Our global supply chains are experiencing an unprecedented stress test due to being “badly tangled,” in the words of one writer. A rare combination of “once in a lifetime” events — the pandemic, natural disasters, shipping container shortages, materials shortages, increased freight rates, and rising energy prices — are responsible for the empty shelves and shipping delays that are impacting product accessibility
If you’re reading this article, you’re likely experiencing these challenges first-hand both professionally and in your personal life — and evaluating what the impact will be to your executive agenda. To further complicate matters, these trends are taking place against the backdrop of the IPCC Sixth Assessment Report, which forecasts more disruptions due to frequent and extreme weather events. Retail executives must get ahead of the inevitable.
The team at Maven Wave is thinking through cloud solutions that can enable more sustainable business practices. Over the next several weeks, we’ll be publishing a blog series for executives and technology leaders seeking to align sustainability, technology, and profitability; leaders who do not simply wish to maintain the status quo but evolve their organizations into an inevitable future. In this post, we identify and discuss best practices for resilience.
1. Treating Operational Transparency and Forecasting Precision as Key Building Blocks
Hasbro was one of the first companies to share the financial impact of supply chain delays in its earnings reports. The company disclosed that $100 million in orders went unfilled during Q3 2021, with operating profits falling 7% year over year due to shipping constraints and freight costs.
The company quickly rebounded with orders being quickly fulfilled at the beginning of Q4. Overall, the company is pacing for annual revenues to rise between 13% and 16%.
The driving force behind Hasbro’s rebound is its organizational agility. In order to counteract unfilled orders, the company rapidly expanded its shipping capacity and shifted fulfillment to rely more heavily on air freight.
Despite the profit-driven narrative in Hasbro’s earnings call, there’s more to the story than financial performance. The question to consider is how Hasbro made such a transformation in such a short amount of time.
The reality is that behind the scenes, Hasbro’s just-in-time recovery was the product of sound, methodical data modeling, and coordination action on behalf of many hard-working people.
This capability requires a technical foundation for predictive analytics, as the ability to course-correct in record time can help weather unexpected, uncontrollable challenges. Data enables transparent and swift decision-making at all organizational levels ranging from executive leaders creating forecasts to administrative professionals coordinating shipments.
Thoughtful data infrastructure facilitates multi-directional communication between manufacturers, shipping providers, and retailers at a systems level.
2. Seeing Sustainable Profits as a Crucial Focal Point For Innovation
Gartner recently published a tactical plan for supply chain sustainability, targeted towards retail executives. According to the report, there are three main actions to help supply chains shift from being the cause of disruption to helping solve sustainability issues.
Step one is for retailers to pivot to sustainable profit models. The idea is to look beyond cycles of short-termism to allow a company to conduct business long into the future.
Sustainable profits include the following three components, according to Gartner:
- Resilient profit: Supply chains account for rising rates of global disruptions.
- Durable profit: Supply chains adapt to new realities to deliver long-term profit.
- Holistic profit: Supply chains account for externalities that impact the environment.
Sustainable profits require cohesion between stakeholder groups that include investors, customers, suppliers, and employees. One approach is to accelerate the transition to digital decarbonization, particularly with respect to services delivered to end-customers.
3. Recognizing Humanity as an Important Strategic Focal Point
During the “great digital acceleration” boom of 2020, revenues and online shopping demand reached record-highs, but there were human consequences. Many supply chain workers lacked sick leave and navigated additional responsibility of homeschooling their children. The resulting labor shortage and resignation wave are symptoms of human exhaustion and frustration.
One way executives may seek to counteract this challenge is through artificial intelligence (AI).
“With the supply-chain disruptions of the past two years showing no signs of easing anytime soon, businesses are turning to a new generation of AI-powered simulations called digital twins to help them get goods and services to customers on time,” writes Will Douglas Heaven for MIT Technology Review. “These tools not only predict disruptions down the line but suggest what to do about it.”
However, it’s important to remember that AI is only as helpful as the people operating it. After an AI algorithm recommends what to do about a problem, how does that information reach stakeholders in a way they can act upon?
One example to consider is AAA: The company wanted to move faster and innovate to keep drivers safer in light of rising highway collisions, so they implemented Google Workspace across the organization to help the front line access documents faster (and send crucial documents to members faster as a result).
In addition, the company implemented Google Cloud to ensure data is accessible rather than remaining in silos. With Google Cloud, the company is able to gain more utility from their data in developing a customer-centric view.
With this foundation, AAA is able to use machine learning to predict where drivers are likely to break down or encounter emergencies. The company can also anticipate surges in call volume ahead of time — as well as renewals and upgrades.
AI can help relieve pressure on workers — and ensure organizations are meeting the needs of human wellbeing as a result.
Sustainability is a front-and-center focus for almost every retailer. And given the number of challenges that need solving, the world needs retail executives to step up as leaders.
Profit is still a priority, which is why the recommendations above inform strategies that are well-aligned with profit goals (with the potential to make corporate performance stronger), but it needn’t be at the detriment of human interest. Innovation and agility begin with a technical infrastructure that supports transparency, thoughtful decision-making, and humanity. After all, the biggest promise of AI has always been to free human creativity and potential. Now, it’s time to make it happen.
Maven Wave works with Agile Retailers with cloud-based solutions that enable them to operate in open, sustainable ways. Are you interested in discussing how your organization can collaborate with consumers, be open with what they value, and invest in the communities that support them? If so, contact us to schedule a time to meet with our experts.
*Chris Daniel was the lead author of a publication team that included Paige Krzysko (editor & lead strategist), Kylie McKee (editor & contributor), and Ritika Puri (writer).
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