We’re in the midst of an import crisis. NRF recently reported that, after record breaking volumes in spring, retail shipments at large U.S. ports from July to December will likely be 1.5% less than they were a year prior. But that is just the beginning. Shipping companies’ rising prices, interest rate increases, and staggering inflation rates are driving many retailers to reevaluate their import strategies before it’s too late.
Many stocked up on holiday goods over the summer to prevent logistics challenges during peak season. Some reduced the number of imports they carried, with many reducing all SKUs to retain profits. While still others passed the 8.5% inflation rate on to their customers.
Let’s take a look at the present state of retail’s burgeoning import crisis, along with a few strategies to nip it in the bud before (and more skillfully than) the competition.
The reasons behind the altered landscape
No retailer wants to promise customers a product that they don’t have. However, in the past two years many retailers have found themselves in this exact predicament. Interest rate increases, inflation, and delays at customs have made imports unreliable. Factor in the production delays, which lead to supply chain shortages, and you have a recipe for disaster.
Pandemic induced production and shipping delays aren’t even retailers’ only concern. FedEx just announced even higher peak season surcharges for the 2022 holiday season. In addition to this, the cost of shipping freights are up by 80% after having nearly tripled in the past year alone.
The present day shipping environment is neither affordable nor reliable, so it makes sense that suppliers and retailers are seeking out alternative solutions.
The result? More retailers are sourcing from regional wholesalers. Those that do sell imported goods are doing so sparingly, while making extra effort to communicate with customers about the inflation rates of imported goods. Other retailers and suppliers are changing their business model altogether.
Ineffective import mitigation strategies
Many industries rely on imports, but some can’t function without them. The global pharmaceuticals, automobile and auto parts, apparel, plastic, and electronics manufacturing industries are the most dependent on imported materials. So, what happens when a manufacturer doesn’t have the materials they need to complete a popular product? Companies have to get creative about how they source and manage inventory.
Companies started trimming SKUs to cut costs back in 2020, when the early impacts of the pandemic on the retail industry became undeniable. Reducing SKUs without using product and performance data to identify laggards, however, is risky business. Most retailers don’t have access to 360-degree product insights with robust visuals. So, essential product data –– like whether an item is sourced locally or internationally –– is lost in translation.
Brands that cut SKUs without product and performance data to inform their decision run a big risk of eliminating the wrong product. Only a product lifecycle management solution that’s built for the unique needs of the retail industry can give retailers a centralized hub for product data and communications about the product –– such as customizable POs, in-app sticky notes about product features, materials used, colors, number available, etc.
PLM increases supply chain agility
Retailers don’t have to eliminate in-demand imports. But imports have become less reliable and more expensive. Rather than eliminate imports or imported materials entirely, retailers can diversify their supplier catalog, so they always have access to the right products to fill every customer need. Similarly, suppliers that diversify their client catalog of retailers are best positioned to maintain margins. Even when retailers panic and do things like: lowball pricing, change their order volumes, or refuse to sign off on an order at the last second.
A fashion PLM can help suppliers reduce the time it takes to confirm a PO from nearly 3 weeks to 30 minutes, freeing up the team to focus on building relationships. But that’s not all. The right retail PLM lets suppliers group items by materials used. Suppliers can use their PLM solution to identify the material, find a replacement, and pivot more easily when imported production materials are in a shipping stalemate.
Without a comprehensive product lifecycle management solution, retailers and suppliers lack the agility necessary to pivot their operating strategy when issues arise. Building new retailer/supplier relationships takes time, which companies that are tied up in clerical work rarely have. Even fewer retailers or suppliers can pivot their sourcing/production strategy without slowing down a product’s time to market. This is where Surefront’s retail PLM software really shines.
Surefront’s retail PLM software gives retailers and suppliers a 360-degree view of each and every product. Companies can identify exactly where a product is in the supply chain to address bottlenecks before they impact product availability. Surefront’s product lifecycle management solution even has a SmartCatalog feature that lets retailers and suppliers view products and make notes on a robust visual platform. For total product visibility, faster time to market, and the ability to pivot seamlessly, before the competition. Free up your time to build stronger retailer/supplier relationships and future-proof your business with Surefront’s retail PLM.
Ready to experience the difference of a retail PLM that allows you to interface with external suppliers? Surefront’s product lifecycle management solution was built by a retailer to service the retail industry’s unique needs. It’s time we got better acquainted. Book a custom demo with one of our product lifecycle management experts today!
Product lifecycle management is a quickly evolving industry with a lot of moving parts. We do all of the research, so you don’t have to. Stay ahead of news & trends by subscribing to our Product Lifecycle Management Blog.
You May Also Like
These Related Stories