Priorities of retail supply chain management in the U.S. 2020

The fast changes in consumer goods consumption caused by the pandemic affected the whole retail supply chain like never before. While 76 percent of retailers used to prioritize the cost efficiency and the quality of order delivery, the current emergency required higher customization, scalability, and speed of product launches. The enforcement of restriction measures induced the stock-piling purchases of essential commodities in a very short time length. Therefore, grocery products accounted for almost half of the out-of-stock volume in worldwide retail.

Inventory indicators

On a bigger scale, changes of retail supply can be seen in monthly inventories-to-sales ratio. This percentage indicates the ratio between the value of inventories at the end of the month and the monthly sales. In the second half of 2020, in the United States, the ratio dropped and remained under 1.3 for the rest of the year. This would imply that retailers could liquidate their inventories in 1.3 months and adjusted with the changing demand accordingly. Over April 2020, the inventories-to-sales ratio amounted to 1.68 points, the peak value for the year, and probably the most critical point for U.S. retail supply.

Who carries the costs?

The mismatch between goods supply and actual sales produced costs for businesses at different levels. A worldwide study estimated the inventory distortion costs for manufacturers at over 650 million U.S. dollars. Compared to them, supply chain players and store retailers lost significantly less.