By Simpactful Senior Partners, Lindsay McShane and Neal Dellett
Retailers have been overstocked for a while, but a November 2022 CNBC article summarizes the urgency amongst Retailers to get the inventory pendulum back to some sort of equilibrium: “Retailer’s biggest holiday wish is to get rid of all that excess inventory.”
In the height of the pandemic and sea freight crisis, brands and retailers alike reacted to component and finished good shortages by building up inventories. For many, suspending “Just in Time” supply systems in favor of higher inventory builds helped them to manage downside risks including rolling virus-related shutdowns, volatile consumer demand and unexpected channel shifts, raw material, and component shortages, and shipping issues. Brands that were successful in meeting demand recognized a major upside, which fueled the behavior. These included increases in On-Shelf Availability and opportunities to secure incremental shelf space from competitors who were Out of Stock. Higher inventories also helped to delay the impact of growing commodity costs.
However, in many categories, brands are reporting high inventory levels and are maxing out inventory space as Retailers rapidly pull back demand and Supply Networks are slow to adapt. In November, China’s threat to roll out large-scale shutdowns in the face of a COVID resurgence that could topple local health networks sent “here we go again” shockwaves through the markets as companies signaled significant risk to supply chains.
Now what? As Simpactful Senior Partner, Lindsay McShane puts it, “This is the time to assess your end-to-end supply chains, including your warehousing and fulfillment systems, and implement more Agile Solutions to ensure you are prepared to manage both the risks and upside opportunities.”
Simpactful has supply chain experts who have worked end-to-end on both the manufacturing and retail side from procurement, and Supply Network Design down through to in-store. Using the team’s collective practitioner expertise, we have built assessment and process improvement tools that enable us to quickly identify high-leverage gaps and opportunities and implement sustainable fixes. Together, we are able to identify opportunities and put together action plans to help brands accomplish the following common opportunities:
- Refocus and revamp their current Supply Networks to better meet Retailer’s ever-changing requirements
- Leverage data to identify and address On-Shelf Availability gaps
- Build more robust business continuity plans with suppliers and Contract Manufacturers
- Address omnichannel retail supply opportunities
- Assess dynamic warehousing capacity solutions
- Determine multi-channel fulfillment solutions for non-Amazon orders to maximize inventory ROI for fragmented DTC and Marketplaces while also reducing cost
Neal Dellett, Senior Partner at Simpactful, shares, “By improving supply chain work processes and KPIs, Simpactful has been able to help manufacturers grow sales by 2-3%, reduce inventory levels by up to 10% and decrease customer chargebacks by 20-40%.”
With volatility comes both risk and opportunity, and brands must move from reacting to adapting. Simpactful’s team of experienced practitioners can help you every step of the way. Interested in learning more? Contact the Simpactful team today at firstname.lastname@example.org or 925-234-6394.