3 ways retailers can quickly build supply chain resilience for the holiday surge
Supply chain resilience is essential for retailers year round, but especially during the holiday shopping season. Here are three best practices.
With global temperatures steadily increasing, sea levels rising, and extreme weather events now our new normal, sustainability has become a priority for consumers.
According to an IDC study, 46% of consumers believe that a retail brand’s sustainability record is an important deciding factor for whom they’ll do business with.
Even impulse buyers are being thoughtful about environmentally friendly business practices. Before ringing up a sporadic purchase, 29% of consumers check for product design and messaging that highlight a brand’s sustainability practices, the study found.
We know today’s retailers are locked in a heated competition for consumer dollars, so given the emphasis consumers are putting on retailers’ sustainability practices, it seems like a no-brainer for retail brands to step up their sustainability efforts, right?
As always, few business decisions are ever that simple. Implementing sustainability in retail industry isn’t easy, but there are steps retailers can take to overcome the hurdles and drive effective change.
Sustainability challenges for retail industry
Consumer demand and regulatory pressures are combining to push for greater sustainability in retail. There are more than 600 local and international standards brands are required to meet, all with strict timelines and penalties for non-compliance.
Adapting to new standards usually mandates an overhaul of existing processes, costing retailers significant time and effort. Retail brands also worry that adhering to so many regulations fosters a reactive approach to compliance instead of a proactive one. There’s also often a lack of understanding among staff regarding sustainability regulations and their purpose, which requires ongoing employee training and support.
Here are three other top issues retailers face when implementing more sustainable business practices:
1. Balancing sustainability and profitability
The costs of being more sustainable can add up quickly, and retailers often worry if these costs will hurt their profitability. The integration of sophisticated technology and systems, as well as training employees to manage these systems, is necessary but costly.
For example, in an industry like fashion, there’s a growing expectation for brands to provide ethically sourced and sustainable products while also keeping up with the latest trends. Retailers are faced with having to choose between what’s best for the environment or boosting revenue.
2. Waste management
Perishable food goods, fast fashion trends, excessive returns, and inaccurate demand forecasting are among the many pain points for retailers. The food industry in particular struggles to balance the ratio of freshly prepared foods to food waste, with an emphasis on the former often increasing the latter. In fashion, unpredictable consumer changes can lead to excess inventory accumulation and unsold products, which then creates more waste.
3. Retail industry supply chain complexity
Retail supply chains are often extremely complex due to globalization, diverse supplier networks, and fluctuating consumer demands. An ethical and sustainable supply chain requires collaboration, but the complexity can inhibit supply chain visibility. making it difficult to align employees, stakeholders, suppliers, or partners at every stage. An IDC survey found that only 22% of retailers can report Scope 3 requirements for their supply chains.
3 strategies for sustainability in retail industry
Solving for each of these challenges retailers face requires a concerted effort across technology, compliance, employee engagement, and consumer communication. Here are three key steps retailers can take to implement, measure, and improve sustainability across their business operations.
1. Supply chain visibility
Increased visibility leads to improved resource allocation, minimizing waste and promoting efficient use of materials and energy. Transparency in supply chain operations also helps to build consumer confidence, as customers increasingly demand ethically produced products.
Cloud-based ERP systems can help retailers by enhancing visibility across supply chains for better efficiency and sustainability. Canada’s largest fashion and lifestyle retailer, Holt Renfrew, uses SAP technology to improve communication with partners and stakeholders in its supply chain for a better understanding of what goes into the products they carry.
2. Ability to measure progress towards sustainability goals
Advanced analytics help brands measure progress towards sustainability goals, including carbon footprint metrics, thereby providing insights into the effectiveness of their initiatives.
For example, CP Foods, a top food business and one of the world’s largest producers of feed, shrimp, poultry and pork, implemented SAP solutions to record, report and act on real-time sustainability data at both corporate and product levels. The tech provides the company with insight into real-time greenhouse gas emissions data to help it advance towards its Net Zero goals.
“Net Zero is the only solution to climate change,” CP Foods CEO Prasit Boondoungpraser said in a prepared statement.
3. Better inventory management
Improving inventory management is key to boosting sustainability in retail operations since it minimizes overproduction and waste. Sophisticated technology can be used to analyze inventory data and help retailers identify trends and adjust inventory accordingly.
Crystal S.A.S. relies on SAP S/4HANA’s embedded sustainability features to help manage carbon emissions linked to inventory management. With more efficient tracking of compliance with environmental standards, the Colombian producer and distributor of apparel and fashion brands has a foundation for true carbon accounting.
Despite the challenges, retailers are making big strides towards sustainability. By taking the right steps now, retailers can set themselves on a growth path for their brand and a greener future for everyone.
