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Supply Chain Resilience in the Retail Industry

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Supply Chain Resilience in the Retail Industry

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The COVID-19 shook global supply chains upon its emergence and continues to do so as numerous industries grapple with material shortages. In this report, based on 100+ decision-makers in the retail industry, we examine how retail leaders are preparing to overcome the impact of the pandemic.

The COVID-19 shook global supply chains upon its emergence and continues to do so as numerous industries grapple with material shortages. In this report, based on 100+ decision-makers in the retail industry, we examine how retail leaders are preparing to overcome the impact of the pandemic.

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Supply Chain Resilience in the Retail Industry

  1. 1. SPECIAL REPORT: SUPPLY CHAIN RESILIENCE IN A POST-PANDEMIC WORLD Retail Segment A Survey of OEM Supply Chain Decision-Makers September 2020
  2. 2. GOALS AND METHODOLOGY RESEARCH GOAL The primary research goal was to capture hard data on trends in supply chain, particularly the impact of COVID-19 and risk management. METHODOLOGY Independent sources of OEM manufacturing professionals with responsibilities for their company’s supply chain were invited to participate in an online survey. Responses were captured between August 18, 2020 and August 27, 2020. PARTICIPANTS A total of 715 qualified individuals completed the survey including 101 that had responsibility for retail devices and technology. All had decision making responsibility for supply chain budgets at an OEM manufacturing company with more than $500M in annual revenue.
  3. 3. PARTICIPANT DEMOGRAPHICS 3
  4. 4. PARTICIPANTS REPRESENTED 101 101 101 102 102 103 105 0 20 40 60 80 100 Retail Smart Home Energy & Industrial Telecommunications Healthcare Consumer Electronics Automotive & Transportation Types of Good Represented $500M - $1B 28% $1B - $5B 28% $5B - $10B 18% More than $10B 26% Company Size
  5. 5. INDIVIDUALS REPRESENTED 5 Senior individual contributor 10% Team manager 55% Executive 35% Job Level 3% 3% 4% 6% 8% 9% 13% 17% 36% 0% 5% 10% 15% 20% 25% 30% 35% 40% Procurement Distribution Inventory management Project management Operations management Logistics Research, development or design Business executive Supply chain management Role
  6. 6. MARKET DYNAMICS DETAILED FINDINGS 6
  7. 7. COVID-19 HAS THE LARGEST IMPACT Which of the following market dynamics are impacting your company's supply chain? Choose all that apply. 1% 23% 28% 30% 32% 32% 33% 35% 37% 44% 70% 2% 24% 18% 18% 28% 28% 35% 20% 43% 43% 67% 0% 10% 20% 30% 40% 50% 60% 70% 80% None of these Supplier consolidation Increased commodity pricing Rapid technology transitions Higher labor costs Global logistics constraints Labor shortages Global trade and tariff issues Increased demand Supply constraints Pandemic disruptions (COVID-19) Retail All
  8. 8. SOURCING ISSUES HAVE DIRECT BUSINESS IMPACT How have component shortages, limited materials, or other sourcing issues impacted your business in the past year? Choose all that apply. 8 2% 8% 1% 26% 32% 36% 43% 62% 2% 11% 2% 30% 29% 38% 43% 64% 0% 10% 20% 30% 40% 50% 60% 70% We have not had sourcing issues We have had sourcing issues, but they haven't impacted business outcomes Other We have struggled with quality issues as we investigated options We have been forced to raise prices We have lost revenue Our profit margins have narrowed We have seen delays in our production delivery or time-to-market Retail All
  9. 9. VARIABILITY IN RISK MANAGEMENT MATURITY How would you characterize your company’s predictive supply chain risk management initiatives (i.e. technology and teams involved in the management of events such as pandemic/global health issues, sourcing shortages, natural disasters, and geo-political change)? Choose the one answer that most closely applies. 9 9% 13% 7% 7% 15% 16% 18% 17% 18% 19% 25% 22% 8% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Retail All Fully executing our program with implemented technology and team structures Executing pilot projects We have a detailed program in place that includes technology and teams Have a framework program in place In process of developing our initial plan Thinking about how to invest in technology and teams Haven't even thought about it
  10. 10. COVID-19 DETAILED FINDINGS 10
  11. 11. FEW GIVE THEIR PREDICTIVE SUPPLY CHAIN HIGHEST MARKS DURING COVID-19 11 How effective was your company's predictive supply chain risk management approach in dealing with the impact of COVID-19? 12% 17% 39% 33% 39% 32% 9% 13% 1% 4% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Retail All Excellent - we had visibility into coming changes and easily adapted Good - we would have liked a bit more warning, but we were able to get info in time to respond Acceptable - we didn't get nearly enough time to act, but we did get some warning Not good - we didn't get information in time to act Terrible - we got bad information or no information Not applicable - we don't have a predictive approach to supply chain risk management Not applicable - we weren't impacted by COVID-19
  12. 12. RESPONSE TO COVID-19: TECH INVESTMENTS Is your company investing in any of the following technologies or services to address the impacts of COVID-19 on your supply chain? Choose all that apply. 12 1% 35% 43% 44% 46% 52% 54% 0% 35% 36% 33% 41% 50% 59% 0% 10% 20% 30% 40% 50% 60% 70% None of these Response protocol and process applications Predictive analytics Business continuity and readiness assessments Advanced and demand planning Risk management Supply chain network optimization/visualization applications Retail All
  13. 13. ALMOST ALL MADE SUPPLY CHAIN CHANGES DUE TO COVID-19 What changes has your company made to your SUPPLY CHAIN as a result of COVID-19? Choose all that apply. 13 2% 29% 30% 32% 38% 40% 47% 49% 1% 26% 31% 32% 31% 30% 47% 56% 0% 10% 20% 30% 40% 50% 60% We didn't make any changes to our supply chain as a result of COVID-19 Invested in regulatory/lobbying efforts to shape policy for company's interests Expanded EMS partnerships (e.g. outsourcing manufacturing, production or supply chain management) Modified end-buyer strategies (e.g. passing price increases to customers, eliminating markets) Explored manufacturing alternatives (e.g. reshoring, moving manufacturing closer to customers) Adjusted sourcing partnerships (e.g. investing in dual sourcing strategies, revising approved vendor lists) Deployed new technology (e.g. better supply chain visibility, risk management, business continuity) Optimized processes (e.g. streamline response times to process recovery, increased incident management coordination) Retail All
  14. 14. MOST MADE LOGISTICS CHANGES DUE TO COVID-19 What changes has your company made to your LOGISTICS as a result of COVID-19? Choose all that apply. 14 3% 21% 30% 32% 34% 34% 37% 38% 44% 1% 17% 26% 33% 34% 31% 41% 37% 42% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% We did not change anything Deployed dual-route transportation strategies Adopted digital technologies (i.e. 3D printing) Changed providers to be closer to customers to minimize movement Needed to re-route to avoid border closures Deployed third party tools and services to provide real-time data on capacity and mode availability Investigated or implemented Transportation Management System technologies Identified additional options for 'last-mile' deliveries to customers Had to quickly identify new options for international shipping Retail All
  15. 15. COVID-19 HAS CHANGED HOW OEMS THINK ABOUT MANUFACTURING PARTNERSHIPS 15 How has COVID-19 impacted your company's approach to working with manufacturing partners? Choose the one answer that most closely applies. 30% 34% 37% 35% 23% 20% 2% 4% 8% 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Retail All More likely to work with large partners that can absorb risk more effectively More likely to bring manufacturing in-house for greater control More likely to work with smaller partners that have more flexibility Less likely to work with manufacturing partners No change
  16. 16. COVID-19 IMPACTED MORE SUPPLY CHAINS THAN OTHER PAST DISRUPTIVE EVENTS Which of the following have had an impact on your company's supply chain in the past 10 years? Choose all that apply. 16 3% 35% 46% 50% 78% 6% 37% 50% 32% 80% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% None of these Natural disaster (tsunami, hurricane, etc.) Geopolitical and trade instability (tariffs, conflicts, wars, large scale protests, etc.) Materials shortages (electronic components, etc.) COVID-19 Retail All
  17. 17. COVID-19 SUPPLY CHAIN ISSUES CAUSED THE GREATEST IMPACT ON OUTCOMES Which of these supply chain issues had the BIGGEST impact on business outcomes? Choose the one answer that most closely applies. 17 8% 11% 15% 66% 8% 3% 2% 77% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Natural disaster (tsunami, hurricane, etc.) Materials shortages (electronic components, etc.) Geopolitical and trade instability (tariffs, conflicts, wars, large scale protests, etc.) COVID-19 Retail All
  18. 18. ABOUT 9 IN 10 REPORTED DIRECT FINANCIAL IMPACTS FROM COVID-19 SUPPLY CHAIN ISSUES To the best of your knowledge, what has been the negative financial impact on your company's business outcomes as a result of supply chain issues related to COVID-19? Choose the one answer that most closely applies. 18 8% 8% 22% 20% 34% 30% 28% 32% 8% 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% All Retail More than $500M $100M - $500M $50M - $100M Less than $50M There has not been any negative financial impact as a result of COVID-19 supply chain issues
  19. 19. STRONG AGREEMENT WITH A RANGE OF STATEMENTS Effective investments in digital technologies and analytics will help companies recover faster from the impacts of COVID-19. 19 49% 44% 42% 44% 7% 10% 2% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% All Retail Strongly agree Agree somewhat Disagree somewhat Strongly disagree
  20. 20. STRONG AGREEMENT WITH A RANGE OF STATEMENTS Our supply chain footprint has shifted notably because of COVID-19. 20 38% 37% 44% 51% 14% 7% 4% 5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% All Retail Strongly agree Agree somewhat Disagree somewhat Strongly disagree
  21. 21. STRONG AGREEMENT WITH A RANGE OF STATEMENTS We've always known the value of a diversified supply chain footprint and sourcing strategies, but recent events (COVID-19, tariffs, etc.) have made it even more clear. 21 42% 37% 45% 49% 11% 13% 2% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% All Retail Strongly agree Agree somewhat Disagree somewhat Strongly disagree
  22. 22. STRONG AGREEMENT WITH A RANGE OF STATEMENTS Outsourcing is the preferred model to reduce risk. 22 26% 30% 40% 38% 24% 25% 10% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% All Retail Strongly agree Agree somewhat Disagree somewhat Strongly disagree
  23. 23. SUPPLY CHAIN RESILIENCE DETAILED FINDINGS 23
  24. 24. MOST CARE ABOUT SUPPLY CHAIN RESILIENCE – ALTHOUGH NOT ALL FUND IT ADEQUATELY Which of the following statements best represents your company culture? 24 66% 72% 28% 24% 6% 4% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% All Retail Supply chain resilience is a core value and is funded appropriately We talk about supply chain resilience but do not adequately fund it We aren't concerned about supply chain resilience
  25. 25. RESILIENCE PROGRAMS FOCUS ON A RANGE OF RISKS What are the top risks that your organization's supply chain resilience program focuses on managing? Choose up to 3 of the following. 25 2% 27% 40% 43% 47% 50% 53% 3% 18% 39% 42% 54% 50% 48% 0% 10% 20% 30% 40% 50% 60% We don't focus on any specific risks Geopolitical concerns Travel restrictions Workforce limitations Price escalations Logistics interruptions Material availability or shortages Retail All
  26. 26. RESILIENCE PROGRAMS HAVE A RANGE OF GOALS What are the key goals of your company's approach to supply chain resilience? Choose all that apply. 26 1% 30% 37% 39% 41% 44% 52% 53% 0% 20% 39% 39% 44% 47% 51% 52% 0% 10% 20% 30% 40% 50% 60% We don't have goals for supply chain resilience Reduce financial risks resulting from falling demand All key suppliers are financially viable Ensure consistent pricing Increase visibility into supply chain to make decisions faster High levels of agility to increase or decrease production Always have multiple sourcing options Ability to recover quickly without impacting customer delivery timelines Retail All
  27. 27. SUPPLY CHAIN STRATEGIES HAVE A RANGE OF FOCAL POINTS Which of the following are important to your supply chain strategies in the next two years? Choose all that apply. 27 1% 38% 43% 53% 60% 61% 1% 39% 41% 51% 61% 60% 0% 10% 20% 30% 40% 50% 60% 70% None of these Moving manufacturing closer to end customer and markets Effectively assess supplier community Ability to predict shifts in supply chain Reduce risk Ability to respond rapidly to business/supply disruptions Retail All
  28. 28. MOST TRACK METRICS FOR SUPPLY CHAIN RESILIENCY What metrics does your organization use to measure supply chain resiliency? Choose all that apply. 28 5% 41% 42% 69% 6% 38% 41% 63% 0% 10% 20% 30% 40% 50% 60% 70% 80% We don't measure supply chain resiliency Time-to-Survive Time-to-Thrive Time-to-Recover Retail All
  29. 29. NO CONSENSUS ON GREATEST SUPPLY CHAIN RISK In your opinion, what creates the greatest risk within your supply chain? Choose the one answer that most closely applies. 29 28% 33% 26% 19% 19% 19% 27% 29% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% All Retail Sourcing issues: materials shortages, component issues, etc. Trade issues: tariffs, regulations, geopolitical instability, etc. Demand issues: inventory optimization, storage costs, time-to-market, etc. Logistics issues: lack of predictability and visibility into capacity availability and timeliness of delivery
  30. 30. DOWNLOAD THE FULL SURVEY REPORT 30
  31. 31. FOR MORE INFORMATION Dimensional Research® provides practical market research for technology companies. We partner with our clients to deliver actionable information that reduces risks, increases customer satisfaction, and grows the business. Our researchers are experts in the applications, devices, and infrastructure used by modern businesses and their customers. For more information, visit: www.dimensionalresearch.com 31 Jabil (NYSE: JBL) is a manufacturing solutions provider with over 260,000 employees across 100 locations in 30 countries. The world's leading brands rely on Jabil's unmatched breadth and depth of end-market experience, technical and design capabilities, manufacturing know-how, supply chain insights and global product management expertise. Driven by a common purpose, Jabil and its people are committed to making a positive impact on their local community and the environment. For more information, visit: www.jabil.com

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