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Cost Slows Retailer Supply Chain Digitization

February 15, 2019

According 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).

For 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 products.

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.

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