How Brands Can Tackle Reputation and Revenue Challenges Driven by Persistent Supply Chain Disruptions
Are Traasdahl, founder and CEO of Crisp
The backed-up ports and material shortages that haunted companies during the pandemic have settled to a somewhat manageable level. But a new set of supply chain challenges have emerged in their place. The most challenging area of friction? Trade route disruption.
Global areas of conflict are forcing companies to reroute shipments around the Red Sea, where 15% of global seaborne trade typically passes, and drought has led to a 36% reduction in ship crossings of the Panama Canal. The Baltimore bridge collapse and resulting cargo congestion put a slowdown on port traffic, with Port of Baltimore rail traffic also being rerouted to the Ports of New York and New Jersey.
Meanwhile, labor shortages continue to impact production, warehousing and logistics, which complicate delivery and add to the existing challenge of out-of-stocks, delays and increased costs.
And none of this is invisible to consumers or investors who are already feeling the impact of costs being passed on to buyers through retail channels. While trade route normalization will take time to solve, many companies are realizing they need better insights into what’s happening across their supply chain, especially at, and near, the point of sale.
Unblocking the real-time view of sales and inventory
Often, critical retailer and distributor data that CPG brands need to make better decisions about matters like inventory management is no longer actionable by the time they see it. That’s because current data access processes take considerable time to pull and analyze from disparate and difficult-to-reach retail portals.
By leveraging real-time point-of-sale (POS) and inventory data, brands can more quickly understand both positive and negative changes in sales, inventory and distribution of products. This can help them proactively address supply chain challenges and adopt a more data-driven approach to delivering inventory where demand is highest.
For example, MUSH, a maker of ready-to-eat overnight oats that rose to fame on “Shark Tank,” faced headwinds as it sought to bring healthy daily breakfast options to more people. One of those challenges was inventory management. The company was experiencing 40% out-of-stock rates, impacting both revenue and reputation.
MUSH’s challenge was rooted in a lack of real-time data. Team members were downloading spreadsheets, manipulating data, and creating pivot tables to understand inventory and sales patterns. This created a lack of clarity across teams and impacted their ability to make fast, informed decisions.
Things changed for MUSH when it adopted a collaborative data platform with advanced analytics allowing it to aggregate data across all its retail channels. With this real-time data, MUSH started to identify and take action on trends with distributors to proactively revise purchase orders. This helped MUSH boost store fill-rate percentages by 5% from 2021 to 2022, and today it exceeds 90% fill-rates across its distributor partners.
Ritual, a provider of science-backed, women-owned vitamin essentials, tapped into a better data solution to streamline its shift from online sales to an omnichannel model.
The company’s initial data set-up was useful for a direct-to-consumer brand, with sales data, 3PL order information, and digital advertising data all housed within one platform. But as Ritual ventured into brick-and-mortar sales, it quickly saw challenges as it tried to manage retail data ingestion in-house.
After experiencing challenges with in-house efforts to extract retailer inventory and sales data into Google Sheets and build individual API integrations into retailer portals, Ritual turned to a third-party data platform to integrate all retail channel data into its existing platform. This integration quickly allowed operations to manage the entire supply chain with increased visibility, while sales could monitor retail channels to make fast adjustments, and finance could plan more strategically.
The integration also enabled insight-driven capabilities for Ritual. A “Weeks-Worth of Inventory” report, for example, allowed team members to gauge stock levels by product SKU and location. And a unified orders model provided a holistic view of brick-and-mortar, Amazon and direct-to-consumer orders. Visibility of the complete product journey also fueled optimization initiatives to minimize stockouts and markdowns, leading to greater on-shelf success.
ZURU is a $1B New Zealand-based toy company that distributes across 120 countries. Its lean business model minimizes reliance on warehousing, opting instead to ship direct-to-store from its manufacturing facilities.
Sales operations and analytics team members had been spending 10 to 15 hours a week manually pulling reports. This gave them little time to uncover and present important insights. And with team members spread across multiple time zones, it was even more difficult to aggregate information and work efficiently as a unit. By gaining real-time access to and analysis of store-level data from retailers, ZURU was able to shift away from number crunching and embrace more agile, responsive, and efficient global operations.
Now, ZURU not only advises retailers on the volume of products to stock, but it can also direct retailers on where product needs to go for optimal distribution. Real-time, store-level insights also allow the company to craft strong go-forward strategies for new products early in their launch. These insights have also helped ZURU devise strategies for the crucial holiday shopping season. In November and December of 2022, for example, the company saw an 86% year-over-year sales increase at Walmart.
Data for the disruptions ahead
Despite the pressures of route disruptions, each of these brands took tangible steps to gain greater visibility into market demand, real-time inventory levels, supply chain realities and production options, optimizing the delivery of the right products to the right place, at the right time. By reducing the impact of change for consumers, they also boosted revenue and reputation in the market.
Resilient, responsive and transparent supply chains remain critical for brands as they face an ever-evolving slew of supply chain challenges. But by combining existing operational and logistics data with real-time online and offline retail sales and distribution data, brands can take a more proactive approach to avoiding disruption and safeguard their brands in the eyes of the market.
Are Traasdahl is Co-Founder and CEO at Crisp, an open data platform that harmonizes and normalizes retail data to increase profitability and reduce waste.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.