Develop a Strategic Approach to Retail Supply Chain Tech Investments

Retail and CPG are undergoing unprecedented challenges, shaped by evolving consumer expectations, technological advancements, and intricate supply chain dynamics. A November 2023 survey conducted by SoftServe and Wakefield Research revealed that for more than half (58%) of retail businesses with a minimum revenue of $1 billion, supply chain and logistics will be a top-three line of business for technology investment in 2024.

Driving the predicted expenditure in the supply chain is a desire among more than one-third (37%) of the businesses surveyed to reduce distribution or delivery costs. However, many enterprise retailers face supply chain challenges such as cost volatility (67%), omnichannel complexities (50%), and disruptions (48%) that hamper efforts to enhance logistics.

In this landscape, adopting a proactive approach to supply chain optimization is essential. Based on the principles of customer-centricity, technological innovation, talent development, collaboration, and long-term vision, companies can overcome supply chain challenges and pave the way for resilience, adaptability, and growth.

Retail and CPG companies seeking to optimize their supply chain should begin by focusing on customer needs. Adopting such a strategy appeals to the 44% of enterprise retailers that hold improving customer experience as a top-three 2024 goal and helps optimize logistics. By prioritizing customer expectations, companies can utilize data analytics and customer feedback to identify pain points and opportunities for improvement in supply chain operations. This customer-centric philosophy involves a strategic commitment to understanding and meeting the evolving expectations of end-users. Leveraging data analytics and customer feedback becomes paramount in this approach, providing companies with nuanced insights into consumer behavior, preferences, and potential areas for improvement.

Consumer-focused supply chain strategies remain attuned to the dynamic demands of the market, fostering not just operational efficiency but also heightened customer satisfaction and loyalty. By embracing technology and consumer insights, companies can dissect data to uncover trends, identify pain points, and respond swiftly to shifts in consumer preferences. This proactive strategy allows for a supply chain that not only meets current expectations but is also positioned to anticipate and thrive amidst rapidly changing market trends.

The imperative to adapt to the swift evolution of business dynamics has given rise to a pivotal shift in operational frameworks — the introduction of the composability model, particularly relevant in the realm of supply chain planning and execution. Highlighted by insights from the SoftServe/Wakefield Research survey — where consumer data management and protection, along with in-store theft, emerged as predominant concerns in 2024 (each garnering 15% of responses) — the composability model presents a strategic response to common challenges. This model centers around the development of programmatic interfaces (a set of rules and protocols to govern the interaction between different pieces of the supply chain) and a coherent design of business-centric modularity, allowing companies to dynamically adjust their supply chain strategies.

Composability offers a flexible and agile approach to supply chain operations. It recognizes that a rapidly changing environment necessitates a more adaptable system, but it requires a cultural transformation. A new mindset must be adopted; one that cultivates a bidirectional partnership in business-IT collaboration, emphasizing a synergistic relationship between technology providers and end-users within the supply chain ecosystem. This collaborative approach empowers business leaders to tackle the intricacies of supply chain challenges effectively. It equips them with the agility to make informed decisions amid changes or disruptions, fostering resilience and adaptability in the face of uncertainty.

Of course, new strategies require new technology, and retailers are compelled to embrace cutting-edge technologies as strategic tools for effectively optimizing supply chains. The SoftServe/Wakefield Research survey, shedding light on the 2024 technological investment strategies of retailers with a minimum revenue of $1 billion, underscores the industry's collective acknowledgment of the transformative potential residing in automation, artificial intelligence, and blockchain technologies. Notably, store operations, customer service and support, and supply chain and logistics emerged as focal points, each capturing a significant 44% of respondents' attention. This underscores a shared industry understanding that investing in these technological pillars is not merely an option but a strategic imperative, positioning companies to thrive in the dynamic and competitive market landscape.

The identified technologies — automation, AI, and blockchain — are emerging as revolutionary forces in supply chain dynamics, promising efficiency gains, cost reductions, and the ushering in of new business models. With 99% of respondents planning on increasing technology spending in 2024, the survey results indicate a unanimous industry sentiment that adopting these technologies is not merely about staying technologically current; it's a strategic move with the potential to fundamentally reshape how companies operate in the modern retail landscape. Technologies that enable real-time tracking and optimization not only streamline internal processes but also contribute to the overarching value chain, allowing companies to meet customer demands with unparalleled agility and responsiveness. Such an approach to technology adoption becomes a driving force for increased productivity, reduced lead times, and an overall enhancement of the customer experience, positioning companies at the forefront of industry innovation.

Effectively strategizing and implementing new solutions to overcome supply chain challenges requires collaboration with IT partners who can both implement tech and provide the consultation necessary for smooth adoption. This is especially important given that 40% of the executives responding to the SoftServe/Wakefield Research survey lack in-house experts to get the most out of new technology, and 37% believe that communication regarding solutions and how to use them is unclear.

Despite near unanimity on their plans for increasing technology expenditure in 2024, 27% of the executives surveyed are experiencing shrinking budgets. This underlines the importance of maximizing ROI when adopting innovative technology. An IT partner can help enterprise retailers identify areas in which new solutions will be most impactful as well as assist with implementation and adoption.

By adopting a strategic approach, companies can overcome supply chain challenges, stay competitive, improve customer satisfaction, and meet the changing needs of the market.

SoftServe's expertise in retail and technology helps you develop a customer-centric strategy, leverage cutting-edge technologies, and create a clear, long-term vision for your supply chain. We partner with you to evaluate and adapt your strategies as market dynamics evolve.

Let's talk about how SoftServe identifies and implements the solutions that transform your retail supply chain.