Andrea Sordi, lecturer in the Supply Chain Management Department of the University of Tennessee, discusses lessons learned by retailers from the last three years, and how they’re transforming their supply chains in the face of a possible recession.

We’re seeing the effects of a “post-pandemic” moment, Sordi says, with consumers engaging in “hectic” activity in response to economic uncertainty. Demand could spike if they up their purchasing activity in anticipation of another wave of shortages on retail shelves.

Having suffered through three years of swings in supply and demand, retailers now are looking to redesign planning and forecasting practices. The effort signifies a realization that planners must take into account many more variables than they considered prior to the pandemic. “The last three years were not the norm,” Sordi says, “but they have left some consequences. There’s a need to define the parameters of what planning is going to look like.” 

The situation seems to change weekly, as economic and geopolitical events fuel uncertainty. Against that backdrop, there’s the additional prospect of a possible recession, although experts don’t agree on when and whether that will occur. Nevertheless, they’re taking certain steps now to make their supply chains more resilient regardless of what happens, including building up buffer stocks to counter supply interruptions, and diversifying sourcing to reduce the risk of relying on just one supplier for critical materials or products.

There’s a general sense of the need to take risk management more seriously, Sordi says, although that doesn’t necessarily mean there will be an all-out push for near-sourcing of goods previously manufactured overseas. Certain materials must still be sourced from distant suppliers.

That said, Sordi believes that supply chains are more resilient than they were prior to the pandemic, with companies having learned some lessons about the need to prepare for unanticipated crises and disruptions.