11 Challenges of Building a Sustainable Grocery Supply Chain
At a Glance
- Traditional Legacy systems have emerged as a major impediment for grocers to embrace digital disruptions.
- Grocers face major challenges across operational efficiency, policy implementation and workforce management.
- 9% of grocers have the analytic talent required for data management and analysis.
- This article explores strategic areas for navigating the challenges to build a sustainable supply chain.
In an age where sustainability takes center stage, grocers face a distinct set of hurdles as they endeavor to establish sustainable supply chains. Sustainability entails continuously reducing operational costs, aligning with net-zero carbon emission objectives, and adapting to the ever-changing dynamics of a highly competitive market with slim profit margins.
This article will delve into the eleven primary challenges that grocers confront as they embark on their quest for sustainability, categorized under three main themes: operational efficiencies, vision and policies, and workforce management.
In today's data-driven landscape, traditional legacy systems have emerged as a major impediment for grocers. Overcoming operational inefficiencies and errors is contingent upon having a highly skilled workforce adept at harnessing data for predictive analysis. Here are some key operational challenges that grocers encounter, hindering their journey toward sustainable supply chains:
Real-Time Visibility - The ability to track deliveries and assortments in real time, especially at various supply chain points such as food manufacturers processors and during shipments, presents substantial challenges. Ensuring that each truckload preserves products before expiration is critical to prevent wastage and reduce carbon emissions.
Out-of-Stock Challenges - In the intensely competitive grocery sector, out-of-stock items can drive customers away. Accurate demand forecasting, empowered by predictive analytics, is crucial to maintaining just-in-time inventory and avoiding stockouts. Legacy systems may no longer suffice in meeting the demands of digitally savvy Gen Z consumers.
Cost of Materials and Inflation - Rapid inflation has significantly raised material costs, placing pressure on grocers' profit margins. To counter this, many grocers are turning to private-label brands to mitigate the impact of inflation and bolster sustainability.
Omnichannel Shoppers - The proliferation of online deliveries, curbside pickups, and contactless shopping options has given rise to challenges related to staffing constraints and operational delays. Adapting to the preferences of omnichannel shoppers is crucial, necessitating substantial changes in systems and processes to provide a seamless shopping experience.
Vision and Policy Implementation
Grocery Doppios’s research suggests that 71% of grocers have prioritized improving sustainability in 2023, this commitment must transcend long-term growth. Sustainability should be more than a trendy buzzword; it necessitates transforming a company's vision and day-to-day decision-making processes. This transformation should encompass investments in eco-friendly practices, streamlined logistics, promoting diversity in hiring, ensuring fair wages, and providing comprehensive employee benefits. These sustainability endeavors must be not only externally communicated but also firmly embedded in the organization's policies. Below, we explore the challenges that grocers need to address in their quest for sustainability.
Evaluating ROI in Sustainable Ventures - For sustainable initiatives to yield lasting benefits, grocers must carefully assess their financial impact on the bottom line. This involves a dedicated commitment to measuring and reporting on the outcomes of these initiatives, ensuring they contribute to the company's long-term sustainability goals.
Data Backlog - A backlog of data can impede efforts to gauge the impact of sustainable initiatives effectively. Grocers require robust data collection and analysis capabilities to monitor progress comprehensively and make informed decisions based on data-driven insights.
Adoption of Technology - While artificial intelligence (AI) adoption is surging within the grocery industry, promising to automate routine tasks and free up human resources for strategic roles, a notable challenge lies in the shortage of analytical talent. As per Grocery Doppio's research report, on "Impact of AI in Grocery," 73% of grocery executives expect AI capabilities to be integrated into all software within the next two years. However, to fully unlock the potential of these technologies, grocers must address the scarcity of skilled professionals capable of harnessing AI effectively.
Workforce and Management
Overcoming workforce challenges and ensuring that employees receive the necessary training and skills to manage data, understand the data, sustainable initiatives, and integrate AI technologies is a pivotal step for grocers in their journey toward sustainability. Here, we outline some specific hurdles grocers encounter concerning their talent pool.
Analytical Talent Shortage - A significant challenge highlighted in a report om Impact of AI in grocery is the severe shortage of analytical talent within the grocery industry. Shockingly, only 9% of grocers possess the essential skills to effectively manage and analyze the vast amounts of data generated in the digital age. Addressing this talent gap is imperative to leverage data-driven insights for sustainable supply chain management.
Labor Shortages - Beyond data analytics, grocers also grapple with labor shortages, especially when filling positions in manufacturing facilities and retail. Aspirations for higher-skilled roles and career growth are rising among the workforce, making it increasingly challenging for grocers to attract and retain talent in these positions.
Fair Wages and Diversity - While fair wages are a fundamental requirement, they must extend beyond mere adequacy. Grocers are urged to provide competitive wages coupled with comprehensive health benefits. Moreover, there's a growing emphasis on gender diversity, highlighting the need for equitable opportunities and compensation for all employees.
AI and Sensory IoT Infrastructure - The rising prominence of AI in scaling sustainability efforts within the grocery industry is promising. However, to harness AI effectively for sustainable supply chain management, a skilled workforce is essential. Grocers must invest in training and development programs to equip their employees with the necessary skills to handle data integration and AI technologies proficiently.
Building a sustainable supply chain in the grocery industry is complex and evolving. Grocers must navigate challenges related to operational efficiency, omnichannel shopping, stock management, cost pressures, vision and policy alignment, ROI evaluation, data utilization, workforce development, and technology adoption. Success in sustainability will not only benefit the environment but also secure a competitive edge in an industry driven by evolving consumer preferences and expectations.