5 Challenges & Strategies to Navigate the Global Retail Supply Chain
Article
International retail supply chain challenges in apparel shifts as frequently as on a monthly basis. Below, are five of the most pressing challenges for retail supply chains to be aware of right now.
International retail supply chain challenges in apparel shifts as frequently as on a monthly basis. Below, are five of the most pressing challenges for retail supply chains to be aware of right now.
Changing consumer demand
The advent of online communication has radically changed the relationships between consumers, brands, manufacturers, and products. Consumers have more ways than ever to discuss their product and service experiences with friends, other consumers, and brands themselves. As a result, the expectation and demand for high-quality, sustainable products are increasing.
For many consumers, environmental and ethical practices have become as important as price. A survey from McKinsey & Co. found 66% of all respondents and 75% of millennial respondents say that they consider sustainability when making a purchase. A large proportion of consumers are now deciding based on concerns about climate change, pollution, workplace safety, and other related issues. While many brands are rising to meet the needs of these consumers, other brands are facing increased scrutiny from consumers, shareholders, and non-profits.
Increasing distribution complexity
As the online marketplace has developed, more channels to market have become available to retailers. The same product may be sold through a company’s own brick and mortar stores, on its website, via other physical retail partners, or by any number of third-party online retailers. Consumers also have a wide-range of advertising platforms and can target them 24/7 with AI-generated suggestions for products they might like.
Depending on the product, any or all of these retail methods may provide an effective route to consumers. Many consumers still enjoy the in-store retail shopping experience, while others expect to be able to order products online directly and receive them within a few days. The majority of consumers fall into both camps.
Managing supply chain logistics in a way that maximizes the potential of each of these opportunities, while minimizing risk, is a constant balancing act. Retail supply chains must consider extensive planning, innovative strategies, and flexibility in the face of ever-changing global distribution and production.
Climate-related risks
Climate change affects international supply chains and retail logistics in a variety of ways. The increasingly irregular weather patterns and frequency of extreme weather events are already impacting strategic factors, such as transportation, employee health and safety, and seasonal demand.
These risks are an international concern, and the importance of corporate involvement in minimizing and mitigating the effects of climate change figures significantly into the global agenda. As a result, many investors, financial reporting standards, and environmental reporting standards integrate climate-related risks and mitigation into their assessments of a company’s performance. Environmental, Social and Governance (ESG) practices have also become increasingly prevalant in helping stakeholders screen investments based on corporate policies and encourage companies to act responsibly. An international supply chain that has mitigation measures and climate resiliency built into its operations is more likely to reduce its risk—and enhance its reputation.
International concerns
By their nature, international supply chains are vulnerable to changes in international relations. From negotiation breakdowns to new trade deals, these changes can be drastic and sudden, and can generate risk factors that are difficult to predict.
The recent escalation of trade relations between China and the United States is one of the most striking current examples of how international relations can affect international supply chains. The recent announcement of tariff policy changes sparked debate across the retail sector, leading to speculation, risk reassessment, and massive shifts in international supply chains. The Russia-Ukraine conflict has also resulted in a significant change in global relationships and business structures, not to mention the energy price shock felt across Europe.
In the coming years, rapid adaptability to these kinds of sweeping changes will be a key part of retail logistics and international supply chain management and strategy.
Relationship management
Managing relationships with suppliers can be a very time-intensive process for brands with international supply chains. Working with every supplier in a chain to develop performance standards, to report progress against those standards, and to identify opportunities for new success can seem like a daunting task. However, allocating the required resources to manage these relationships effectively will lead to significantly improved efficiencies and will build greater consumer trust in the long term.
Making use of external consultant services—to provide expert personnel and specialized software, for example—can be a powerful way to streamline the complications of this process. For example, CleanChain provides an easy way for brands to track, manage and report environmental data across facilities and supply chains, building transparency and trust with their customers and stakeholders.
Get in touch: cleanchaininfo@adec-innovations.com
