The Friday Report: January 28th, 2022

Pandemic Re-Engineering of Retail Supply Chain

Prior to the pandemic, retailers tended to concentrate their efforts on bolstering profitability, throughput, and overall efficiency within operations but now priorities have shifted. Agility and resilience are now considered to be the most important characteristics of today’s retail supply chains.

The pandemic changed everything. For years retailers seemed to have a relatively accurate vision of what customers wanted and needed, but COVID changed the role of brick-and-mortar stores and fulfillment operations. The retail supply chain was completely upended. Transportation was one of the most crucial elements that needed to be reorganized and dramatically changed.

Here are some of the ways that retailers changed:

• Gained a new perspective on peak seasons and have reduced their reliance on focus on one season or event
• Began to generate alternative plans well in advance to aid in reducing COVID-driven supply chain shortages
• Expanded innovative thinking around new product launches
• Shifted to a major concentration on inventory management
• Begun moving away from just-in-time inventory
• Implemented use of physical stores and hub-and-spoke model to create smaller, regional distribution centers, eliminating the need to lease more space or build more warehouses

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Microsoft and FedEx Team Up on Technology to Improve Customers’ Shipping

Partnerships has never been more popular. Microsoft and FedEx are working together to offer cross-platform “logistics as a service” solutions using FedEx shipping data on a Microsoft platform. The result is an improvement in order fulfillment and shipping for customers.

The multi-year partnership leverages data, artificial intelligence, and Microsoft Dynamics 365 Intelligent Order Management with shippers’ existing e-commerce platforms to optimize fulfillment and provide real-time delivery updates to customers.

FedEx has expanded, adding more automated facilities to its network as part of its effort to handle the demand originally forecast for 2025. With the pandemic, there has been a significant increase in volume two to three years earlier than projected.

86% of the growth in the U.S. domestic parcel market is anticipated to be due to e-commerce. The new Microsoft-FedEx service is forecast to be available to American customers in the second half of 2022.

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The $100 Million Negative Impact of Legacy Supply Chain Infrastructure on Bed Bath & Beyond

Relying on a legacy supply chain infrastructure that provided diminished visibility, constrained vendors, and limited inventory flow to stores and distribution centers caused Bed Bath & Beyond to be unable to meet the demands of its customers. The inability to replenish inventory effectively especially impacted the retailer’s ability to keep its top 200 items on shelves.

Struggling with the timing of receiving inventory, the big-box retailer has turned to third-party logistics providers, increasing capacity, and subsequently decreasing warehouse holds. Bed Bath & Beyond is also adding digital capabilities designed to improve inventory visibility and automatically shift sourcing based upon availability.

The company is investing $250 million in its supply chain to decrease replenishment time from 35 days to 10 days. In addition, Bed Bath & Beyond is opening four regional distribution centers to reduce its reliance on cross docks. Technology is another essential facet of its investment and will include an Oracle ERP system for real-time financial and operational data.

For more information, please continue reading here.