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5 Retail Supply Chain Management Trends 2022

Industry Insights

5 Retail Supply Chain Management Trends 2022

2021 was another busy year for supply chain managers as they warded off threats to business continuity. Along with supporting colleagues throughout the pandemic, businesses have also faced increasing competition and pressure from buyers and suppliers to deliver — despite supply chain disruptions. And on top of it, they’ve also had to ensure that the overall customer experience is positive, safe, compliant and transparent. 

Retail industry impacted by commodity price rise in 2021

The Achilles Supply Chain Resilience Index (ASCRI) evidenced that commodity prices have increased 68% since the start of 2021. It also mentioned that 28% of disruptions are caused by supplier failure throughout Q3 into Q4, meaning supply chain risk remains in the high-risk range.

A survey of 500 retailers of different sizes discovered that supply chain issues hit 85% of the business in the last year. The disruption has added an average of 21% to their costs. The result: 58% have had to raise their prices

The demand for physical goods is increasingly being constrained by the ability to supply on a global scale. Retail organisations are becoming exposed to any type of supply disruption or unexpected demand increase without the ability to mitigate these risks in advance.

What trends should retail supply chains watch out for in 2022? How could they potentially impact the industry? We’ll take a look in this article.

1. Supply Chain Risk Data Modelling

Developing a supplier risk model that is in line with procurement and meets the needs of the business in times like these can help minimise threats and the associated impacts.

Without the correct supplier data at your fingertips, acting effectively on the potential risks your business faces becomes much harder. Collecting and verifying the right information buyers need, we sharpen their reaction times and enable them to be more proactive in managing third-party risks.

Consumers, employees, investors — every stakeholder today — have their eyes on how the retail brands they engage with operate. There are various examples from the recent past where brands from the sports, fitness, and fashion industries found themselves at the centre of controversies related to supply chain and procurement management. This reputational damage could have been easily avoided by complete visibility of their suppliers’ practices. 

2. Digital Transformation

The digitalisation of supply chains — especially in retail — brings a high volume of data that must be analysed for correct usage. This analysis will increase the efficiency of supply chain integration processes and operations and facilitate decision-making. 

When properly managed and implemented, supply chain digital transformation can add significant value to supply chains in the retail sector. 

Bain & Company found that retailers who integrate digital technologies into their supply chain rapidly improve service levels while cutting costs throughout their supply chain by up to 30 per cent

Javier Caravantes, Achilles Ambassadors Board Member and former procurement consultant to petrochemical companies such as Naturgy and Cepsa, explains, “From supplier prequalification, through solutions like crowdsourcing and integrated ‘Source-2-Pay’, the supply chain management needs to be fully digital –and connected– today. Companies that fail to keep up could lose track against their direct competitors but also against smaller, more agile start-ups who can understand the power of digitalisation and challenge the economic strength of traditionally-managed businesses”

3. Net-Zero Supply Chains

For home and clothing retailers, approximately 98% of emissions are generated by their supply chain — something not directly under their control

Society will continue to demand environmentally-friendly supply chains and build on the momentum from the COP26 conference to achieve net-zero carbon targets by 2050. Research has revealed that consumers are willing to pay as high as 60% for environmentally friendly products

While many companies have incorporated processes in line with this demand, industrial manufacturing and construction supply are significant sources of carbon emissions and pollution.

Reducing carbon emissions can significantly benefit your business, your customers, and our collective future. We have been assisting clients in the retail sector to Measure, Manage and Report their Carbon Footprint with the utmost confidence and drive business efficiency through carbon reduction savings in operational cost and performance for over 12 years.  Some of our clients saved millions of pounds per annum.

4. Supply Chain Cyber Attacks

Supply management is increasingly concerned about cyber security. Between 2021 and 2022, there has been a 264% increase in ransomware attacks in the retail sector — especially targeted at eCommerce and online retail businesses. 

Considering the size of consumer and company data that are handled daily and just the digital nature of retail today, retail supply chains and businesses must have a proven cyber security partner in their supply chain. 

The effects of a supply chain cyber-attack can be devastating:

  • Loss of essential financial information
  • Reputation damage
  • Expenditure on fixing cyber security issues
  • Paying hacker ransomware
  • Legal issues
  • Public exposure of confidential customer information

As cyber-attacks pose an increasing threat to supply chains, both buyers and suppliers in the retail industry need to make sure their businesses are prepared. A Government Cyber Security Breaches Survey revealed four in ten businesses (39%) reported cyber security breaches or attacks in the last 12 months.

We partner with cyber risk expert Orpheus to deliver cyber scores for suppliers and to indicate the level of cyber risk associated with an organisation. The higher the score, the higher the risk a company faces of being the victim of a successful attack. Understanding your cyber score will allow you to take action to mitigate any issues identified, safeguarding your business from potential attacks.

5. Raising ESG standards

Environmental, social, and governance (ESG) will forge ahead as a 2022 priority to achieve a more sustainable supply chain. Today’s consumers are proactively looking for the sustainability practices and ESG credentials of the brands they buy from. To 56% of consumers, these practices make a difference in where they buy from. 

The COVID-19 pandemic put an intensifying spotlight on climate change, and emerging social movements have all given rise to more socially and environmentally responsible consumers. As a result, we’ll see buyers and suppliers being more transparent with their ESG practices in the coming year, as transparency speaks volumes to the interests of socially conscious buyers and customers. 

Buyer and supplier organisations need to take charge of their supply chains to gain a competitive advantage over their rivals and reduce their risk level at the same time.

Request a call back to find out how Achilles can help your business stay ahead of these trends. 


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