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2020 impact of shortages

How to reduce the impact of shortages in the retail sector

Whether it be the Collins, Merriam-Webster or Oxford Dictionaries, each year a range of publishers issue their “word of the year”, a word or expression that has attracted a great deal of interest over the last 12 months across society in general. If the retail sector were to publish its word of the year in 2021, it would arguably be ‘shortages’.

From a shortage of labour deriving from a perfect storm of Brexit and COVID-19, a shortage of raw materials from the shipping crisis to warehouse infrastructure struggling to keep up with the pandemic-fuelled growth in online retail – the industry has been hit from all angles, presenting many “kinks” in the chain.

So, what can brands do to navigate this turbulent retail landscape in 2022 when resources are tighter than ever, and keep their heads above water and focus on growth?

Repurposing existing resources – additional space isn’t always the answer.

Look beyond the centralised warehouse model to consider what other physical space you may have and whether these are being optimised fully. By utilising existing physical store spaces that may have become redundant or that have the capacity to work smarter, you can look to plug the gap. With the right order management system and picking technology, brands can double-up their brick-and-mortar sites and turn them into multi-node distribution facilities – making the space work twice as hard by fulfilling the needs of both in-store shoppers and online demand.

Even for brands that do have the available warehouse space for the retail sector, with skyrocketing rent prices and hiking consumer orders to fulfil, it’s vital to ensure every square foot is being maximised. This can be achieved by making sure that the warehouse has the right technology and processes in place. To increase the efficiency of both storage and retrieval, retailers should consider the implementation of automated storage and retrieval systems (AS/RS) which should be underpinned by an effective warehouse management system. This will ensure goods flow in and out smoothly when the warehouse is full to the brim.

Cloud-based order fulfilment picking solutions are also valuable here. Easily integrated within existing systems, these flexible order picking solutions can help increase distribution efficiency, by speeding up the picking process and increasing picking accuracy.

But what happens when existing space is all maxed out?

Ironically, looking to temporary fulfilment centres can offer brands a more permanent solution to this issue. Pop-up distribution centres (pop-up DCs) are an effective alternative to investing in scarce – and costly – warehouse space. Thanks to their flexible nature, pop-up distribution centres can be implemented fast, providing a cost-effective option in the face of rising costs elsewhere.

Overcoming a diminishing worker pool

With recruitment difficult, helping to solve this issue also comes down to optimising existing resources, and equipping current employees with the tools to make the supply chain as efficient as possible.

In brick-and-mortar stores, shop assistants – who may be experiencing less high street footfall – can be given the technology to fulfil online orders from their stores. Through a cloud-based omnichannel solution, brands and retailers can leverage their workforce across retail channels and the retail sector – effectively directing retail staff wherever they are most needed through the pick/pack/ship processes.

In the warehouse, a robust Distributed Order Management (DOM) system to coordinate and automate the location of stock – can also free up employee time and boost productivity. An advanced DOM system works by enabling your order management system (OMS) to divert orders to the appropriate inventory pool – depending on several factors such as delivery address and product type.

Whilst not the right fit for every brand depending on size and cost efficiencies, another option is to turn to automation and robotics-powered solutions.  These tools can handle a range of essential, time-consuming, tasks that would otherwise be carried out by human workers. By implementing automation to perform these simple tasks, your intelligent workforce is then freed up to support with tasks that add real value to the organisation and ultimately build brand loyalty.

Making shortages visible to enable a response

A shortage of materials can often feel even more difficult for brands to handle. Recently, the UK was hit with a shortage of cosmetics and skincare products due to a major drop in the availability of a key chemical, ethoxydiglycol. As a result, prices of the compound increased almost tenfold, rising from £12/kilo to £103.

Whilst the shortage of materials may be somewhat out of a retailer’s control, by having full visibility of stock levels across the retail sector and all retail channels, brands can limit the problems that may occur when it comes to maintaining brand loyalty. Presenting an item as out of stock and giving customer service agents up-to-date information will avoid customer disappointment down the line.

Whilst this myriad of shortages presents a very real threat to the profitability of businesses across the globe, they don’t necessarily mean getting caught short. For the retailers and brands that execute foresight and implement the strategies and technologies that build resilience into their supply chains, these shortages present an opportunity to distinguish themselves from their competitors who don’t and set them up for growth in the long run.

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Christophe has extensive experience in eCommerce with over 15 years of experience in a variety of roles at PFS. He is also the Founder and Owner of the LinkedIn Supply Chain Management Group brimming with over 200,000 industry professionals. As Managing Director, Christophe oversees all of PFS' European operations. His well-rounded experience has afforded him a wealth of industry knowledge and expertise.

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