Stuart Greenfield, Sales Director at Advanced Supply Chain (ASC), looks ahead to consider the retail supply chain trends we can expect in 2024.
Roll-out of Nominated Carrier Schemes (NCS)
Warehousing remains a key priority for retailers. ASC* research in 2022 and this year found it remained the top ranking area of focus for retailers aiming to reduce costs and protect margins. For this reason, I think we can expect to see a growing number of companies investing in nominated carrier schemes in 2024 to improve warehouse processes and efficiencies.
Many omni-channel retailers already work with a number of different suppliers to spread risk, manage costs, and increase choice. These supplier bases are growing and diversifying, as retailers respond to tough economic conditions and challenging sales environments. Such circumstances can add to the complexities of inbound logistics, with products arriving at warehouses from many different suppliers in varying different formats. It can lead to inconsistencies in processes, packaging, and labelling, which risks errors and proves unnecessarily time-consuming to manage. An NCS can overcome this to consolidate and streamline inbound logistics.
A well-run scheme, backed-up with capable IT systems and transport management systems can effectively automate inbound logistics. Supplier compliance and compliant inbound deliveries can be achieved to drive consistencies and reduce the risk of errors and the amount of time spent correcting mistakes. Automation compliance can also be established and improved, minimising touchpoints to move goods faster through warehouses and eliminating the threat of bottlenecks. Retailers can also benefit from enhanced tracking and transparency to support overall stock inventory management and availability.
Minimising mileage
Forward-thinking retailers are already stripping mileage out of supply chains – a trend that’s likely to grow in 2024 because of mounting efforts to better manage costs and carbon emissions. ASC research found that 35% of retailers are aiming to remove miles from their supplier chains to lower operating costs. This is happening against a backdrop of a European-wide shift towards circular economies.
Scope 3 requirements are already encouraging the up and downstream management of carbon footprints throughout supply chains. Similarly, initiatives such as the EU’s circular action plan and the European Green Deal are prompting businesses to embrace sustainable consumption and growth. This year, the European Commission revised its circular economy monitoring framework, which has sharpened the focus on ‘material footprint and resource productivity’.
We’re already working with retailers to strip miles out of their supply chains. However, this doesn’t just involve reshoring or near-shoring. In many instances, it involves in-depth analysis of data to enhance cube optimisation, so that more goods can be shipped per load to reduce overall transportation movements and carbon emissions. Rich, reliable data is being used to reduce mileage by making global supply chains more efficient and this trend shows signs of gathering pace as retailers continue to source internationally to secure the best prices.
Returns – a reoccurring trend
Whenever we’ve spoken about annual supply chain trends during recent years, customer returns has been a reoccurring trend, and 2024 is likely to be no different. Retailers are working hard to encourage sales amidst consumer uncertainty caused by high living costs. We’re seeing the expansion and diversification of product ranges. Lower-priced goods are being added into the mix, alongside new and alternative offerings for shoppers. This can mean consumers are buying goods they are less familiar with, which can lead to higher rates and volumes of returns.
We’re also seeing a trend of retailers working hard to avoid having to charge shoppers to send goods back. Free returns appeal to cash-strapped and value-conscious consumers and can prove a real point of difference when it comes to adding goods to baskets and the all-important checkout. Taking these points into consideration, I think we can expect to see a growing trend of data-led returns.
Utilising data, retailers can better address margin dilution caused by returns. Salvage rates can be increased, and quicker decisions can be made about items that can’t be returned to grade A. Goods can be redirected to the most appropriate resale channel to extrapolate maximum value from returned items, while also cutting levels of waste and associated disposal costs.
*ASC and Sapio Research surveyed 100 retail decision makers in September 2022 and July 2023. Survey respondents worked for UK retailers employing at least 250 employees.
