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CPR companies brace for holiday supply chain hurdles, pivot to local sourcing

EditorAmbhini Aishwarya
Published 11/17/2023, 02:31 AM
Updated 11/17/2023, 02:31 AM

As the holiday season approaches, consumer products and retail (CPR) organizations are gearing up to tackle anticipated supply chain challenges, including potential stockouts and late deliveries. A recent study by the Capgemini Research Institute has revealed that a significant number of these companies expect disruptions during the crucial shopping period.

In August and September 2023, the institute surveyed 300 CPR industry organizations about their strategies to address these challenges, particularly during Black Friday and the broader holiday season. The findings indicate that two out of five retail organizations anticipate stockouts or product shortages on Black Friday, with this figure rising to 47% during the holiday season. Additionally, 38% predict late deliveries due to import delays, and 35% foresee labor shortages.

To combat these issues, CPR companies are adjusting their supply chain strategies by diversifying and localizing their operations. Approximately 79% are diversifying their supplier base, while 71% are investing in regionalization and localization. 'Friend-shoring,' which involves partnering with politically and economically aligned countries to reduce risk exposure, is being actively pursued by 83% of organizations.

These strategic shifts come in response to key global supply chain challenges such as inflation, geopolitical tensions, over-reliance on specific countries for components, fluctuating freight rates, and port congestions. Geopolitical issues alone affect the costs and efficiency of supply chains for 77% of CPR organizations. To counter these challenges, nearshoring and domestic sourcing are being emphasized to balance cost with resilience.

By 2025, it is expected that offshore procurement will decrease by 7%, with nearshoring and domestic sourcing increasing by 4% and 3%, respectively. North America is at the forefront of this trend, with a predicted 9% increase in nearshore procurement and a 4% increase in domestic procurement by the same year. Offshoring procurement is projected to reduce by 15%.

Furthermore, CPR organizations are focusing on building cost-efficient supply chains through improved planning, process enhancement, and automation. Over the next 12-18 months, improving supply chain cost efficiency is a top priority for 42% of these organizations. They anticipate significant changes in supply chain operations, with a heavy emphasis on data management and cloud computing as key drivers of this transformation.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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