Retail and CPG companies struggle to balance investments that remediate short-term pains and improve long-term resiliency. Disillusionment over prior investment payoffs, plus being in constant crisis mode, has supply chain executives focusing on fundamentalssuch as efficiency improvements and cost containment.
Retail and CPG companies have challenges with inventory uncertainties and workforce shortages driven by supply disruptions, inflation, low unemployment, and shifting consumer demand. Yet to improve productivity and results, two words are often thrown out as the solution: Automation & Insights. But they often ring hallow.
It's time for some good news. Labor productivity grew by 2.2% annually between 2020 and 2021, up from a 0.9% average annual growth from 2011 to 2019. Before attributing this to people working more hours, labor productivity is measured as the output per worker hour. Hence, people are becoming more efficient.
AI Demand Forecasting & Planning solutions are redefining traditional practices. They're improving inventory placement and reducing overall inventory costs, returns, and markdowns. Already prominent retailers such as Walgreens and PACSUN are reaping the benefits of these solutions. But not all solutions are created equally, and people struggle to evaluate them. Many advocate pilots, and while that is a viable option, even free pilots cost your company time and resources. Pilot or not, you need methods to down-select solution providers.
An extensive amount of news today focuses on inflation and supply chain disruptions. The latest Survey of Consumers focused on inflation's impact to consumer sentiment, which fell to its lowest level since November 2011. While the Delta and Omicron variants have pushed the index lower, consumers' primary concern is rising inflation and falling real incomes.1