What We Learned From Our Supply Chain Disruption Survey

By Victor Engesser, RVCF Retail Executive Advisor

Last month we asked retailers to what degree are you seeing recovery from last year’s supply chain disruptions? Where are the remaining pain points with your suppliers? And how well are you making progress internally to strengthen your supply chains going forward? We surveyed retailers in early March and asked a series of questions around these topics, here are the takeaways we thought you might like to know.

In our first question we asked where the current supply chain disruptions were felt the most, “Container availability” followed closely by “Shipping”, and “Factory level delays” received the highest scores. Above average scores were also attributed to getting shipments thru “Outbound ports” and “US Docks”. With vaccinations increasing and stimulus checks going out retail sales are forecasted to be strong this year and retailers are trying to get ahead of expected demand. Clearly the transportation and port choke points have backed up for everyone and may stay that way for some time.

We next asked if all types of suppliers were impacted or if some groups stood out for having more problems? In general, retailers told us all size and types of suppliers were having the same problems and struggling to fully recover but responses suggested that slightly lower levels of performance were coming from Softlines, Replenishment, and Large Hardware providers.

Asking retailers about internal challenges that most impacted their supply chain performance, not surprisingly, retailers clearly scored “Sales” and “Forecasting” the two largest contributors. These topped the list as all retailers spent 2020 reacting to extreme changes in consumer purchasing behavior along with hard swings in product availability. “Distribution Center receiving” and “Store replenishment” came in next no doubt a consequence of these volatile sales and inventory swings.

Trying to understand what activities or adjustments retailers were making to improve supply chain performance the two highest responses were around “Extending purchase order lead times” and “Increasing supplier communication & collaboration”. Both acknowledge the importance of working closely with trading partners to support and adapt during difficult periods. Also, worth noting was “Deploying inventory differently” as well as “Adding additional suppliers”, both make sense in a marketplace shifting hard to E-commerce and to new fulfillment options.

When might retailers feel their supplier supply chain performance will return to pre-COVID levels? 20% indicated it was not clear to them at this time, 20% more optimistically suggested in the next 3-6 months, with 30% suggesting in the next 7-12 months and the remaining 30% thinking sometime over a year away.

Last of all we asked to what degree retailers had made progress strengthening aspects of their own supply chain capabilities and the top response was around “Identifying weak spots in their own supply chain”. The other responses, in descending order were “Taking steps to better manage future risks to your supply chains” and “Building in more visibility and flexibility”. The lowest score was given to “Enacting new technology to strengthen supply chains”. For both retailers and suppliers decisions to acquire and adopt new technologies take time but are likely to be the longer-term solution to strengthening supply chains. 

All the survey responses we received help inform the current challenges and opportunities retailers face today as they work to recover with their trading partners. While chokepoints in the global supply chains continue to delay recovery there is reason for optimism. At RVCF we will continue to monitor and report on these supply chain challenges and work closely with membership to provide the information, resources, and support required to strengthen trading partner supply chain performance.