It’s Time For Retailers To Take Back Control Of Their Supply Chains. Here’s How.

Leadership Strategy It’s Time For Retailers To Take Back Control Of Their Supply Chains. Here’s How. Gary Drenik Contributor Opinions expressed by Forbes Contributors are their own.

New! Follow this author to stay notified about their latest stories. Got it! Aug 30, 2022, 10:00am EDT | New! Click on the conversation bubble to join the conversation Got it! Share to Facebook Share to Twitter Share to Linkedin Product Shortages AdobeStock_481384993 The pandemic completely upended retailers’ supply chains, and the repercussions are just as prevalent as ever. According to Prosper Insights & Analytics data in August, 47.

6% of adults surveyed think product shortages will continue for the next 6-12 months due to current supply chain conditions. Key macroeconomic indicators provide conflicting signals about the state of the U. S.

economy and the position of consumers, both of which directly impact freight demand. Specifically, this leaves some retailers having trouble finding available freight to transport products, causing backlogs on top of peaking inflation and consumer demand. Amid the conflicting landscape, consumers expect retailers to prioritize sustainability in their supply chain and overall operations, adding to the mounting pressures.

However, retailers have new tools at their disposal to change the current state and incorporate sustainability all at once. Prosper – How Long Will Product Shortages Continue Prosper Insights & Analytics Heather Mueller, CMO and CPO at Breakthrough , leads the development of Breakthrough’s energy, freight, and sustainability management platforms and is intimately familiar with retailers’ shipping woes. I spoke with her about the supply chain challenges retailers are currently facing and how they can improve efficiency by leveraging more data-driven insights within their supply chain.

Gary Drenik: What supply chain issues are retailers facing right now? What’s causing them? Heather Mueller: Supply chain disruptions have thrown a major wrench in retailers’ efficiency and profitability. This year, some of the biggest disruptions have come from global events like the war in Russia and Ukraine, port congestion and much more. While certainly in the recovery process, retailers are still grappling with ramifications of supply chain disruptions from the early days of the pandemic.

These kinds of events often have a lasting impact that takes time to fully recover from. Diesel prices and price volatility are expected to remain difficult for shippers to manage through autumn. Carriers are passing on high diesel prices to retailers, putting a dent in their profits and making it challenging to transport goods on a budget.

MORE FOR YOU 5 Cognitive Biases Blocking Your Success Preparing To Go Public: An Overview Of The IPO Process Immigrants Hope Registry Saves Immigration Bill While navigating these external factors, retailers are simultaneously expected to take more action on sustainability initiatives as well. Why? The same Prosper Insights & Analytics data shows that 42. 2% of Gen-Z consumers will spend more with brands that are more environmentally responsible.

This generation has the fastest growing consumer buying power making sustainability especially important. Retailers can actively and more easily monitor and take action against scope 1 and 2 emissions, but scope 3 emissions are what present retailers with the most challenge at this time since emissions are not owned or controlled by them. For retailers, scope 3 emissions are generally a result of outsourcing factory production and carrier partnerships.

Prosper – How Engage with Environmentally Responsible Brands Prosper Insights & Analytics Drenik: What are retailers currently doing to navigate these supply chain issues? What’s working and what’s not? Mueller: Retailers are researching and implementing innovative technology solutions to manage their costs to then reduce the large sum they would pass onto consumers. Now is the ideal time to challenge traditional methods. Capacity solutions can be used to find more efficient modes of transportation or alternative carriers, energy solutions to manage costs, and emissions reduction solutions to address consumer demand and find efficiencies in the supply chain are some of the technologies that are making retailers more efficient.

Retailers are eager to take action to redefine their network and their relationships. In addition to technology, some retailers are turning to alternative transportation channels like air cargo to avoid congested ports and expedite getting their products on the shelves or intermodal transportation to provide additional capacity options and reduce emissions. Others are hiring more talent or finding new supplier partnerships to better manage supply chain operations, handle increasing consumer demand, and relieve backlogs.

Drenik: What can retailers do to create scalable and more efficient supply chain practices? Mueller: The first step lies in digitization with transparent data and wise deployment of technology serving as the cornerstone of it all. While retailers digitized many of their operations to appease remote shoppers, the truth is that the transportation sector is still relatively behind on digital transformation, making it more challenging for retailers to take control of their supply chain. That said, the biggest opportunity for retailers here is to leverage data to make smarter decisions that will improve their supply chain efficiency.

With this data, retailers can optimize their transportation network strategy by viewing network performance by lane, provide recommendations on freight strategy, and analyze energy consumption. Wisely deploying technology and using transparent data is key to uncovering insights that can help scale operations. Investing in the digitization of transportation operations, carefully deploying technology, and using transparent data is crucial in enabling retailers to take control of their supply chain, including their control over emissions output and energy costs.

Not only is this beneficial for retailers in the long term, but to consumers as well. Retailers should also focus on sourcing freight in the contract market to lock in an agreed upon price and potentially save more money in a volatile market. When there is disruption in the freight market, usually driven by external economic factors, retailers often face price pressure and see an imbalance in the ratio of shipments being processed in the contract market compared to the spot market.

The spot market often leaves retailers with instability and at risk of volatile rates. Selecting reliable and best-fit carriers can help their freight market strategies become more resilient to market disruptions. Another key aspect is cultivating strong relationships with carriers to ensure compliance.

This will help when there are market disruptions and ensure more optimization within the network in comparison to securing freight in the spot market or consulting a broker. Another way retailers can optimize their supply chain is to use market-based pricing to calculate accurate fuel reimbursements for every shipment in their transportation network. By establishing clear network visibility, retailers can manage costs, appropriately reimburse carriers for fuel based on the individual freight movement details, and as a bonus, understand their emissions output.

Drenik: How can retailers keep sustainability in mind while evaluating their supply chain practices? Mueller: It’s great to see more retailers are accounting for scope 3 emissions in their climate targets and making meaningful progress on their goals, especially considering that many large corporations are a major contributor to greenhouse gas emissions. While several organizations have made pledges to reduce carbon emissions or completely reach net-zero, acting on these pledges has proven to be the primary challenge. As it stands, many retailers are still behind on their goals or don’t know what steps to take in order to make meaningful progress towards their initiatives.

Scope 3 emissions – also known as emissions from third-party organizations in a retailer’s supply chain – in particular are incredibly challenging to track and control. Once again, data is the best tool in a retailer’s toolset. By leveraging data from freight partners – the largest contributors to scope 3 emissions – retailers can make informed decisions on how to mitigate emissions, potentially save costs and reach their own ESG goals.

Drenik: In your opinion, what will the future of the supply chain look like? Mueller: The future of the supply chain is digital, and data driven. With data analytics and advanced technologies like AI to help retailers make smarter, better decisions, they’ll have more control over the efficiency of their transportation network. We’ll also see more progress toward sustainable transportation and supply chain practices.

With alternative energy sources becoming more readily available, not to mention rising diesel costs, shippers will tap into these greener energies to keep up with changing regulations and their own ESG goals. Data will also play a role in helping shippers to visualize their emissions output to lead them in making more sustainable decisions aligned with their goals and complying with regulations. Drenik: Thank you, Heather, for this insightful conversation on how retailers can navigate the current supply chain challenges they’re facing.

It’s been great discussing this topic with you. Check out my website . Gary Drenik Editorial Standards Print Reprints & Permissions.