Cost Slows Retailer Supply Chain Digitization
February 15, 2019
to new research released from Gravity Supply Chain Solutions, 85 percent
of U.S. retailers haven’t completed the digitization processes (using a
cloud based platform with real time visibility, and automation
capabilities) required to give them full control of their supply chain.
Without this type of control, retailers will struggle with speed to
market, hampering their ability to efficiently allocate supply with
demand with the knock-on impact of reducing sales opportunities.
The research which is based on interviews with 500 retail executives in
the U.S. and the U.K. reveals that only 15 percent of U.S. retail
businesses have completed digitization of their supply chain management
processes. Despite this slow rate of digitization, the report finds that
60 percent of U.S. retailers see supply chain digitization as critical
to creating seamless omnichannel retail experiences.
For retailers relying on manual supply chain management processes, cost
is perceived to be the main blocker to digitization projects, and this
is the case for nearly half (46 percent) of U.S. retailers whose supply
remain undigitized. This concern could be attributed to a fear of such
projects failing to deliver a return on investment considering that a
further 29 percent of U.S. respondents cited the inability to justify
cost as the most significant blocker to supply chain digitization.
“With strong investment in front-end technologies designed to enhance
the customer experience such as smart kiosks, and AR apps targeted ads,
it begs the questions why retailers appear slow to digitize their supply
chains.” says Graham Parker, CEO of Gravity Supply Chain Solutions “If
retailers can’t bring speed to market to meet growing consumer demand,
this will disappoint customers, and potentially undermine investments
made to improve the customer experience at the front-end. Clearly, the
supply chain is the final frontier of retail digitization, and while
retailers are anxious about the cost, not moving from manual
spreadsheet-based supply chain management towards digitized processes
that provide speed, efficiency and informed decision making, could cost
them a whole lot more.”
According to the research, many U.S. retail businesses that have not
completed digitization projects say they do recognize the value in doing
so. Those yet to undergo supply chain digitization believe the lower
cost of operation is the strongest benefit (according to 44 percent),
followed closely by higher profit margins (40 percent), and greater
customer experience (36 percent).
those who have fully digitized their supply chains, one significant
benefit has been better decision-making with 76 percent stating that
they believe their organization has enough data and insight to make the
right decisions about its supply chain following digitization. More than
half (55 percent) of retailers say that order tracking across all
touchpoints has improved the customer experience while 53 percent say
customer experience got enhanced by increased personalization of
The key and most significant learnings from this research report are
that the vast majority of retailers understand the value of supply chain
digitization. However many are yet to realize how urgently they should
be completing digitization projects.
Supply chain digitization presents a massive opportunity for retailers
to improve customer loyalty and the correct solution can allow them to
add analytical, predictive, and AI capabilities in phases to help meet
consumer demand in the most efficient way possible.