As COVID-led disruptions have provided them with a better visibility on their supply chains andenabled them to predict demand trends effectively, retailers plan to refurbish their supply chain strategies in the next three years, says a new report by the Capgemini Research Institute.

Ramping technical capabilities for accurate demand prediction

Over 65 per cent of retailers are likely to change their strategies significantly in the next three years and embed resiliency in their operations, adds the report. However, 23 per cent of consumer product organizations and 28 per cent believe, their supply chain is flexible enough to adapt to the organization’s changing business needs.

These organizations are currently ramping up their technical capabilities to predict demand accurately and plan their supplies in a better manner. Around 85 per cent of these companies faced disruptions due to COVID-induced lockdowns which not only halted their raw material supplies but also disrupted production lines and go-to-market route for consumer goods companies.

Challenges in product and demand planning

It took almost three months for 63 per cent of consumer products companies and 71 per cent of retailers to recover from the disruptions and normalize their supply chains. Around 50 per cent of Indian companies took 3-6 months to recover from the pandemic effects. These companies faced challenges spanning demand planning, anticipating consumer demand and over-reliance on global supply chains.

Over two-thirds of organizations faced difficulties in product planning as they did not have accurate information on the fluctuating customer demand during the pandemic, adds the research. Around 73 per cent of the organizations could not predict demand as they lacked data on fluctuating demand. This led to over 65 per cent organizations planning to organize supply chains according to demand patterns, product value and regional dimensions post pandemic. Over 50 per cent plan to rely on analytics and AI-machine learning for demand forecasting in future.

Focus on local supply chains

COVID-19 has also highlighted the importance of local suppliers and manufacturing base. In the next three years, retailers plan to restrict their reliance on global suppliers to just 25 per cent of their capacity. This localization trend is also catching in Indiawith 73 per cent of organizations investing in regionalizing and localizing their supplier base; and 55 per cent of them regionalizing and localizing their manufacturing base,

Significance of digital investments grows

Demand visibility was also one of the challenges faced by 75 per cent of companies during the period. According to the report, these companies were compelled to increase or decrease production capacity due the pandemic. Over 60 per cent of organizations in India lost sales due to stockouts, adds the report. . Organizations now understand the significance of digital investments in improving visibility.

As per the report, around 58 per cent of retailers and 61 per cent of consumer product organizations plan to digitize their supply chains post pandemic. Around 47 per cent of them plan to invest in automation, 42 per cent plan to invest in robotics and 42 per cent in artificial intelligence. Around 64 per cent of these organizations also plan use artificial intelligence and machine learning across transportation and pricing optimization respectively.