3 Common Supply Chain Challenges Keeping Retailers Up at Night

While the unprecedented supply chain disruptions of the past few years have slowed, several pressure points continue to impact industry leaders, including heightened inflationary costs, increased sustainability expectations, and emerging technologies that require strategic investments to remain competitive.

But what do these influences look like across the supply chain? Here’s a breakdown of these challenges and how retailers can leverage collaboration throughout their supply network to succeed.

1. Cost and Collaboration Go Hand-in-Hand

While inflation is finally starting to cool with the current rate of 2.4 percent as of October 2024, consumer prices are still 21.4 percent more expensive since the pandemic-induced recession began in February 2020, according to an analysis of data from the Bureau of Labor Statistics by Bankrate. And this tougher economic environment continues to pressure everyone, including retailers, to minimize costs whenever and wherever possible.

Sometimes it’s easier to find cost-saving opportunities through external collaboration instead of narrowly looking at internal cuts. For example, a partner with end-to-end supply chain visibility can help improve the flow of palleted goods, identify transportation efficiencies, and sometimes even map out the best places for distribution centers. It’s through strong relationships and transparency that companies can discover new ways to enhance operations while minimizing costs in their supply network.

Finding opportunities to generate new revenue streams is another way retailers can offset increased costs. For some, monetizing waste by selling scrap materials to be recycled or upcycled could make sense. In other cases, engaging in on-site services can generate additional revenue, such as pallet sortation programs offered by select pooled pallet companies.

2. There’s No ‘One-Size-Fits-All’ Guide to Automation

Driven by increasing consumer experience expectations and the competitive need to innovate, many retailers are investing heavily in automation. According to the 2024 MHI Annual Industry Report, 55 percent of supply chain leaders are planning to increase their supply chain technology and innovation investments in the next two years.

When starting their automation journey, some retailers opt to expedite the process by setting the ambitious goal of operating a touchless warehouse. Others choose a more gradual approach to improve individual processes, like upgrading warehouse management systems (WMS) and picking strategies (the technical processes used to fulfill customer orders).

Although there's no one-size-fits-all way to automate, it’s important to leverage experts to understand what systems and products will work properly together and what will ultimately drive business goals forward. Otherwise, a retailer’s automation investments might fall flat, keeping them awake at night with lingering questions about what went wrong.

Since automation compatibility is critical, consider technical specifications, like platform consistency, lead board and deflection as well as pallet and unit load interactions, early in the design phase. By collaborating with the automated system provider, integrators and pallet providers from the beginning, the retailer can make more informed decisions about its automation efforts and avoid costly retrofits needed to achieve expected throughput rates.

3. Sustainability Initiatives Won’t Look the Same for Everyone

Brands are increasingly being asked to set and achieve ambitious sustainability goals. In fact, 71 percent of executives from consumer industries said they felt strong pressures from customers to act on climate change. Furthermore, 54 percent stated their investments in sustainability have increased over the past year, according to Deloitte’s Global Powers of Retailing 2023 report.

It’s no wonder that many retailers are restless, wondering how they can establish appropriate sustainability targets and produce credible, data-driven results.

To level expectations and set a realistic baseline, retailers must determine where their business is in its sustainability journey. From there, they can establish clear maturity goals by comparing their current state against desired outcomes. Some external resources that may be helpful could include sustainability assessment guides, emissions tracking tools, and case studies on best practices offered by industry groups such as the Retail Industry Leaders Association (RILA).

Additionally, retailers should seek meaningful partnerships that align with their organization’s sustainability philosophy and challenge them to think differently about their supply network. Consider transportation collaboration. By partnering with a third party to leverage shared transit lanes between companies, retailers can reduce their empty miles (i.e., the distance traveled with no load or cargo), lower carbon emissions, and even gain some network efficiency along the way. This is just one of the many ways that collaboration can serve as a catalyst for achieving environmental goals.

Most importantly, it’s critical that retailers follow leading industry standards for reporting sustainability data and expect the same from their partners. For example, the Greenhouse Gas Emissions (GHG) Protocol and the Global Logistics Emissions Council (GLEC) Framework are recommended for calculating and reporting value chain emissions and transportation-related emissions. Third-party verifications also add credibility, such as leveraging Life Cycle Assessments to measure the environmental impact of products based on global standards (ISO), further boosting confidence in sustainability reporting.

Better Together

While plenty of things keep retailers up at night, they can sleep more peacefully knowing that through collaboration they can uncover opportunities to create a more cost-efficient, sustainable and future-forward supply network.

Heather Stuart is vice president of retail supply chain solutions at CHEP U.S., a global leader in sustainably moving goods.