The Demand Supply Chain: How to Win as the Bar Continues to Rise in the Retail Industry
The year 2020 was a year unlike any other, and supply chains were more front and center than ever before. This is especially true in the retail space, as a surge in ecommerce and pandemic-driven demand volatility increased the rate of change in an already rapidly evolving industry. For many, a complex global supply chain became even more challenging to navigate. As we kick off 2021, those complexities are still present, but with a new year comes new opportunities to innovate and address some of the biggest challenges for our retail and consumer packaged goods (CPG) customers, such as:
-Planning environments are complex and can lead to costly surplus Days of Inventory on Hand (DOH)
-There’s a desire to meet and exceed heightened consumer expectations
-Industry volatility and logistical complexity creates a risk of high on time in full (OTIF) fines
-Increased reliance on the transportation spot market due to industry planning uncertainty
-Transportation requests for proposal (RFPs) are labor-intensive and can be out of alignment with customer needs
Annual transportation RFPs can take up to half a year to conduct and can become quickly out of date. This challenge has become more prominent as market unpredictability has continued to disrupt these plans. There are two main variables to blame: Changes in demand or sales, and shifts in supply and demand in the transportation market. But those two functions only come together once a year, if ever—when bids are being prepared and shippers are trying to predict what they have to bid out. After that, they really don’t talk to each other.
When demand for a certain product explodes, you can overload the carrier who signed on for less. You start paying more immediately for backup carriers, or worse, pay much more if you go to the spot market to procure trucks.
Retail and CPG shippers need innovative solutions to help them overcome these challenges and succeed today and into the future.
This is why I am excited about C.H. Robinson’s recent partnership with SAS, a trusted analytics powerhouse, to bring end-to-end supply chain processes and technology solutions that connect demand and inventory planning data with procurement and transportation data, in real-time. This solution is delivered through a powerful combination of C.H. Robinson’s information advantage and technology built by and for supply chain experts, and SAS’ demand planning and forecasting technology and expertise.
We’ve joined forces to unify two functions that have often worked in autonomous siloes, demand planning, and transportation optimization. Our partnership creates a first-of-its-kind integration of demand planning data and real-time transportation data that will drive smarter, more agile supply chains.
Steering a supply chain from a centralized operation like this will allow companies more fluid adjustments in scheduling, transportation optimization, and responses to changing consumer demand while inventory is still moving on the ground.
Our retail and CPG customers, both at C.H. Robinson and SAS, look to us for cutting-edge solutions that will help them succeed in the marketplace. As we continue to listen to the pain points within the industry, we are working together to create solutions that will enable shippers to reduce inventory, improve service, increase savings, and gain efficiencies.
-Reduce inventory levels with a demand-powered supply chain. Carrying inventory is a major expense. Some safety stocks are needed when it isn’t possible to plan and adapt to changing conditions in real-time, which this solution now enables you to do.
-Provide more predictability to carriers in real-time, letting them know what is changing in demand.
-Align the largest pool of reliable transportation capacity to the specific needs of your demand plan.
-Spend less on spot market procured freight, by allocating your freight the way carriers want it. In most of 2020, spot market rates were around 30% higher than the previous year, and are usually much higher, at times double, than contract planned rates.
-Reduce fines for late, missed, or incomplete deliveries which can be common in retail.
-Spend less time on your annual procurement event by taking advantage of SAS’ and C.H. Robinson’s technology tools that help you rely less on the static annual plan.
We are just getting started. Today, our solutions are focused within the retail space, but we recognize there are opportunities to expand beyond that as other industries face similar challenges.
I am looking forward to continuing to partner with SAS to bring innovative solutions to the table that will help shippers overcome industry challenges.