Retailers are big spenders on ecommerce and digital technologies that help them sell more online to customers—and make them even better return shoppers.
But while retailers have invested plenty of time, money and other resources into consumer-facing technology, they haven’t put the same effort into applying more digital technology to their supply chains, says a new survey of about 500 retail executives in the U.S. and the United Kingdom from supply chain vendor Gravity Supply Chain Solutions.
“With strong investment in front-end technologies designed to enhance the customer experience, such as smart kiosks, and augmented reality apps targeted ads, it begs the questions why retailers appear slow to digitize their supply chains,” says Gravity Supply Chain Solutions CEO Graham Parker. “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.”
Most retailers see a more digitally enhanced supply chain as a priority—the survey finds that finds that 60% of U.S. retailers see supply chain automation using such digital technologies as artificial intelligence as “critical to creating seamless omnichannel retail experiences,” Gravity Supply says.
But there are roadblocks and challenges retailers face in further automating their supply chain with advanced technology, according to the survey.
Among the challenges:
- Lack of money—29% of U.S. retailers cited the inability to justify cost as the most significant blocker to supply chain digitization, and 52% that have fully or partially digitized their supply chains say cost is the main factor that slowed the process.
- Long way to go—Only 14% of retailers have completed supply chain digitization projects
- Getting underway—49% of merchants haven’t started planning for digitization
- Still on the drawing board. 22% of retailers are only at the planning stage
- Paper and phones—46% of retailers are still using manual processes to run their supply chain
- Long way off—29% of merchants with a manual supply chain are planning on becoming digitized in the next 5 years.
- Looking for talent—19% of merchants say the main blocker is lack of in-house skills
- No plug ins—41% of merchants say difficulty to integrate various systems slowed down the process.
“The research suggests that cost is the main factor blocking supply chain digitization, and retailers seem to believe investment is difficult to justify,” Parker says. “What retailers really need to be questioning is how effective their existing supply chains are at improving speed to market, enabling just-in-time production, reducing markdowns, and capitalizing on emerging trends ahead of others in the market.”
For retailers have progressed toward automating all or key parts of their supply chain, there are benefits to be gained, according to the survey.
For example, the lower cost of operation is the strongest benefit for 44% of survey respondents, followed by higher profit margins (40%), and greater customer experience (36%).
Without addressing outdated processes in areas like supply chain management, retailers are unlikely to see a full return on those customer-facing technologies, because great customer experiences depend on having the right products in the right place at the right time,” Parker says.
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