How retailers benefit from new federal supply chain actions

U.S. domestic supply chain operations are poised to receive a boost from the federal government. 

The Biden Administration’s recent announcement of 30 new actions to strengthen supply chain resilience promises lower costs for consumers, investments in new technology, and reliable deliveries for critical goods and services. 

While the new actions will be key to improving access to medicine, economic data and more, the retail sector also stands to benefit tremendously from this investment in supply chain resiliency. Retail supply chain is a complex web, requiring decision makers to correctly predict market demand, account for disruptions and shortages, and prioritize functional logistical procedures.

Below are a few examples as to how retailers stand to benefit from these new initiatives.

Improved Planning for Weather-Related Phenomena and Product Shortages 

The retail sector has experienced its fair share of disruptions over the past few years. Any extreme event or circumstance has the potential to wreak havoc on the entire supply chain, beginning with production and eventually trickling down to distribution of products and goods. 

The most prominent example from the past several years is the Suez Canal blockage of 2021 and the ramifications felt by retail sectors. The six-day blockage was estimated to hold up to $400 million an hour in trade and resulted in the delay of product deliveries across industries. 

Extreme weather patterns have also impacted the supply chain. Texas’ historical winter storm in February 2021 resulted in economic losses as high as $295.8 billion, and brought the state’s manufacturing, production, and supply chains to a screeching halt due to road and building closures. 

The severe drought being experienced in the Panama Canal this year also continues to have widespread effects on supply chain operations including shipping delays, and challenging logistics to find alternative routes to deliver goods.

Weather-based disruptions are accounted for in these new federal actions. For example, more support and resources are being allocated to federal monitoring climate impacts, including global developments related to El Niño, and determining domestic and global commodity prices, agriculture, and potential disruptions to the global and trade supply chain. 

This investment will allow for retailers to better assess any potential weather-related phenomena that will impact inventory, production, or transportation, and plan accordingly to mitigate risk. This will especially become important in preparation of large shopping events such as the holiday season, which often has some overlap with the global hurricane season. 

These federal actions aim to address those concerns by strengthening medical product supply chains, as well as boost investments in the domestic production of materials necessary for certain medicines. This will partly guard retail pharmacies from potential disruptions to the drug manufacturing and supply chain process from outside global forces, like military conflicts or weather events. 

Investment in AI and Sustainable Supply Chains Will Help Retailers Reach Peak Performance

One of the more critical elements of these new federal actions, is the investment in technology and infrastructure that promotes clean energy supply chains. This will be particularly helpful in moving the retail industry, which contributes 25% of greenhouse gas emissions (GHG) globally, towards sustainability and a more circular supply chain system. 

For example, the Department of Energy has announced a $5.6-million prize to develop circular clean energy supply chains, as well as announce grant selections for investments in cleaner technology for supply chains to revitalize communities impacted by coal mine or power plant closures. 

This includes investments like electric vehicles (EVs), and energy conservation technologies. These clean technologies have the potential to both improve efficiency and operations, while also ensuring an environmentally cleaner process for supply chain operators and retailers. 

Additionally, these new actions also bring artificial intelligence (AI) to the forefront of the discussion. Federal plans are underway to develop a nationwide plan for smart manufacturing, which is the usage of advanced technologies to enhance the manufacturing process. Such investments will enhance the productivity of manufacturing systems that are integral to the supply chain sector, and retail industry, through digital and AI technologies. 

By further integrating AI into the manufacturing and supply chain sectors, retailers will be able to improve inventory planning and optimization. They will be able to make more informed decisions on when to replenish products, hold stock, and ensure there is sufficient inventory. This would ensure leftover items or out-of-stock scenarios become fewer and farther in-between.

Retailers will also be able to utilize AI’s capacity to automate certain tasks and take over roles in the supply chain space. This will particularly be beneficial in the event of talent shortages. As AI assists with automating tasks that employees were required to do manually, such as checking stock availability or moving products and goods, employees will be able to turn their attention towards other aspects of the retail supply chain process that require more of their focus.

Summary
To ensure the retail industry can plan accordingly, meet high market demand, and fulfill customer needs, a strong supply chain system is integral. Without ensuring resiliency in our supply chains, the retail industry is at higher disadvantage of being impacted by elements that are out of its control – including weather, changing trends, and extraordinary global events.