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Half of UK firms decrease R&D as a result of Covid-19

45% of UK firms have decreased their research and development initiatives during the covid-19 pandemic, with even 18% of firms halting theirs altogether, according to new research from Durham University Business School.

However, 40% of firms have invested in their ICT, likely to be the result of firms having to facilitate working from home and remote engagement with customers, say the researchers.

Conducted by Richard Harris and John Moffat, Professors of Economics at Durham University Business School, the study seeks to understand the impact of the pandemic on UK firms’ research and development plans and whether or not companies had refocused their efforts in terms of investments.

The researchers interviewed over 4500 UK companies during the period between October and November 2020. Questions were centred around the firm size, industry, history of operations, before taking a more specific look at the companies’ previous research and development investment initiatives.

The results of the study suggest that the COVID-19 pandemic will have long-lasting negative effects on productivity and growth for firms, whilst increased ICT investment reflects the necessity for firms to become more digital.

Professor Richard Harris said: “The COVID-19 pandemic has had profound effects on the world economy, and in the UK specifically Bank of England figures suggest that it has led to the largest fall in GDP since 1709. While the short-run effects of the early stages of the pandemic are now well understood, less is known about its implications for growth in the medium to long-term.

“Our research findings clearly show that research and development spending dropped drastically during the covid-19 pandemic, which likely will have a negative impact on productivity and growth in the medium to longer term.”

The research reveals that the fall in intangibles investment is distributed unevenly across firms, with industry playing a major role in predicting the change in investment and internationally-oriented firms experiencing smaller declines in the early stages of the pandemic.

These research findings showcase the huge impact that covid-19 pandemic has had not only in the short-term, but in the long-term too for UK firms, with it likely that firms will have challenges related to productivity and growth in years to come due to the lack of R&D over the last year and a half.

Top supply chain priorities in light of climate crisis and COVID

Research from Reuters Events Supply Chain in partnership with Blue Yonder has revealed the priority strategies and investments for supply chain execution and risk management within transportation and warehousing.

Following a year of intense changes in the logistics industry, The State of Supply Chain Execution Report 2021 analysed the anonymous responses of supply chain professionals and found that the COVID-19 pandemic, customer centricity, rising e-commerce complexity and costs, need for Direct-to-Consumer (D2C), and the risk of financial peril are propelling retailers, manufacturers and logistics service providers (LSPs) to digitally transform.  

E-commerce and D2C Volumes Skyrocket  

E-commerce shows no signs of slowing down. Companies looking to capitalize on the omni-channel opportunities created by increased online-order volume over the last 18 months are prioritizing more agile delivery and fulfillment models, like D2C: 

·         Retailers’/manufacturers’ online sales increased more than 120% over the past year. LSPs have seen e-commerce volumes explode, reporting a 200% increase compared to 2019-2020.   

“As the economy transitions to a post-pandemic environment, retailers, manufacturers and LSPs are transforming their transportation and broader supply chain operations to address their most pressing supply chain challenges,” said Raj Patel, senior director, 3PL Industry Strategy, Blue Yonder. “In the long term, investment in execution systems like Transportation Management Systems (TMS) and Warehouse Management Systems (WMS), as well as end-to-end visibility, automation, and cloud strategies will help them – and their customers – build more sustainable, resilient and agile organizations for the future.” 

Pandemic Prompts Re-evaluation of Supply Chain Risk Management 

From constraints on raw materials, to labor shortages, to growing cybersecurity threats on distributed networks, pandemic-related challenges have shifted supply chain risk management priorities: 

·         Respondents are hesitant to pursue near/onshoring plans, with only 29% of retailers/manufacturers making an investment. 

·         63% of retailers/manufacturers stated that dual-sourcing was a favored strategy for risk management moving forward. Constraints on the availability of raw materials caused supply side disruptions, even for those with distributed manufacturing facilities. 

·         Environmental concerns are also being considered when planning for supply chain risks. Over half (53%) of retailers/manufacturers and half (50%) of LSPs plan to invest in sustainability as a strategy for risk management. 

Companies Prioritise Digital-First Practices and Technology Investments  

With the growth of e-commerce, investment in modern supply chain technologies and new approaches have become essential for businesses to keep pace with shifting trends and customer expectations. The report found that there are various factors driving investment in supply chain technologies and digital-first practices: 

·         LSPs cited the pressure to reduce supply chain costs (58%) while also improving service levels for their retailer customers (48%) and dealing with labor shortages (30%). 

In the current supply chain environment, companies are moving away from legacy systems and prioritizing technologies that enable visibility for customers and their operations, automate processes and support enterprise agility.   

·         63% of retailers/manufacturers and 60% of LSPs agreed that end-to-end visibility is currently yielding the highest ROI in their supply chain execution process. 

·         Roughly half (48%) of retailers/manufacturers and more than half (57%) of LSPs have a robust cloud strategy in place, helping to create high levels of infrastructure agility that on-premise, legacy technology systems can’t achieve. 

Richard Ebach, CIO Americas, DB Schenker, said: “In the current supply chain environment, companies need good visibility into their transportation/ freight and partners that help them operate in a very agile, resilient manner. Knowing this, we’ve been investing in technology that provides good visibility for customers and their operations; tools that support enterprise agility; supply chain automation solutions; and zero-trust IT security tools. Combined, these technology solutions help our customers address their most pressing supply chain challenges while also helping them build stronger, more resilient organisations for the future.”

Easing of lockdown and effect on the supply chain

With Step 4 of the Government’s ‘Roadmap out of Lockdown’ delayed beyond June 21st, Oliver Hall, Managing Director at allmanhall, the independently owned food procurement experts, comments on its effect on the supply chain and the foodservice sector…

After a challenging fifteen months, the food service sector is trying to remobilise and welcome back customers but is facing added complications from a supply chain under extreme pressure from multiple lockdowns. The challenges faced by suppliers are nationwide, and are a culmination of factors including the re-opening of hospitality creating an unprecedented surge in demand, recent good weather resulting in further heightened demand, and an extreme shortage of drivers UK-wide.

With these unexpected pressures on the supply chain, one unavoidable outcome is changes to delivery days and delivery frequency being enacted by suppliers. The national shortage of HGV drivers has had a huge impact on the whole supply chain with foodservice suppliers experiencing a knock-on effect on both in-bound and out-bound deliveries. Suggestions and proposals are being made to the Government, in an attempt to alleviate the driver shortages, even including military intervention.

One way for foodservice providers to reduce the risk of inconvenience, is to place orders with suppliers  with as much advanced notice as possible,  a minimum of day 1 for day 3 ordering wherever feasible. These longer lead times will reduce disappointment and help ensure orders are booked before any temporary cut offs are imposed by suppliers. Some suppliers are also making other adjustments, such as restricting the availability of a significant number of ambient and non-food split product lines. This will help to speed up picking times and help vehicle dispatch times, thus helping to meet delivery expectations.

Forward planning and communication are crucial when it comes to placing orders or liaising with suppliers over stock shortages and alternatives. However, all sectors of the hospitality industry have had to adapt “on the job” to deal with major changes in the way they operate. Staff shortages and training deficits is a worrying outcome of the lockdown, and together with depleted financial reserves, and the intensity of new operational requirements (increased cleaning, sanitisation, supervision of customers to ensure they are leaving their contact details, logging in using track and trace), may impact back-office tasks. 

By allocating these tasks to team members and ensuring they have the capacity to do the work along with other operational requirements, pressures can be eased.  It’s important to remember that all suppliers are struggling and many are working together to address shortages and meet customer’s demands. Another alternative is to outsource to a procurement provider, who will have a case and resolution handling service, and a helpdesk who can contact suppliers on your behalf.

Another result of the pandemic has been a rise in prices of foodstuffs. allmanhall operates analysis and insight updates throughout the year on food pricing, and 2021 is likely to be a volatile year which  is now being experienced through the supply chain. Many input prices and raw material costs are at the highest that they have been during the last 4 years, with a resulting rise in food prices.

A procurement expert will monitor these price fluctuations, negotiating and mitigating price increases as much as possible.

Digitalisation in the supply chain – Better solutions made easier

By Kevin Rogers, Managing Director, Elanders UK

The COVID pandemic has resulted in much being written about the importance of a robust supply chain and how it is managed and controlled. In that context, what has the past 18 months taught us as consumers and as managers in the supply chain? Amongst many:

  • The need for greater supply chain resilience and the better use of data / technology.
  • The need for agility in both the design and execution of a supply chain solution.
  • Cost is important – but – is it all that is important?
  • Greater clarity on product segregation that we now buy – critical to have vs like to have. 

Progress and evolution of supply chain solutions will always keep happening – what worked yesterday will probably have to change and adapt to meet tomorrow’s needs. Keeping businesses fresh and on point, utilising the latest technology and data to support this constant evolution is now the norm. For businesses – this constant progression and development of solutions is a fundamental strategic requirement to be successful in the future.

As consumers, we have seen a rapid change in both what we buy, but more importantly how we buy the products and items we need. The prolific rise in the e-commerce and omni-channel retail use is also changing the business landscape. For retailers, who historically managed the direct customer interface and engagement in a physical shop, they now must pivot their customer experience to more of the on-line solution – where the actual physical interface and engagement is now via the supply chain solution and delivery.

E-commerce solutions though have their problems. As consumers, we become increasingly more defined on what items we now want and buy on-line, and it is easy to get frustrated and “dissatisfied” with the buying experience because of the lack of personalisation, engagement and communication that may happen during a sale. Where this is really visible though is in how returns are managed and processed from consumer back to the retailer. 

This is where the Elanders Supply Chain return product integrated platform can support. Using technology and data to make better informed decisions that benefit both the consumer and the retailer. 

  • For the consumer – how they feel the returns process is conducted and how they feel the interaction back with the retailer values them.
  • For the retailer – how it allows both a bespoke classification of the individual consumer and what return rules apply per individual and how each specific SKU is assessed for its e-commerce profitability and contribution.

Historically – many organisations had one business solution for all return’s management and interaction with the consumer. Today, there is now a single returns management platform and operational solution that is agile in its structure, adaptable in its scale and customisable in its interaction with individual consumer. The Elanders platform integrates the customer returns experience with the retailing profitability needs – data driven technology that makes a better solution for all and helps make life that little bit easier.

Elanders Supply Chain: Customer returns solutions – Reimagined. 

For further info please visit www.elanders.co.uk or contact addingvalue@elanders.com.

Supply Chains 2023 – A dramatic focus shift in business requirement

By Elanders

As global economies start to extract themselves out from the grip of COVID restrictions, with the need for businesses to continuously pivot and adapt to short term blockages and lockdowns, the role of the supply chain has rapidly moved up the Board level agendas.

The short-term impacts like rising container shipping costs on core routes; the Suez Canal blockage; compounded by more longer-term impacts like the rise in e-commerce and Trade relationship changes (like Brexit) – it looks like the future will be based on a platform of continuous change and challenge for many organisations.

Supply chains must adapt and adapt quickly. The relationship between customers, their supply chain and any partners used in that supply chain will no doubt change as the post COVID transition period continues.

So, what can all this mean for a supply chain solution? One word and solution covers the many possible outcomes, and that word is “agility”. Where in the past, a customer may have tried to functionally optimise specific individual supply chain elements in isolation, going forwards he will no doubt need to synchronise the complete supply chain process and solution.

Organisations that provide just a single service or capability may well struggle – ones that can offer customers multiple solution capabilities will be the ones that drive the agendas and growth. The rise in environmental and sustainability of a supply chain has also started to impact corporate decision making – where in the past supply chain solutions were maybe chosen on cost and capability, going forwards it could be about sustainability / environment and customer service solutions that drive the agendas.

Agility in design and agility in supply chain execution will require new relationships between supply chain parties – one based on true integration capability, flexibility in business relationship and a wide geographical coverage. Welcome to the Integrated agile supply chain partner.

The Elanders Group is already well on the way to supporting its customers with the integrated offer.  Today, we are already offering the integrated solution capability:

  • Designing environmentally friendly e-commerce packaging for products that are then managed through agile e-commerce solution hubs, using the latest technology. 
  • When the product has reached its end-of-life stage, Elanders offers a value recovery solution that feeds into the circular economy strategic objective.
  • Sustainable solutions; customer service raised via integrated supply chain visibility; depth in solution execution with breadth in solution capability; responsive without a large corporate noose; business focused with the agile financial backing.

An agile complete supply chain provider that has an integrated customer focused offer today. Elanders Group – meeting the supply chain business needs of 2023 – today.

For further info please visit Elanders website www.elanders.co.uk or contact us on addingvalue@elanders.com

Post Brexit Supply Chain execution – managing disruption, testing resilience

By Elanders

The supply chain operational challenges caused by Brexit, compounded with the COVID-19 pandemic, have really tested the effectiveness and resilience of some current supply chain solutions. Managing the extra customs documentation; working out now what UK operational supply chain solutions are best for an organisation, the cost of getting things wrong – these and more challenges are raising the importance today of effective and agile supply chain operations.

Many market surveys in recent weeks constantly seem to report back that supply chain solutions and effectiveness post Brexit have the strong possibility of impacting overall business performance. For some organisations post Brexit, maintaining the customer market promise and service support when things go wrong for some has been a massive challenge. What was thought to be an effective supply chain solution pre-Brexit (and COVID-19) – for some, has rapidly been exposed. Global economies and extended supply chains are now seriously being challenged and recreated:

  • Brexit itself has been a one-off challenge for organisations to understand, navigate and maintain business continuity in the short term. 
  • Brexit for many has now identified that today’s supply chain solution needs a complete rethink, with a revised strategy now required that has an agile operational solution behind it. 
  • Brexit may be a unique challenge to manage today – but supply chain change and disruption will be a constant part of every business’s focus from now on. 

Elanders UK Supply Chain solutions provide businesses with an alternative. Global coverage but delivered locally to the specific customer needs. Managing the post Brexit challenges on documentation, visibility and movements; working out for your business what the new storage strategy and the associated operational solution should now be all requires a combination of executional capability, practical experience and business partnership. 

Our bonded warehouse solutions in mainland Europe and in the UK with dedicated customs experts; our end-to-end global supply chain execution solutions – these all combine to support many leading global organisations create and maintain their post-Brexit supply chain operational solution for today’s needs – but we are also agile and innovative to meet tomorrow’s challenges. 

To find out more please visit www.elanders.co.uk/brexit-services/ or contact us at addingvalue@elanders.com.

Early preparation ‘remains key’ to avoid Brexit & COVID supply chain disruption

43% of businesses have been impacted negatively by Brexit in 2021 – but 19% of businesses are thriving in a post-Brexit world.

That’s one of the conclusions of Descartes Systems Group’s latest Brexit research report: Beyond Brexit: The Realities of Brexit for UK-EU Cross Border Trade.

Following its 2020 research on Brexit preparedness of UK companies, this latest report analyses how business has been affected by both Brexit and the COVID-19 pandemic and the level of uncertainty around the future.

Undertaken by SAPIO Research during March 2021, the interviews with supply chain managers assessed the specific elements of EU trade that have been affected, the resulting disruption and the expected performance of supply chains in 2021.

Key findings include:

  • Mixed performance: 43% of businesses have been impacted negatively by Brexit in 2021 – but 19% of businesses are thriving in a post-Brexit world.
  • Disruption reality: 90% of businesses have faced disruption since the end of the Brexit transition period.
  • Economic impact of Brexit: 53% expect their 2021 turnover to be lower than if the UK had remained in the EU – and the average reduction is 29%.
  • Pandemic impact: 76% had their Brexit response disrupted by COVID-19.
  • Early preparation has proven key to success, with those businesses that started their customs filing preparations in 2019 (24%) and early 2020 (33%) thriving most.

As predicted in Descartes’ 2020 research, Brexit has had a negative impact on both business and the economy. Of the companies surveyed, 90% have experienced disruption in their ability to trade in and out of the EU in 2021 – with 20% experiencing significant disruption since the transition period ended. Despite the high level of concern revealed in the 2020 survey, 40% of companies have actually experienced worse-than-expected EU supply chain performance, according to Descartes’ latest report. Additional key findings include:  

  • 80% of businesses reported disruption to their cross-border trade with the EU or Northern Ireland (NI), rising to 93% for medium and large enterprises 
  • 40% have experienced delays in their supply chains 
  • 37% have experienced increased cost of imports
  • 36% have had to manage customs declarations 

The combination of COVID-19 on top of Brexit created unprecedented challenges for businesses of every size, in every market. Confidence has been affected. Three quarters (76%) of companies confirm that COVID-19 disrupted their Brexit response. 

However, a significant finding is that almost one fifth (19%) are actually thriving in a post-Brexit economy, with 35% of electronics, computer and telecommunications companies enjoying a positive outcome. Preparing early proved essential, allowing these companies to take a holistic approach by working closely with experts who understand the complexities of global trade and by putting solutions in place for customs declarations.

The research findings underline that with the next phase of Brexit changes – an end to deferred import declarations from July 2021, and safety and security filings required from 1st January 2022 — there are lessons to learn about the value of preparation and acting ahead of deadlines. When it comes to successful global trade, planning is not just essential for compliance – it makes a tangible difference to successful business operations. 

“Brexit has thrown many businesses into a spin, but the companies that prioritised Brexit preparation are thriving and provide a best practice blueprint that the rest of the market can now follow,” said Pol Sweeney, VP Sales and Business Manager UK, Descartes. “Our research highlights that with the changes due from July through to January 2022, early preparation is, once again, crucial to avoiding expensive disruption.”

For the full research findings, see Descartes’ Brexit Realities Report and for additional Brexit resources visit Descartes’ Brexit Resource Centre.

WEBINAR REWIND: How Haribo is ensuring high performance in a world disrupted by Covid-19

Don’t worry if you missed last week’s excellent webinar from FuturMaster and Haribo – You can now watch the entire session again online!

In order to meet ambitious growth challenges, Haribo France is leading a major supply chain transformation which focuses on forecasting and planning management processes, using FuturMaster’s solutions.

In the context of the global pandemic, Elsa CROS, S&OP Manager at Haribo France, and Baptiste Saissac, Demand Manager at Haribo France, detail how the company has navigated extreme volatility without compromising on their forecast reliability, service rate, or obsolescence.

You can click here or simply scroll down to watch the full session:

How to build resilience into Supply Chain 4.0 strategies

By Ian Terblanche (pictured), Strategic Sales & Channel Director at Sigfox

 
With the rise in supply chain disruptions during COVID-19, companies may already have an eye on streamlining and improving supply chains but they are also under immense pressure to manage supply chain disruption.

When examining the challenges faced by supply chains today, companies need to build resilience by digitising their infrastructure?  But how can they digitise and track their supply chain assets end to end when they are outside the enterprise boundary for most of their lifetime, often crossing country borders; how do they digitise an asset that has no access to power for months or years; and how can companies digest and make sense of multiple data sources from their own enterprise and external providers? 

Disruption and digitalisation

Today, disruption is the new normal, and it is affecting supply chains a lot more frequently. Examples include earthquakes, tsunamis, sanctions, trade wars, COVID-19 and changing consumer demand. The magnitude and the frequency of this disruption has been escalating, and that is partly due to the globalisation of supply chains, and new risks presented by geopolitical and climate change issues.

The lesson is that disruption is here to stay, but businesses recognising, and taking advantage of, the changing demands that disruptions herald are primed to succeed. While manufacturers have suffered from supply chain disruption, online retailers like Amazon have profited and the unprecedented surge in businesses shifting online to continue sales means that many had to adapt their business processes to ensure their own survival. There is also a blurring of the line between retailer, shipper and pooler, which is itself creating new market opportunities.

The importance of prioritizing the supply chain

Resilient and flexible supply chain can be instrumental if not vital to recovery so now, more than ever before, supply chains are on boardroom agendas due to their impact on global businesses and CSR. Traditional prioritises like keeping costs down are becoming less important as companies actively consider how they can mitigate any loss or other supply chain risks. The focus of investment is on risk mitigation and increased resilience for rapid recovery and profit restoration, so COVID-19 has been the catalyst to more businesses understanding the magnitude and importance of investing in a supply chain. While costs may increase, this is outweighed by the benefits of fleet optimisation and the increased chance of business survival.

With supply chain modelling and optimizations changing, the time to make the investments in supply chain resilience and flexibility is now and, during COVID-19, a number of business cases, including Austrian Post from our own client base, have been approved. Industry reports have also forecast significant changes ahead in the supply chain sector with predictions of the global connected logistics market expected to grow during 2017-2023 at a CAGR of approximately 22% with supply chain analytics exceeding US$ 10 billion by 2027.

Resilient supply chains not only recover much faster from destruction, but when done correctly, with the right level of investment, a robust plan and systems in place, supply chains become a source of competitive advantage and open up new and interesting marketplaces or valuable segments. Resilient supply chains typically reduce risk exposure but only if they incorporate these five common characteristics: agility, digitization, connectivity, insight and rapid recovery capabilities.

Agility

A flexible ecosystem of suppliers and partners where materials can be swapped, and a dual or triple sourcing strategy is adopted, makes a supply chain agile. But so too do companies creating smaller more nimble manufacturing sites that are more able to adapt to challenges and change, rather than relying on traditional manufacturing sources, like China.

Visibility

It is often the case that when a shipment has left the last checkpoint, for example a sea port, organisations do not have visibility of that shipment’s exact location until the next checkpoint, which is often the next port. However, the Internet of Things (IoT) enables all elements of the logistics process from packaging and loading to distribution and storage to be tracked. This makes IoT solutions the ideal tool for supply chain visibility. Attaching IoT sensors to valuable components that need to be tracked gives all interested parties a holistic view of the supplier network so they can obtain accurate and ‘live’ information about shipment location, route and arrival time, amongst other things, as and when they need it. 

Digitization

Digital transformation and Industry 4.0 connectivity are creating agile operations more capable of responding to and recovering from disruption. Aside from warehouses and production lines being fully automated, autonomous vehicles for short distance deliveries are providing supply chain flexibility. When combined with other technologies, based on digitisation & IoT, this helps manage market volatility, especially in industries that track assets. 

Adoption of cloud-based supply chain applications is critical, with plug and play interfaces for connectivity, as regardless of the manufacturer, if apps and devices are interoperable, they can be used widely, and drive more valuable and deeper data. 

Everything from raw materials and finished products to the vehicles that transport products can be tracked digitally to provide complete supply chain visibility of product and asset movement. This then helps businesses identify and respond to disruption quicker, while adhering to compliance needs. 

Visibility is crucial. However, with digitization comes cyber risk too, so security needs to be firmly factored into a resilient supply chain strategy. The data derived from full digitisation has deep tactical and strategic value so defining a clear evaluation model is critical.   

Connectivity

By implementing IoT-connected devices across the supply chain, businesses gain a vast array of data that not only fulfills regulatory requirements, but also offers extremely granular insights into the efficiency and real time operation of their networks. From a full overview of routes travelled, warehouse delays and network gaps to ensuring vehicles deliver best performance limiting downtime and repairs, while ensuring driver safety is of the highest calibre, the opportunities are almost endless. 

Some businesses operate a “control tower” model to connect and manage their digitized supply chains. This set up resembles an airport control tower where they receive continuous updates about raw and finished material, orders, and production levels at manufacturing sites. This model provides complete local visibility, even of global supply chains, resulting in faster reaction times when problems occur, but the critical question is do you own this control tower or build trust in a third party who can manage it for you? 

Insight

Data analytics provide insights into the supply chain, allowing teams to build forecasting, plan scenarios and develop early warning systems, which is key. As the pandemic evolved, the use of continuous scenario simulation has been employed to ensure that supply chains were all clear on what the required next steps would be, no matter what the disruption situation was. 

Rapid recovery

The final characteristic of a resilient supply chain is the ability to recover rapidly. For success here, recognise that it is down to the people involved. Empowering teams to problem solve whether they are at home, in the office or warehouse, means that decision making is decentralised and teams on the ground can get on with deciding how to deal with a situation while feeding data back into a central command. This helps a business to understand and manage crises quickly.

The use of simple and accessible IoT solutions to digitise their infrastructure means that supply chain will continue to flourish, whatever disruptions they face. 

Consumer brands and retail preparing to overhaul supply chains to counter future disruption

66% of organizations say their supply chain strategy will change significantly in the next three years, as they adapt to the pandemic and embed resiliency into their operations.

According to a report from the Capgemini Research Institute examining the impact of the past year’s disruption on consumer products and retail (CP&R) supply chains, just 23% of consumer product organisations and 28% of retailers believe that their supply chain is agile enough to support evolving business needs.

COVID-19 was a wakeup call for CP&R companies: 85% of consumer products organizations and 88% of retailers say they faced disruption, while 63% of consumer products organizations and 71% of retailers say it took at least three months for their supply chains to recover from the disruptions.

As a result, the report says organisations are realigning their strategies to focus on three critical areas:-

The move to demand sensing

Over two-thirds of organizations (68%) say they faced difficulties in demand planning due to a lack of accurate and up-to-date information on fluctuating customer demand during the pandemic. To improve forecasting, 66% of organizations plan to segment supply chains according to demand patterns, product value and regional dimensions post pandemic, while 54% say they will use analytics/AI-machine learning for demand forecasting to cope with the impact of COVID-19. 

Visibility becomes critical – 75% of consumer product companies faced difficulties when they needed to quickly increase or decrease production capacity due to COVID-19. To create the agility to respond to sudden shifts in demand, manufacturers can identify opportunities to improve visibility, cites the report. This can help deal with the challenge of strategic, tactical, and real-time operational decisions.

Organisations understand the significance of digital investments in improving visibility. 58% of retailers and 61% of consumer product organisations are planning to increase investments in digitisation of supply chains. In particular, 47% of organisations are planning to invest in automation, 42% are planning to invest in robotics and 42% in artificial intelligence. 64% and 63% of organizations are also planning to make extensive use of artificial intelligence and machine learning across transportation and pricing optimization respectively. 

From globalisation to localisation – To prevent future disruption, organisations are recognising the importance of localisation and are actively investing. CP&R organisations are shifting from globalisation to localisation of the supplier and manufacturing base. 72% of consumer product organisations and 58% of retailers say they are actively investing in regionalising or localising their manufacturing base or nearshoring production.

65% of CP&R companies are also investing in regionalising and localising their supplier base, rising to 83% in the UK and 73% in India. In line with these strategies, global suppliers will represent just 25% of retailers’ capacity in three years’ time, down from 36% today. In consumer products, global manufacturers will represent just 17%, down from 26% today.

In line with the move to localisation, dark stores, which have independent operations and are closer to the delivery locations, are becoming an increasingly useful alternative for fulfilling online orders as physical footfall decreases.

Earlier Capgemini research showed that if deliveries from dark stores increase by 50%, profit margins could grow by 7% as a result of lower delivery costs and higher delivery throughput compared to stores (while also not affecting store operations).

“CPGs and retailers recognize the great risk of future disruption, and they have an opportunity to be in front of creating agility and resilience to adapt their supply chain networks,” said Lindsey Mazza, Global Retail Supply Chain Leader at Capgemini. “The pandemic was an accelerated learning event. Organizations realize that new technologies can enable much-needed agility – from improving demand predictions, to boosting fulfilment to quicker, cost-effective last mile deliveries. By investing now, organizations put themselves in good stead to safely support consumers in their time of need – whenever the next industry disruption may be.”