Going back to a pre-Covid-19 economy isn’t going to happen. So the supply chain sector is adapting to new trading conditions. 2021 will see the continuation of a short-term focus on rapid changes and a need for agility, balanced against a need to adapt to longer-term trends that are redrawing the rule book of what is ‘normal’.
This piece looks at the key trends that COOs, IT Directors and Transformation Leads need to be close to. In the coming weeks we will follow up this piece with further industry insight and perspectives from key players on how they are leading their organisations forward and transforming for future success.
4 Key Trends that are Boosting the Pace of Change in Supply Chain:
- The hit on the high street with all its supply chain implications is now well known. When the pandemic is over, the high street will not be the same as pre-2020. Further change is now being driven by the aggregation of brands. Recent examples include Boohoo buying up Dorothy Perkins, Wallis and Burton brands from fallen retail group Arcadia(1) and ASOS acquiring to buy Topshop, Topman, Miss Selfridge and HIIT brands. Whilst stores are not part of some deals (eg ASOS/Debenhams) the brands are in demand and these shopping sprees in the marketplace will lead to significant supply chain consolidation and restructuring to maximise the deal values.
- Dark stores demand and pick-up only retail has boomed during the pandemic and looks set to be a significant part of future supply chains. This can be seen in the US where Amazon has bought out JC Penny’s empty stores as potential fulfilment centres for its e-commerce business (2). Whilst variation in format varies with geography and by country what has become clear is that retail doesn’t always need a store on the high street, fulfilment flexibility is critical and customer demand for this concept is high. This will undoubtedly lead to more growth and a need for supply chains to adapt to service demand in a local and fast manner as customer expectations skyrocket.
- Digital transformation is still top of the agenda and market activity in M&A is driving a need for further change to consolidate and align systems within reshaped organisations – and in line with new supply chain requirements. Together with optimisation and efficiency these three key elements remain core to any serious transformation and strategic change plan in the sector. The added ingredient over and above this (as evidenced through the pandemic) is the human element to keep teams motivated, to keep well-being central and communication & teamwork seamless in a remote world with reduced human contact. For many, strategy change execution has become more difficult with teams dispersed, personal concerns impacting working patterns and cost measures such as furloughing are removing knowledge & capability for periods of time. Whilst other concerns are high on the agenda, digital, optimised processes and efficiency are king. Delivering this in a customer-centric strategy enables a market leading approach. ‘The customer is king’ and will remain so! Efficient digital processes need to enable and support this and flex to the changing demands.
- As Reuters have recently concluded on the last 12 months (3): “In a year of big shocks, those that have been able to adapt have been those best placed to weather the storm”. Lean supply chains, just in time processes and minimal room for adjustment have tested supply chains beyond the stress testing and business continuity planning that many had put in place. More than ever a need to still be able to adapt quickly, communicate changes and implement them in hours and days at most is strategically very valuable. Retailers need to be able to ramp up and down in different countries as policies change and government announcements afford short time frames to take action. Supply chains need to flex to shape to changing demands, order volumes, peaks of new demands, new safety measures. Needing time to do this leads to high business impact and increased competitor pressure. Success requires quick learning, reducing risks and building in new adaptations to survive, future proofing for the post pandemic crisis and ensuring that adaptability and change are core in the organisational DNA to reinvent and thrive against future economic challenges.
Process reviews will help to determine how quickly your organisation can adapt to an ever–changing landscape. Five-year plans have gone out the window and the key to success now lies in fluidity and quick responses. If your existing business model doesn’t fit the sector’s success criteria for the new normal then seek help to transform! Nine Feet Tall have recently worked with clients including Sally Beauty, Danone, Banner Group, Nisbets, Connect Group and other organisations across the sector who are dependent on slick supply chains. Our vision is for change to be embraced and we have been delivering transformations for over 17 years. Nine Feet Tall specialise in delivering complex change combining the power of people and technology. Contact us now for a free assessment to identify where value can be added in 2021 for your organisation. EstherM@NineFeetTall.com