Presentation from NRF 2022: Retail’s Big Show Kiri Katterhenry, Bain & Company Inc. Carla Nasr, Bain & Company Inc.

1. The 360 supply
chain: Bain &
Company
examines
changes needed
to make supply
chains the new
customer value
proposition
Carla Nasr
Partner, New York
Bain & Company Inc.
Kiri Katterhenry
Associate Partner,
Bain & Company Inc.

2. in a post-COVID World
January 18, 2021
The future of
supply chain

3. Our speakers for today
Carla
Nasr
Kiri
Katterhenry
Partner,
New York
Carla.Nasr@Bain.com
Associate Partner,
Houston
Kiri.Katterhenry@Bain.com

4. The future retail supply chain is
Efficient
Always king
Sustainable
Win-win
Resilient
Competitive advantage

5. Retailers are already moving in this direction
Do you have a program or
metrics in place to track
supply chain resiliency?
~60%
Yes No
How important are
sustainability (ESG) goals to
your supply chain?
~55%
Important Less important
How important is efficiency
compared to pre-COVID?
~75%
More
important
Less
important
Resilient Sustainable Efficient

6. Labor
shortage
68%
Shift to
e-commerce
67%
Near-term challenges have driven resiliency to the top of
supply chain agendas
Delayed
orders
Supply
shortage
77%
71%
% O F R E TA I L R E S P O N D E N T S FA C I N G P R E S S U R E

7. Making delivery
policies more
flexible
Increasing
visibility
Re-routing
lanes
and ports
53% 50% 45%
We are using new
ports to reduce
congestion and
private ship
capacity to better
execute freight flow.
D E P A R T M E N T
S T O R E R E T A I L E R
“
Delayed Orders
% Of retail respondents implementing strategy in
response to pressure

8. Optimizing
inventory
Increasing
visibility
Buying ahead
and holding
inventory
64% 56% 54%
We have been improving
end-to-end supply
chain visibility from
supplier's production
schedules right up to
the dock door.
E - C O M M E R C E
R E T A I L E R
“
Supply shortage
% Of retail respondents implementing strategy in
response to pressure

9. Increasing pay
(base, bonuses)
Increasing
distribution
automation
Cross-training
distribution
associates
81% 57% 54%
We are increasing
pay for employees, in
particular HGV drivers.
G R O C E R Y
R E T A I L E R
“
Labor shortage
% Of retail respondents implementing strategy in
response to pressure

10. Optimizing
inventory
Deploying last mile
delivery strategies
Opening in-market
distribution assets
66% 50% 44%
Our focus is on
optimizing inventory so
the right product is
in the right place at
the right time.
M A S S
R E T A I L E R
“
Shift to e-commerce
% Of retail respondents implementing strategy in
response to pressure

11. Many retailers are also pushing fulfillment closer to consumers
to efficiently adapt to changing consumer demand
What changes are you making to your supply chain network?
( % O F R E TA I L E R S I M P L E M E N T I N G C H A N G E S )
40%
38%
30%
26%
23%
16%

12. Network nodes and locations
Dependencies
Degree and timeliness of data
Exposure to trade risks
Sustainability risks
Manufacturing complexity
Stability of supply base
Stability of labor pools
Risk exposure Resilience
Supplier dependency/alternatives
Fulfilment options
Manufacturing/assembly nodes
Real-time visibility
Ability to ingest and synthesize data
Adaptable, agile network structures
Capacity and inventory buffer
Flexible workforce configurations
Though, winning retailers are building a comprehensive
resiliency program to balance their long-term risk exposure

13. Results
Context
~25%
of 2020
revenue
protected
Customer
satisfaction
remained high
Began investing in resiliency program in 2018
Supply chain has faced storm of issues due to COVID:
Strategy
$30B+
retailer
C A SE STU D Y
Overnight doubling
of eCommerce
Warehouse
automation
Supply
volatility
Labor
shortage
Data
capture
Attracting
labor
Need for visibility has
never been greater.
Knowing about a delayed
shipment at the time of
intended arrival is less
helpful than knowing about a
potential delay 2 days prior.
“
~33%
less
warehouse
labor

14. Which sustainability goals are the most important to your supply chain?
( % W I T H S U S TA I N A B I L I T Y G O A L )
Retailers are taking steps to meet their sustainability goals
78% 75% 71%
66% 64%
42%

15. How important will
traceability be in responding
to supply chain pressures?
~65%
Important Less important
Forward thinking
retailers are turning
to traceability efforts
Important Less important
How important are the following types of traceability
information to your company?
58%
58%
58%
54%
51%
49%
46%
42%

16. Results
Context
~35%
Reduction
in carbon
emissions
Ranked in
customer
satisfaction
Customers indicated importance of sustainability
Leadership realized sustainability efforts could also
reduce cost
Strategy
$5B
retailer
C A SE STU D Y
Minimized carbon
emissions
Defined and
tracked KPCs
Accountability
through 3rd
party audits
We found that
sustainability is
inextricably linked to
efficiency. ESG initiatives
are now part of our strategic
initiatives with associated
KPIs and incentives.
“
~15%
Reduction
in supply
chain cost
#1

17. How important is efficiency
compared to pre-COVID?
~75%
More important Less important
Winning retailers
are pushing ahead,
while still focused
on driving efficiency
% implementing strategy
What strategies is your supply chain implementing to
reduce cost?
64%
54%
53%
50%
47%
38%
30%
26%

18. Start building your future supply chain
Resilient
Sustainable
Efficient
Elevate data analytics
capability to enable real-time
insights and traceability
Assess your future
risk and build a
resiliency program
Look for sustainability win-wins
that drive revenue upside and
cost efficiencies
Integrate sustainability
into your supply
chain efforts
Consider fulfillment closer to
consumers to efficiently serve
changing consumer demand
Take end-to-end view of
cost across value chain,
partnering with suppliers

19. T H A N K Y O U