Businesses in Europe face a new reality: unsettling business conditions combined with a volatile global financial market.
The interconnected nature of global economies and corporate outlooks will become more pronounced in 2012 – and these market shifts could make this year a particularly vexing one for businesses. In particular, the economic and market volatility will force businesses in the retail and manufacturing sectors to adapt and reinvent to remain competitive – especially from a supply chain perspective.
Supply chain challenges in Europe can be better understood when they are analyzed in the context of the retail and manufacturing industries and how they impact each other. The retail industry is undergoing a major shift where the European consumer profile has changed. Today, the new consumer is connected, social and mobile. As explained in Hamish Brewer’s post – Retail’s New Rules: Are You Ready? – a new era in retail is firmly upon us. Consumers today actively price compare in real time with their mobile devices. They expect retailers to give them what they want, where and when they want it.
As retailers try to establish how to address the new consumer profile, they need to consider how to work across multiple channels including online, mobile, brick-and-mortar and catalogue channels (to name a few). The same consumer is now omnipresent and makes purchasing decisions in different ways than ever before, increasing the need for supply chain transformation.
European retailers are also rethinking the supply chain equation — reconsidering the empowerment of store operations versus having more centralized planning capabilities with localized offerings. It is critical for retailers to master this balance to cater to unprecedented consumer behaviour on a much more localized level.
Manufacturers also are challenged to manage the volatile demand they are experiencing from the end consumer that is several tiers ahead of them. Their constant battle is to reduce the variability in demand. The supply base for these manufacturing companies has moved toward low-cost supply countries, which has resulted in increased and uncertain lead times.
The overall working relationship between manufacturers and retailers is undergoing change; traditionally this relationship was based on mistrust and lack of willingness to share data or collaborate. Given Europe’s macro-economic circumstances where many countries are in crisis, organizations are being forced to work more closely together to achieve common supply chain goals.
European organizations that take time out to understand these challenges will be more likely to come out ahead of those that merely react. Below is a video interview I conducted highlighting additional European supply chain challenges ahead and what businesses in the retail and manufacturing sectors need to do to stay ahead of the curve.
For those of you on the ground in Europe, I’d like to know about the challenges you see and how they align with the ones described here.