It’s a race against time for retailers facing supply chain disruptions in the run up to the holidays
In recent years, several supply chain issues have blighted the holiday season. From stocking up on gas for European homes in the wake of the Russian war on Ukraine to the effects of the Covid-19 pandemic on production cycles, disruptions in the supply chain are close to becoming the norm. Retailers across the globe, especially as they stock up for their best season in the year, should urgently address their levels of preparedness as the countdown to this holiday offers more new hurdles to tackle.
The Houthi attacks in the Red Sea, rail strikes in Canada, an expected record-breaking hurricane season, and the closure (albeit for 80 fraught hours) of the Ningbo Port in China due to a container explosion on the YM Mobility are all reminders of the vulnerabilities affecting the supply chain. In a global economy, these incidents are not isolated events but have severe repercussions that see retailers in Europe and the US, for example, bracing when an issue affects a port in China like Ningbo, which handles nearly 29 percent of China’s total vessel traffic. With the holiday season just around the corner, the pressure is on.
The ripple effect of global disruptions
Any stage of the logistics network can cause issues, and often, although a solution is found, it can lead to further consequences. One example is the cost increases and longer routing times caused by Houthi attacks in the Red Sea. This is particularly impacting European retailers sourcing from Asia, with 66 percent of ships forced to divert around the south of Africa to circumvent the Suez Canal, which adds anywhere between 12 days to three weeks to the timelines of moving stock from Asia to the UK by sea.
For retailers, this means that the goods ordered in anticipation of the Christmas season need to be ordered earlier to compensate for longer shipping times. The risk is reputational damage and customer churn caused by stockouts and customer frustration.
Resiliency is key
Businesses need to leverage skills and technology to ensure that the supply chain is resistant and flexible enough to accommodate sudden change. In particular, the integration of predictive AI technology and automation into existing procurement and supply chain management systems has become an urgent need for businesses wanting to stay competitive, avoiding potential risk and deescalating a crisis before it impacts the bottom line.
While larger retailers may already be planning for next year’s holidays, it is imperative for all retailers to ensure they consider potential risks and amend their usual planning accordingly. Key dates such as Black Friday, Christmas, Boxing Day, and Valentine’s Day remain critical for driving sales and in today’s competitive environment, retailers must start planning earlier than ever to develop robust contingency plans.
Leveraging technology
Safeguarding the ability to meet customer demand and capitalize on these crucial shopping periods remains key for overall business health. Although consumers may initially understand delays due to well-publicized global events, they will shop with their feet and quickly turn to retailers that can guarantee their must-haves are well-stocked.
Take, for example, predictive analytics: these can help forecast potential supply chain bottlenecks based on a huge range of both internal data like historical supplier performance and geopolitical events, as well as external market data.
AI-driven automation can also streamline the procurement process, reducing the risk of human error and ensuring that critical decisions are made based on accurate, real-time data. Generative AI can help analyze supplier proposals, identify key risk factors, and generate recommendations that align with organizational goals such as carbon reduction or diverse supplier selection. In addition to supporting risk prevention and automation, AI plays a key role in helping businesses pivot rapidly when they need to change their sourcing strategy and select a new supplier.
Preparing for future uncertainties
With supply chain disruptions emerging more and more often, retailers need to leverage technology within strategic planning. AI’s role in supply chain management is poised for significant growth, with emerging technologies like generative AI offering even greater opportunities to enhance procurement strategies and improve efficiency.
Looking ahead, building a resilient supply chain is more critical than ever. Companies that take proactive measures to integrate AI-powered analysis to manage risk now will be better equipped to handle future uncertainties. The data required to make rapid and informed contingency plans already exists; retailers must now harness the tools to take decision making to the next level in face of ongoing disruptions.
For a list of sources used in this article, please contact the editor.
Simon Thompson
Simon Thompson is the Vice President of Sales Northern Europe at JAGGAER. With over 20 years of industry experience at several procurement technology providers, Simon is passionate about driving change by creating meaningful value. Simon leads JAGGAER’s UK, Nordic, and Benelux Commercial teams with a focus on performance and strategy.