How better supply chains can help retailers through tough times

Faced with high inflation and a cost-of-living-crisis, retailers are under significant pressure. What steps can supply chain leaders take to help their businesses stay profitable?

It’s a difficult moment for businesses in almost every sector. High inflation, energy price rises and a predicted recession mean that many are focused on nothing more than getting through their immediate challenges.

But while the outlook is testing for nearly all, the difficulties facing retail businesses are even more severe. Added to the problems already mentioned, they face ongoing supply chain challenges, high business rates and a cost-of-living crisis that will leave consumers with far less money to spend. 

Five steps supply chain leaders must take to help their businesses

Given the scale of the challenge they face, many retail businesses will need to take bold steps right across their organisation. But some of the most important actions will need to focus on how they source, move and deliver goods.

1. Make sure you understand your true costs in this moment

At a time when high costs are squeezing profits, businesses have to focus on higher-margin products. But with ongoing economic volatility and price fluctuations, it’s not necessarily an easy task to keep track of exactly what it costs to put your products on the shelf and what the true level of profit is.

Businesses can all too easily stock – and invest marketing spend on – products that on closer analysis are generating little, if any, profit.

Understanding your true costs and true profits, day by day, is crucial. And while now may not be an easy time to make big investments, having the right enterprise resource planning software in place can help give retailers the information they need to make quick decisions about products and pricing.

2. Put certainty of supply at the heart of your supply chain

Consumer spending is dropping, and customers will be looking to make savings where they can. So retailers are going to need to reduce their range and focus on those core, often high-value products that will continue to sell.

But with that reduction in the number of items comes greater pressure to actually make sure the stock is on the shelves. With fewer stock items, anything missing is more likely to represent a missed sale, given the lack of alternatives. And if you let down customers on key items, they will start to look elsewhere.

So supply chain leaders’ number one priority must now be to ensure the predictability of supply to the business and the availability of goods to the customer.

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