NRF Forecasts Record Increases in 2021 Retail Sales: Are DCs Ready?

NRF Forecasts Record Increases in 2021 Retail Sales: Are DCs Ready?

Supply chain experts weigh-in on the challenges of rising demand and industry solutions

According to the newly released National Retail Federation (NRF) 2021 retail sales forecast, retail sales are slated to rise between 6.5 and 8.2 percent over 2020 results, which equates to a $4.33 trillion uptick. This prediction hinges on the success of COVID-19 vaccinations and the re-opening of the economy, but should it play out, would mark the highest annual retail sales growth mark since 2004.

It would also represent an inflection point for distribution centers already struggling to keep pace. 2020 and the pandemic-related eCommerce boom tested supply chain capabilities with previously unseen levels of demand and stretched distribution center capabilities to their limits.

“I think that this year is going to be a nightmare for DC’s,” said Katherine Ross, recently retired Worldwide Vice President, Customer and Logistics Services for J&J, where she was responsible for enterprise-wide warehousing, transportation and customer service organizations globally. “There are a lot of upstream kinks in the supply chain, particularly for internationally sourced goods and factors like raw material shortfalls, port blockages and container shortages.”

Ross forecasts that these challenges will demand decisive responses. “Smart companies will be building buffer inventory for goods long in advance of peak sales periods to smooth out supply interruptions,” she explained. “This will drive more demand for warehousing in an already tight market. I would be locking in contracts for spare warehousing right now. Companies that aren’t able to secure buffer inventory will be operating hand-to-mouth, which requires a tight orchestration in warehouses – from receiving to shipping – to turn orders around quickly,”

She also stressed the importance of optimizing the DC, saying: “There will be much more variability in labor and equipment requirements, so focusing on the creation of spare capacity in the warehousing employee base – seasonal workers and trained temps – along with extra forklifts and mobile devices will be important for capturing demand surges. Because it can help companies rapidly onboard employees, Voxware is an asset in this environment.”

Indeed, onboarding those new employees is now a lightning-quick process using Voxware’s Natural Language Voice Recognition engine supporting 30+ languages: VoxTempo®. Eliminating the need for voice training, with VoxTempo any individual can equip themselves with a headset and immediately begin issuing commands that the system will recognize, register and provide a response. This practically eliminates the time and effort needed to introduce new workers to the warehouse floor.

We asked Sandy McKay, noted expert in supply chain execution, for his take on the situation. “There is going to be a lot of pressure put on supply chains this coming year with the recovery and also with a new administration in office,” he told Voxware.

“Dynamic fulfillment requires a discipline around people, processes, technology and data. The sheer number of moving parts require organizations to use systems that can look ahead – if tariffs are changing, container charges are going up or down, raw material costs going up or down, incoming weather patterns and so on – to provide actionable information, adjustment to consumer shopping patterns and keep the supply chain moving for wholesale and eCom.” he explained. “This will be a challenge for the companies who continue to run their distribution centers as they have traditionally rather than looking ahead and making adjustments.”

Of note, Voxware’s enterprise supply chain analytics solution, VoxPilot®, aggregates and analyzes internal and external data sources and presents real-time and historical information, predicts future events and helps users navigate the right course of action to immediately resolve problems that may surface.

McKay stressed the importance of self-assessment: “Warehouses will need to be reevaluated to see if their current flow will handle the new flow patterns and volumes. Companies should look at their velocity and sales reports to see which SKUs will be top, medium and low sellers, and in which channels. Additionally, the traffic patterns will need to be evaluated to make sure the workforce is safe and efficient.

And there are new 2021 wrinkles to consider, beyond the eCom crush. “Another issue companies need to address is the sustainability of their supply chain and its carbon footprint,” McKay cautioned. “With a new administration in office this is going to be an added pressure and potential cost for companies. I do not believe it will be too long before carbon emissions will need to be reported.”

An additional 6.5 to 8.2 percent growth on top of already historically high demand is an intimidating prospect. But it also presents an incredible opportunity for growth. Organizations who deploy advanced technology solutions to optimize the distribution center can harness the potential of this hyper-growth environment and achieve significant positive results.

For DCs, what was once considered futureproofing the DC is no longer a luxury, but a necessity. That hypothetical future point arrived quicker than anticipated, and DCs must adapt. Have you put your operation in the best position to succeed and meet demand effectively? If there are areas that require attention, now is the time to address them. Contact Voxware today for a no-pressure consultation to learn how we can help.

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