In the past two years, there has been a shift in how supermarket supply chains function. A report by Acosta, a US-based sales and marketing agency, on grocery store trends for 2021 indicates that 46% of people now use online delivery more than they did before the pandemic.
A shift from physical grocery stores to digital grocery stores is indicative of a shift from traditional shopping practices to demand-driven buying practices. When demand can be anticipated with accuracy, it can be delivered efficiently with demand forecasting techniques.
Supermarkets have multiple touchpoints when attracting a customer base. These include psychological, social, cultural, and economic touchpoints. Even a moderate variation in any of these factors leads to a varied demand dynamic. Therefore, it is essential to switch to a supply chain model that acts on the forecasted demand to cut down wastages, enhance viability and eliminate bottlenecks.
In the US alone, more than 80% of the shoppers prefer traditional superstores over supercentres or gourmet food stores, with sales amounting to over 700 billion dollars in revenue. But the fact remains that some of the most complex challenges have hit supermarkets over the past two years.
Demand-driven challenges faced by supermarkets
- Perishable Goods:
Supermarkets inventory consists of fresh fruits, vegetables, dairy, and meat products, which come with short shelf lives. This presents the challenge of selling them before their expiry periods.
- Competing With Online Delivery Services:
A report by McKinsey noted an average of 15-30% growth in online sales across all supermarket categories. The digitalization of supermarkets puts traditional supermarkets at a competitive disadvantage in significant ways. With challenges of lower display space and physical inventory management limitations, traditional stores struggle with the challenges that are absent in online delivery systems.
- Multiple Target Audiences:
With categories such as baby-care, alcohol, groceries, and make-up all under one umbrella, it becomes difficult for grocery stores to push targeted advertising due to multiple target audiences.
- Environmental Concerns:
Concerns around environmental degradation have brought forth the added expectation of dealing with sourcing and management of products in a manner that does not harm the environment.
- Production Bottlenecks:
Production bottlenecks have stemmed in all fragments of the supermarket supply chain, but especially those that deal with imported perishable goods. Food products like exotic fruits and vegetables have been specifically hit due to labor shortages in developing countries that supply imported food.
How automation is transforming supermarkets
With these niche challenges threatening supermarket sustenance, it becomes important to predict the consumption patterns of users to establish market viability. Demand forecasting ensures that supply chain wastages are mitigated and that the inventory caters to the targeted demand. With a global shift to digital stores underway, physical supermarkets can benefit from automating processes that make traditional market models viable.
Supermarkets have upgraded to large-scale automation, from automated checkouts to sensor tags on products. These practices not only help keep track of data provided by users, but also present a crucial challenge. Automating a standalone process only benefits the enterprise if larger chunks of the supply chain are also automated.
Data-driven forecasting builds accurate information pipelines based on patterns of purchase and forecasts of global trends. These pipelines feed data to every level of the supply chain, thus enabling supply to be specially curated for the demand.
Data-driven demand forecasting for the win
Demand forecasting elevates supply management to a level of tremendous viability and profitability. The processes it enables are-
1. On-Time Replenishment
Accurate demand forecasting guarantees replenishment of inventory based on real-time data. With automated information tracking and data management, anticipating future demand comes naturally. Accurate data ensures that stock replenishment is at par with future demand.
2. Optimized Resource Management
It becomes easy to identify bottlenecks and points of wastage in the supermarket supply chain with a demand-driven system in place. Where resources are scarce, demand-driven forecasting can identify critical junctions and points of intervention for resources to be deployed.
Both humans, as well as financial resource distribution, benefit from data-driven demand forecasting, enabling profitability for the supplier and respectable wages for workers.
3. Increased Supply Chain Visibility
Demand forecasting in supermarket supply chains permeates down to every link in the supply chain. All channels, from transportation and distribution, benefit from precise, demand-driven information. When demand is accurately predicted, procurement of goods and services becomes a precise activity, eliminating the need for reevaluation and repetitive re-ordering.
The backflow of information ensures efficient material flow through the supply chain.
4. Reduced Run-Hours
When the demand-driven data informing supply becomes readily available and undisputable, the time required for managing operations also reduces. Cutting down operation time also cuts down operational costs within supermarket supply chains.
High-value forecasting for increased sales
In the age of rapid digitalization and automation, supply chains are no longer restricted to single-story operations. Supermarket supply chains, in particular, carry multilayered communication channels and distribution systems. To integrate these with the global supply chain in order to meet customer demand, it is important to integrate demand-driven forecasting. Demand-driven forecasting is a key performance optic that enhances both the user experience as well as profitability for the owner.
Throughput’s AI Solution uses data to forecast demand and acts on it to create an undisrupted material flow through the supply chain pipeline. ThroughPut AI Solution presents vast data in the form of accessible interfaces and dashboards in order to automate sales, purchasing, distribution, and manufacturing for enhanced profitability. To see your supply chain systems optimized for higher efficiency and visibility with supermarket supply chain software, book a demo now.