In 2021 flexibility is the key to solving supply chain challenges

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From Brexit, to e-commerce and COVID, retail supply chains are facing a challenging year

In conversation with procurement consultancy firm Proxima, Hatmill’s founder Simon Dixon discusses how supply chain challenges posed by COVID-19 and Brexit will continue into 2021. Embracing technology and automation, and building flexibility into the supply chain model, will be instrumental to the survival and success of retailers this year.

Agility and flexibility are key in 2021

With uncertainty around physical trading, increasing demand for e-commerce and the new legislative barriers arising from Brexit, Retail supply chains are set to face another challenging year.

 

Adjusting supply chains to the impact of COVID

Consumer demand for online shopping has advanced significantly since the pandemic began, forcing retailers to adapt their supply chains quicker than ever before. And there’s plenty of evidence that consumer habits aren’t going to flip back to what they were pre-pandemic.

With lockdown restrictions likely to loosen and re-tighten for some months to come, and consumers moving between high streets and online, retail leaders need to anticipate the ongoing impact this will have on their supply chains.

The pandemic will also continue to push up prices for retailers with overseas trade; we’ve seen the cost of shipping surge, pushed by demand for PPE from the East disrupting normal flows, and many shipping containers being in the wrong locations or not being in free circulation. We believe this will continue to be a challenge in 2021.

We believe that the winners in the sector will be those businesses that have the most flexible supply chains, enabling them to pivot more effectively than other businesses.

Read more in our article: Preparing to remobilise your supply chain

 

Brexit logistics and the increasing costs of returns

Retail has been one of the industries hardest hit by Brexit and the UK-EU Trade and Cooperation Agreement (TCA), and we think this continues to present logistical and administrative challenges for retails at least in the first part of the year.

Retailers must identify and disclose materials sourced and manufactured from countries outside of the EU, before importing them into the trade bloc. This has spelt a crisis for UK-EU border disruption.

In addition to this, new legislation has caused huge problems in reverse logistics, with companies experiencing unsustainable returns costs for the transport of goods between the UK and Europe.

It could take three to six months for businesses to overcome these initial barriers, but we expect business leaders to seek to optimise their post-Brexit supply chains once they are more stable.

 

Building flexibility into automation solutions

Since the Brexit vote in 2016, we’ve witnessed a continued fall in the volume of available labour that’s been exacerbated by social distancing restrictions caused by the pandemic, leading to significant labour shortages within the sector.

With this in mind, retailers re-evaluating their operations and supply chains are turning to automation as a solution. When we talk about automation, for many it conjures up visions of massive state-of-the-art ‘Ocado-type’ automation facilities.

But, Autonomous Mobile Robots (AMRs) and co-bots can help increase efficiency, providing manufacturers and retailers with new, more adaptable, automation options to integrate into supply chains.

It’s important that retailers explore options thoroughly to build confidence in the investment decision. And while there’s a temptation to move quickly, this needs to be balanced with patience to analyse the data and landscape before committing to expenditure.

Read more in our guide here: Automation: A guide for the savvy supply chain director

Agility and flexibility are key in 2021

Supply chains are starting to be recognised for their ability to differentiate costs and customer propositions, but now more than ever, businesses need to rely on their agility and flexibility in order to survive.

With the ongoing impacts of the pandemic and Brexit, having a transparent, robust, flexible supply chain has never been more important. 2021 will be centred on retailers reviewing learnings from 2020, embracing the changes which worked and building flexible and resilient supply chains.

 

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