The last few years have brought unique challenges to the global marketplace, and 2023 is undoubtedly poised to continue the trend.
While the lingering effects of the pandemic – including supply chain constraints and labor shortages – have started to lessen in markets around the world, reduced consumer demand and inventory overstock, rising labor costs, and record-breaking inflation are now top-of-mind concerns for retailers and consumer goods brands.
As consumer buying patterns change in response to global events, accurately forecasting demand and replenishment plans for stores and omnichannel sales have become exceedingly difficult. Inflation, for example, is driving multifaceted changes to consumers’ purchasing decisions leading to decreased demand for their products as consumers delay larger-ticket items, switch to discount retailers, scout for promotions, and favor less expensive private-label brands.
Though difficult, retailers and consumer goods companies must react quickly and accurately as new data becomes available, so they can adjust their plans accordingly to prevent lost sales, out-of-stock, and excess inventory.
While the retail and consumer goods industries have learned many lessons in the last few years, there are three keys to master in 2023.
- Cut costs without compromising service.
As inflation continues to impact margins substantially, retailers and consumer goods companies are scrambling to adjust their product size, packaging, and pricing. However, this practice leaves consumers with a bitter impression. Rather than raise prices and pass along the increase to customers, companies should instead turn their focus toward supply chain efficiency and streamline their operations first.
Fortunately, tools are available to fight the worst effects of inflation by cutting unnecessary operational costs. With a unified supply chain planning solution, retailers and consumer goods brands can remove operational inefficiencies by aligning and optimizing all the layers of their end-to-end value chain, including demand, merchandise, supply chain, and operations planning. Organizations can unlock efficiencies that drive cost savings and protect margins with a unified supply chain planning solution.
Furthermore, a unified supply chain planning solution allows for improved information sharing across departments and organizations to drive collaboration and adaptability across the end-to-end supply chain. With improved visibility and collaboration, retailers and consumer goods brands can also ensure their workforce is optimized, and labor costs are being spent when and where they’re needed most.
The retail and consumer goods companies that can refrain from raising consumer prices will benefit during an economic downturn in the long run.
- Drive sustainability inside & out.
An increasing number of customers today choose to shop at retailers and buy products they perceive as more sustainable. In addition to the cost savings associated with sustainability measures, retailers and consumer goods companies that focus on reducing waste also see improved reputation and profitability.
With machine learning-driven supply chain optimization, retailers and consumer goods companies can drive sustainability across the value chain by
- Reducing spoilage and waste through more accurate demand forecasts and replenishment orders
- Reducing CO2 emissions by optimizing the transportation of goods
Sustainability efforts benefit not only the environment but also retailers’ and consumer goods companies’ bottom lines.
- Improve efficiency from supplier to consumer.
Uncertain and volatile demand will be an ongoing problem in 2023. As demand patterns continue to change in response to inflation and world events, retailers and consumer goods companies must collaborate to mitigate risks.
Through powerful collaboration solutions, retailers can share their real-time forecasts automatically and regularly, allowing their consumer goods brand partners to react to shifting demand patterns, gain insight into planned promotions, and understand the start and end of seasons in different regions better to tailor their manufacturing and raw material procurement cadences to meet fluctuating demand.
Meanwhile, advanced warning of availability or manufacturing issues gives retailers the visibility needed to adjust their order plans to avoid out-of-stock and lost sales. Improved visibility, transparency, and collaboration between retailers and consumer goods brands give both organizations a competitive edge.
While challenging, the events of the last few years have offered proof positive that unified supply chain planning solutions are vital in helping retail and consumer goods companies stay on top of the value chain and provide exceptional customer service in times of uncertainty. The retail and consumer goods companies that can quickly streamline their costs, reduce waste, and improve operational efficiency will be the most competitive in 2023.
RELEX Solutions helps retailers and consumer brands drive profitable growth across all sales and distribution channels by maximizing customer satisfaction and minimizing operative costs. Our market-leading, unified supply chain and retail planning platform helps retailers and consumer goods companies align and optimize demand, merchandising, supply chain, and operations planning across the end-to-end value chain. We drive record-high product availability, increased sales, improved sustainability, and the best return on investment in inventory, space, workforce, and capacity. Leading brands like Dollar Tree and Family Dollar, Stokke, Rite Aid, Sprouts Farmers Market, AutoZone, and PetSmart trust RELEX to optimize their supply chain and retail planning. Go to Relex Solutions for more.
By Mikko Kärkkäinen, Co-Founder and CEO of RELEX Solutions