The next evolution of the supply chain will be all about visibility
PVH Corp., the parent of Calvin Klein and Tommy Hilfiger, is more highly prioritizing real-time inventory visibility to better adjust to potential disruptions coming out of the pandemic.
Eileen Mahoney, PVH’s CIO, told The Wall Street Journal, “It’s allowed the business to get a better handle on where demand is, where the consumer is shopping, and we’re now going to be nimble about where inventory is.”
A new report from the Capgemini Research Institute finds 66 percent of consumer products and retail (CP&R) organizations saying their supply chain strategies will change significantly in the next three years, with much of the attention on heightened visibility.
The supply chain realignment is expected to focus around three areas.
Sixty-eight percent of CP&R organizations surveyed faced difficulties in demand planning due to a lack of accurate and up-to-date information on fluctuating customer demand during the pandemic. Two-thirds plan to segment supply chains according to demand patterns, product value and regional dimensions post pandemic, while 54 percent will use analytics/AI-machine learning for demand forecasting.
Visibility becomes critical
Facing difficulties quickly increasing or decreasing production capacity, 58 percent of retailers and 61 percent of consumer product organizations are planning to increase investments in digitization of supply chains to improve visibility. Forty-seven percent are planning to invest in automation, 42 percent in robotics and 42 percent in artificial intelligence. Sixty-four percent and 63 percent of organizations are also planning to make extensive use of artificial intelligence and machine learning across transportation and pricing optimization respectively.
From globalization to localization
Seventy-two percent of consumer product organizations and 58 percent of retailers are actively investing in regionalizing or localizing their manufacturing base or nearshoring production to prevent future disruption.
The study found respondents faced significant challenges across the supply chain in the wake of the crisis, including difficulties in end-to-end monitoring of the supply chain, cited by 72 percent; delayed shipments/longer lead times, 74 percent; and bottlenecks at ports or at borders, 68 percent.
- PVH Fashions New Supply-Chain Strategy in Pandemic-Hit Apparel Market – The Wall Street Journal
- Research: Consumer product companies and retailers plan to overhaul their supply chain strategies to better adapt to future disruptions – Capgemini Research Institute
DISCUSSION QUESTIONS: How important will visibility be in helping reduce supply chain disruptions in the future? Which of the three themes for improving supply chain agility cited in the article is most important?