Retailers struggle with unavailable goods and lose profits

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Prague, August 11, 2021: Supply chain failures are becoming more and more of an issue, affecting an increasing number of industries in Czechia. Businessmen struggle with the unavailability of certain goods, losing profits because they cannot satisfy demand. But according to Roland Džogan of Ydistri, sometimes the issue can be solved relatively easily, with modern technology, smart redistribution in particular. In fact, retail chains often do have the required goods in stock—only not at the right outlet and with no ability of relocation.

Over the past few months, supply chains have racked up significant delays as a result of the covid-19 pandemic. The issue, typically concerning the import of goods and vital components from overseas, is already being felt by Czech businessmen. Chinese ports, vital arteries of international maritime transport, have continuously been faced with new waves of covid and limited their operations, with ships waiting up to several days to pass through. Elsewhere there’s nothing to load. Due to the pandemic-induced lower demand, intermodal containers stayed unused in Europe, which led to their current low availability overseas. The price of those that are available has grown significantly when compared with the prior situation.

“According to market information, the price of maritime transport from Asia has increased sevenfold, making it unprofitable for many companies to import certain goods. In this era of capacity issues, airfreight transit time has doubled, railway transport takes two or three weeks longer than usual, and the schedule will be hopelessly full until the end of the year. Overall, transport has become 8 to 15 times as expensive across industries, forcing retailers to address not only the shortage of components or goods needed for production and sale, but also end prices to offset this price hike,” said Roland Džogan, goods distribution specialist and Ydistri’s CEO, about supply chain complications. 

The situation in international transport is already affecting many industries. In Czechia, the consumer electronics and automotive sectors have been impacted the worst; supply failures have also occurred in the textile and pharmaceutic industries. Moreover, circumstances are unlikely to improve in the short-term, and many businesses, worried about their ability to satisfy demand in the Christmas period, therefore pre-order goods in bulk. According to Džogan, the unavailability issue might not have become as wide-reaching if retail chains had learned to distribute their goods better. 

“Retailers often find themselves unable to satisfy demand at a specific outlet, losing customers unnecessarily, even though the required goods are overstocked at another outlet within the chain where they cannot be sold. This makes it even more important than ever for chains to be able to smartly distribute goods from one outlet to another, taking into account current demand,” said Roland Džogan whose start-up Ydistri is developing a service capable of analysing inventories and their sales potential across the chain’s outlets, subsequently ensuring smart redistribution. 

Smart redistribution, however, isn’t an end-all-be-all solution—there is a real shortage of certain types of goods and components, such as chips, which can only be resolved in Asian factories and in distribution. Still, smart redistribution would significantly improve the availability of a great number of goods:

“It’s clear that although traditional ordering systems can predict demand, they never can be 100% accurate. Surpluses or shortages of goods at individual outlets need to be addressed after the fact, using smart distribution. By evaluating the service with our customers long-term, we’ve found that the effectiveness of our predictions & selection of products suitable for redistribution exceeds 90%. Thanks to this smart technology, businesses can often reach for their own unused stock instead of ordering goods they already have somewhere else where it’s gathering dust,” concluded Džogan.