COVID-19 'stretches supply chain' capacity

A new study has identified human vulnerabilities across the retail supply chain during the Coronavirus crisis - and the need for future investment in flexibility and automation to improve future resilience.

WMG, the University of Warwick and Blue Yonder gathered insights from 105 different retailers from Europe, Asia and the Americas, finding that the majority (61 per cent) used inventory to buffer against the disruption of COVID-19.

Supply chain processes and systems were effective, but more than half (58 per cent) of retailers said a high degree of manual intervention was required to respond to the fluctuation in demand and supply.

Workforce issues were dominant for retailers, with 59 per cent of warehouse and 48 per cent store staff being affected by quarantine or illness. This often resulted in the closure of online operations and the need to recruit temporary staff.

Retailers were also polarised in their treatment of supplier payments, with 37 per cent delaying payments and 30 per cent making early payments.

Jan Godsell, professor of operations and supply chain strategy at WMG, University of Warwick, commented that using inventory to buffer against the disruption of COVID-19 was the most common strategy deployed by retailers. "This provides the greatest certainty of supply but comes at a cost."

In contrast, only just over a quarter (29 per cent) of retailers relied on suppliers with more agile manufacturing and distribution networks, which is a potentially more resource efficient and resilient response.

“With 75 to 80 per cent of products seeing a demand fluctuation, retailers were slightly better at responding to decreases rather than increases in demand," she noted. "Whilst retailers found that their supply chain processes and systems to be effective in responding to the demand fluctuations, many were still dependent on the human touch."

Wayne Snyder, vice president for retail strategy EMEA at Blue Yonder, added: “A critical learning for retailers is the need to invest in creating supply chains with greater flexibility, visibility and automation.

"Technologies such as artificial intelligence and machine learning will play a key role in helping retailers navigate future disruption, whilst still meeting customers’ expectations.”

The survey was administered on-line by Qualtrics in late April, targeted at senior executives in retail supply chains.

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