Guy Yehiav, a recognized industry thought leader, is the president of SmartSense, IoT solutions for the enterprise.
In the late 1990s, the big buzzword in the supply chain world was “demand-driven supply networks.” During that period, there was a consensus that demand-driven supply networks would have the biggest impact in the years ahead. Now, the sentiment around which phenomena will have the most influence is less clear.
For a time, we thought blockchain was going to solve many of the remaining inefficiencies in our supply chains. It’s in the zeitgeist, much less right now, but a final judgment hasn’t been determined, and I believe it’s coming back. We will indeed see a resurrection of blockchain-enabled technologies when enterprise users are ready to adopt them. Likewise, RFID technology has undergone several waves of innovation, and we may see another wave.
Going forward, I believe the trends in supply chain management will not be marked by a singular technology or solution but by the application of several different tools in unique combination. The future of supply chain technology will be led by enterprises navigating emerging regulations in innovative ways, especially for compliance requirements around traceability.
It’s clear that traceability is a key factor that will significantly impact various sectors within the retail industry, especially food and the authenticity of collectible items. The use of blockchain’s public ledgers in the retail supply chain is an intuitive match for new traceability requirements. We’ve seen some blockchain projects fail miserably. However, looking ahead a couple of years, the lessons learned from those failures will result in the integration of blockchain technology into supply chain operations at a greater rate as traceability requirements become more stringent.
Startups that can provide blockchain-enabled traceability solutions will likely emerge as industry leaders in the coming years, revolutionizing supply chain operations and setting new standards for transparency and efficiency. Energy-harvesting technologies are also emerging as a disruptive force in the supply chain space. Many startups are exploring ways to combine energy harvesting with battery backup to enhance tracking and monitoring capabilities throughout supply chain operations.
Unique Challenges Across Retail
In the grocery and convenience store (C-store) segment of retail, the impending FSMA 204(d) regulations regarding traceability will drive significant changes in supply chain operations. These regulations mirror the requirements in the Drug Supply Chain Security Act (DSCSA) that apply to retail pharmacies. Lot-level data for raw material will need to be collected and tracked across the various handshakes in the supply chain. Companies will need to adapt to these regulations by either implementing disruptive solutions such as blockchain technology or engaging in continuous improvement processes to enhance traceability and transparency in their supply chains with linear improvements to SKU route tracking. In addition to improving food safety efforts, the increased tracking intelligence will help reduce unnecessary food waste.
On the retail clothing front, fashion and department stores are experiencing a fundamental shift toward zero inventory models. This approach, which involves carrying minimal inventory in-store and promising quick delivery to customers, requires a focus on micro-analyzing warehouse and store operations. Continuous improvement efforts in optimizing available-to-promise to consumers will be crucial in meeting customer expectations and reducing costs.
In the pharmacy retail sector, increasing regulations on over-the-counter drugs and temperature traceability are driving the need for improved traceability and condition monitoring in supply chain processes. Companies will need to prioritize safety and compliance to meet these regulatory requirements and avoid costly recalls due to inventory mismanagement. Several of the big retail pharmacy brands have been shrinking store numbers as profitability challenges have proliferated, including high-volume GLP weight loss drugs that raise sales but eat at margins.
Evolutions In Fulfillment
The world of supply chain fulfillment is being driven by workforce shortages, minimum wage increases and the relentless push for efficiency. From the rise of automation to the specialized approach of micro-fulfillment, there are clear trends emerging that will shape the industry in the years to come.
Particularly high attrition rates and the need for rapid training of new employees have characterized the current workforce environment. This revolving door situation makes automation even more critical to bridge the gap. The use of robots and cobots (collaborative robots) is becoming increasingly commonplace, allowing for quicker onboarding of temporary workers and improving overall efficiency in warehouse operations.
We’re also seeing a shift toward more specialized solutions in the area of micro-fulfillment. Rather than trying to create a one-size-fits-all approach, companies are now focusing on niche fulfillment for specific products or departments. This targeted strategy allows for quicker implementation and better utilization of resources, ultimately leading to improved customer satisfaction and operational efficiency.
Today, demand sensing and forecasting in supply chain management are much more accurate and up to date with the moment. Software tools will continue to advance in this area, leveraging AI and machine learning to credit and penalize their models on a continuous basis to increase accuracy. The role of human decision making remains crucial. While technology can provide valuable insights and data, it is the human ability to deduce and make strategic decisions based on experience that sets us apart from machines. The future may see a shift toward more automated decision making, but human intuition and deduction will still play a vital role in the success of supply chain operations.
The future of the supply chain in the retail industry will be shaped by a combination of regulatory changes and technological advancements. Retail executives must be prepared to adapt to these changes through continuous improvement efforts and by embracing disruptive technologies that enable greater traceability in their operations. The key to success lies in staying ahead of the curve and leveraging innovative strategies to navigate the challenges of the future.
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