You're not alone if you’re still seeing local grocery stores with empty shelves. Food shortages are still lingering in 2023.
Increases in consumer demand, labor shortages and shipping capacity restraints continue to interrupt supply chains, particularly for grocery retailers. These problems have persisted throughout the pandemic, as seen with the shortages ranging from fruits and vegetables to canned goods, meats and paper goods. Additionally, disruptions related to inflation, oil prices and geopolitical activities have only compounded grocers' challenges.
Consider the bullwhip effect to help understand how impactful an increase in consumer demand can be on supply chains. Small changes in consumer demand can trigger larger changes in retailers’ orders from consumer goods manufacturers. Ultimately, this leads to bigger demand swings for the materials needed to manufacture those products.
The disruptions widen exponentially as you move up the supply chain, as more error gets introduced, leading first to surplus and then to shortages when manufacturers overcorrect and reduce supply. Perishable food supply chains have an added layer of complication because they can’t be overstocked or stored for long periods due to the risk of spoilage.
Missed opportunities
Grocers have quickly realized that their forecasting systems were not designed for all these unforeseen disruptions. Many grocery executives have found that historical forecasts were a valuable indicator of supply and demand before the disruptions of the new digital economy.
As a result, most are striving to use more external data and market and demand signals in their forecasts and plans. Grocery retailers are taking steps to optimize, coordinate and improve their supply chain and customer engagement through better forecasting and planning.
Achieving this granular visibility is only possible with predictive analytics, AI and machine learning. Yet only a hand full of grocers use AI and analytics for forecasting and demand planning. However, according to The Progressive Grocer, 45% plan to do so in the next 18 months.
Grocery stores and supermarkets rely heavily on effective supply chain planning to ensure that they have the right products on their shelves at all times. This is especially important in the fast-paced world of the grocery industry, where consumers expect to find what they need when they need it.
Grocery supply chain planning can be complex, with many variables to consider. However, by using software as a service (SaaS) for grocery supply chain planning, grocery stores can gain these six important advantages.
1. Captures real-time data and information
Harnessing the power of supply chain and external marketing data can boost a grocer's ability to anticipate shifting consumer demand patterns due to unforeseen disruptions and provide more personalized promotions. SaaS provides real-time data, allowing grocery stores to make informed decisions quickly. With up-to-date information about inventory levels, sales trends and more, grocery stores can ensure that their supply chain is running smoothly and that they always have the right products.
2. Protecting data and avoiding downtime
Predictive analytics and machine learning can be easily deployed across many brands, categories and stores empowering retail grocers to anticipate customers’ purchases through more reliable, dynamic forecasting models to make faster value add decisions. This would reduce backorders and waste, particularly for perishable products.
3. SaaS is highly scalable
As business needs change and grow, including unexpected spikes in demand, cloud scalability allows for a quicker response to shifting consumer demand. SaaS provides the flexibility to scale applications up and down all grocery categories and brands based on your needs. Typically, scaling can be done quickly and easily with little disruption or downtime.
4. SaaS can be easy to use
Demand planners have a short learning curve when migrating demand-management analytics to a cloud-native solution. Another advantage of using SaaS for grocery supply chain planning is its easy use. With a simple, user-friendly interface, even those with limited technical experience can start using the software immediately. This makes it easy for grocery store managers to quickly and efficiently plan their supply chain operations.
5. Rapid deployment reducing time to ROI
The software is already installed and easily configured in a cloud-hosted environment. No time is wasted getting to analyzing the data and producing demand-planning insights. It also reduces the workload for the grocery IT team.
6. SaaS can be cost-effective
One of the biggest advantages of SaaS for grocery supply chain planning is cost-effectiveness. Cost savings result from a shared environment (known as a multi-tenant environment). Instead of paying for expensive software and hardware, grocery stores can simply pay a monthly subscription fee to access the software. This eliminates the need for upfront costs, installation, and maintenance fees, making it a much more cost-effective option for grocery stores.
SaaS offers several important advantages for grocery supply chain planning, including cost-effectiveness, ease of use, real-time data, scalability, and reduced risk. For grocery stores and supermarkets, these advantages make SaaS a valuable tool for optimizing their supply chain operations and staying ahead of the competition.
A demand planning cloud-native SaaS solution helps grocers properly plan and forecast demand for their products and services across stores, categories and brands down to the SKU level. In turn, grocers can make informed decisions about allocating resources to meet customer demand faster and more efficiently.
