Shorter lead times from retailers has led to the need for faster turnarounds in the manufacturing and delivery of goods. CPG brands in particular face shorter and shorter lead times from stores who order in smaller batches, but more frequently. The volatility resulting from this shift has led to the need for more proactive supply chain management and an investment in digital transformation. By turning to technology brands found they could streamline processes to adapt to faster turnaround times. We see this in the rise of E-commerce.

E-commerce is expected to be a $5 trillion industry by 2021. As consumers shifted to online channels over the years, the supply chain that was once built for brick-and-mortar factories, warehouses, and distribution centers has been transformed into a complex system based on digital infrastructure. Online consumer demand increased, and the supply chain had to evolve in order to keep up.

Global E-commerce giants like Amazon sped up fulfilment by investing heavily in a digital transformation throughout their entire supply chain. By utilizing automation to streamline transport through fulfilment centers, software to scan products and track the progress of each delivery, and dedicated Amazon planes to expedite shipping, Amazon managed to shorten the all-important lead time and revolutionize delivery and fulfillment. With an offer of accelerated two-day shipping, it suddenly became possible for consumers to purchase whatever they needed, wherever they were and to receive it almost instantly.

The Great Recession triggered a dramatic shift in consumer spending. Consumers began to expect high discounts on brand-name goods, which they would find in abundance in off-price stores. Brands, too, benefited from the off-price market and leveraged it as a lucrative channel for selling excess inventory.

However, when grappling with outdated, manual processes, selling excess inventory is easier said than done. Brands found themselves at a significant disadvantage when it came to selling into off-price due to outdated systems that provided no real-time visibility and no substantial way to manage ever-growing inventory levels. As a result, they had no way to identify off-price opportunities and even when they did, they were held back by inefficient and error-prone inventory management processes.

So, to successfully move inventory through off-price channels, brands began to leverage digital supply chain solutions to analyze inventory, to identify opportunities and to effectively plan ahead to ensure they can sell-through most effectively.

90% of a company’s environmental impact comes from their supply chain. As sustainability became increasingly important to consumers and brands alike, the supply chain experienced several technological changes intended to help the planet. Excess inventory is one of the biggest pain points for brands in terms of sustainability. With an increased focus on brands for disposing of stock through burning or throwing product into a landfill, it has become crucial for brands to move excess inventory in a more sustainable way.

We have seen the emergence of organizations like Delivering Good whose focus is on helping brands to repurpose excess inventory to help those in need while minimizing waste. We have also seen companies like Flexport develop technology to help enterprises make smarter decisions when it comes to their freight carriers. Flexport calculates companies’ carbon emissions to highlight where action needs to be taken, and how much of an effect these actions have on reducing brands’ overall carbon footprint.

From a supply chain perspective, INTURN and other software solutions have evolved to help retailers sell excess inventory to minimize waste and expenses throughout the supply chain. When faced with excess inventory, digital technology can be used by retail brands to track inventory in real-time, analyse market trends and access performance history to pin-point lucrative opportunities and sell through off-price channels with minimal environmental waste and maximum benefit to their bottom line.

Oftentimes, innovations in the supply chain are prompted by moments where supply and demand do not match – and these moments are often caused by, or exacerbated during, times of global uncertainty. Over the years, global disruptions like economic turmoil and public health crises have impacted supply chains at both the demand and supply end.

A recent example is COVID-19, the current pandemic which caused unprecedented disruptions to the global supply chain. Due to measures put in place to control the virus’ spread, factories were shut down and shipments were halted. As a result, brands found it difficult to source products from their regular supply bases. Meanwhile, as the pandemic grew more severe, consumers began to panic-buy essential goods, culminating in serious inventory shortages – particularly for CPG brands.

However, ramping up manufacturing to cater for this sudden spike in demand came with even more risks as, when the panic-buying stopped, brands were faced with the possibility of additional excess inventory. On the other side, fashion and home brands also found themselves with inventory in excess as consumers shifted their attention to more essential items.

What all of this indicated was the danger and ineffectiveness of rigid supply chains. Brands ultimately found they were not equipped to cope with sudden fluctuations in demand brought on by the COVID-19 pandemic. To be better prepared for disruptive events, manufacturers, suppliers and retailers are now heavily investing in digital solutions to gain visibility into their inventory and leverage insights at every stage of the supply chain. By implementing new technology, brands will be able to plan ahead to adjust supply to meet demand and proactively make decisions that help to minimize the risks that comes with major disruptions.