Nearly 85% of U.S. retailers haven’t completed the digitization processes (using a cloud-based platform with real-time visibility and automation capabilities) required to give them full control of their supply chain, according to new research released from Gravity Supply Chain Solutions, Chicago.
The research, based on interviews with 500 retail executives in the United States and the UK, reveals that only 15% of U.S. retail businesses have completed digitization of their supply chain management processes. Despite this slow rate of digitization, the report finds that 60% of U.S. retailers see supply chain digitization as critical to creating seamless omni-channel retail experiences.
For retailers relying on manual supply chain management processes, cost is perceived to be the main blocker to digitization projects, and this is the case for nearly half (46%) of U.S. retailers whose supply remain undigitized. This concern could be attributed to a fear of such projects failing to deliver a return on investment, considering that a further 29% of U.S. respondents cited the inability to justify cost as the most significant blocker to supply chain digitization.
“With strong investment in front-end technologies designed to enhance the customer experience such as smart kiosks and AR apps targeted ads, it begs the questions why retailers appear slow to digitize their supply chains,” says Graham Parker, chief executive officer. “If retailers can’t bring speed to market to meet growing consumer demand, this will disappoint customers and potentially undermine investments made to improve the customer experience at the front-end. Clearly, the supply chain is the final frontier of retail digitization, and while retailers are anxious about the cost, not moving from manual spreadsheet-based supply chain management toward digitized processes that provide speed, efficiency and informed decision making could cost them a whole lot more.”
According to the research, many U.S. retail businesses that have not completed digitization projects say they do recognize the value in doing so. Those yet to undergo supply chain digitization believe the lower cost of operation is the strongest benefit (according to 44%), followed by higher profit margins (40%) and greater customer experience (36%).
For those who have fully digitized their supply chains, one significant benefit has been better decision-making, with 76% stating they believe their organization has enough data and insight to make the right decisions about its supply chain following digitization. More than half (55%) of retailers say that order tracking across all touchpoints has improved the customer experience, while 53% say customer experience increased personalization of products.
The report also revealed that the vast majority of retailers understand the value of supply chain digitization. However, many are yet to realize how urgently they should be completing digitization projects.