E-Commerce growth propelling tech investments in supply chain execution & high ROI

Following a year of rapid change in the logistics sector, new data from Reuters Events Supply Chain in collaboration with Blue Yonder uncovers the top supply chain execution and risk management strategies and investments. The COVID-19 pandemic, customer centricity, rising e-commerce complexity and costs, the need for Direct-to-Consumer (D2C), and the risk of financial peril are propelling retailers, manufacturers, and logistics service providers (LSPs) to digitally transform, according to the State of Supply Chain Execution Report 2021.

Companies that want to take advantage of the omnichannel opportunities of increased online-order volume in the past 18 months are adopting more agile delivery and fulfillment models, such as D2C. Online sales by retailers and manufacturers have surged by more than 120 percent in the last year. E-commerce volumes have also exploded, with LSPs estimating a 200 percent growth from 2019-2020.

 “As the economy transitions to a post-pandemic environment, retailers, manufacturers, and LSPs are transforming their transportation and broader supply chain operations to address their most pressing supply chain challenges,” said Raj Patel, senior director, 3PL Industry Strategy, Blue Yonder.

Also said, “In the long term, investment in execution systems like Transportation Management Systems (TMS) and Warehouse Management Systems (WMS), as well as end-to-end visibility, automation, and cloud strategies will help them – and their customers – build more sustainable, resilient and agile organizations for the future.”

Pandemic Prompts Reevaluation of Supply Chain Risk Management

Pandemic-related difficulties have transformed supply chain risk management objectives, from raw material limits to labor shortages to increased cybersecurity threats on distributed networks:

• Respondents are hesitant to invest in near/onshoring plans, with only 29% of retailers and manufacturers doing so.
• Dual-sourcing was cited by 63 percent of retailers/manufacturers as a preferred risk management method in the future. Supply chain interruptions were triggered by raw material shortages, especially for companies with spread production sites.
• Environmental considerations are also taken into account when preparing for supply chain risks. Over half of retailers/manufacturers (53%) and half of LSPs (50%) plan to invest in sustainability as a risk management technique.

Companies Prioritize Digital-First Practices and Technology Investments

With the rise of e-commerce, firms must invest in contemporary supply chain technologies and new ways to keep up with changing trends and customer expectations. Various factors, according to the research, are pushing investment in supply chain technologies and digital-first practises. LSPs cited the need to cut supply chain costs (58%) while also enhancing service levels for their retailer clients (48%) and dealing with labour shortages as reasons for their decision (30 percent ).

Companies are shifting away from old systems in the current supply chain environment, prioritising technologies that offer insight for customers and their operations, automate procedures, and enhance corporate agility. End-to-end visibility is now generating the highest ROI in their supply chain execution process, according to 63 percent of retailers/manufacturers and 60 percent of LSPs. A solid cloud strategy is in place at almost half (48%) of retailers/manufacturers and more than half (57%) of LSPs, enabling to enable high levels of infrastructure agility that on-premise, legacy technology solutions can’t match.