retail supply chain: why operational agility is now a competitive imperative

Efficiency was once the North Star of retail logistics, but recent global disruptions have exposed the fragility of purely cost-optimised supply chains. Global markets are increasingly concerned about labour shortages, with some sectors reporting up to three open roles for every available worker. And the supply chain has become a primary driver of enterprise value.

Today, the conversation has shifted from cost optimisation to a fundamental redesign of supply chain architecture that strengthens retail supply chain resilience and supports long-term growth. This transition requires moving away from rigid, linear processes toward fluid and responsive supply networks. The challenge is to navigate an $11.23 trillion logistics market where nearly 80% of organisations faced major disruptions in the last year. True agility requires a shift from defensive resilience to a proactive, agentic operational model. This model integrates regulatory readiness and geopolitical awareness into everyday decision-making.

The erosion of linear efficiency

The traditional “push” model of retail supply chain management has become obsolete thanks to the hyper-fragmented demand. Historically, retailers focused on a Just-in-Time philosophy to minimise inventory costs, yet this created a vulnerability to shocks.

Recent data suggests that nearly 64% of companies are now regionalising their operations to build defences against geopolitical volatility, effectively moving production closer to vital markets to reduce lead times. Hence, efficiency without flexibility is a significant business risk. Particularly, as cross-border regulations, sanctions, and trade controls continue to shift with little notice.

There are other major retail supply chain challenges surrounding end-to-end visibility. Currently, very few organisations can claim to have full transparency across their network, leading to “blind spots” that manifest as stockouts or inventory bloat. Without real-time data integration, retailers cannot accurately calculate the granular cost-to-serve at a node-by-node level.

This lack of insight prevents leaders from rapidly pivoting to maintain margins during sudden demand spikes or transport delays or compliance-driven disruptions such as sudden export restrictions or customs reclassifications.

Transitioning to agentic intelligence

A defining shift in management trends in retail supply chains is the move from generative AI pilots to Agentic AI in supply chain management. Unlike iterations in the recent past that merely provided insights, agentic systems are autonomous ecosystems capable of executing tasks such as supplier evaluation or freight rerouting without human intervention.

Agentic AI in supply chain management allows retailers to transition from predictive sensing to autonomous acting, ensuring that disruptions are mitigated before they reach the consumer.

Implementing these intelligent agents can lead to a 15% reduction in overall supply chain costs while increasing service levels by up to 65%. By integrating these tools with digital twins (virtual replicas of the entire supply chain), organisations can simulate ‘what-if’ scenarios in a 3D environment.

This allows transformation leaders to stress-test operational, regulatory, and geopolitical scenarios simultaneously, such as tariff hiked, embargoes, or country-specific sustainability mandates ensuring the physical network remains as flexible as the digital strategy.

The “Just-Right” inventory paradigm

The pendulum has swung from “Just-in-Time” to “Just-in-Case,” yet neither extreme is sustainable in 2026. Forward-thinking retailers are adopting a “Just-Right” approach, leveraging predictive analytics to balance high working capital with service availability. This requires a deep integration of point-of-sale data, social sentiment, and macro-economic indicators to align stock levels with actual local demand rather than historical averages.

It also depends on precise product traceability, enabling faster recalls, proactive risk containment, and regulatory readiness across markets.

This calibration is essential because inventory carrying costs have risen alongside interest rates and warehousing premiums. With this transformation, retailers can maintain a leaner footprint while still meeting the rapid delivery expectations of the modern consumer.

Agility here is measured by the speed at which capital can be reallocated across the product portfolio as trends shift.

The mandatory shift: from circularity to value loops

A new perspective that is often overlooked is the transformation of reverse logistics into a value loop. With the rise of the circular economy, agility must now include the ability to efficiently process and “re-invent” returned products.

Instead of viewing returns as a sunk cost, industry leaders are treating them as a secondary source of inventory, using agile operations to refurbish and restock items in record time. This capability is becoming inseparable from compliance, as sustainability and waste-reduction mandates increasingly govern how products are recovered, reused or disposed of.

This circular agility is a financial imperative. Efficiently managed returns processes can recover significant portions of the product’s original value, which otherwise disappears in traditional liquidation channels. As regulatory pressures for “digital product passports” increase, the ability to track and monetise every item throughout its lifecycle will become a hallmark of the most agile retail organisations.

Strategic implications for 2027 and beyond

For functional leaders, the next twelve months will require a pivot toward human-centric automation. As the labour gap persists, the focus must shift to reskilling the workforce to collaborate with AI and robotic systems. This collaboration is the only way to sustain the throughput required for omnichannel growth without exponentially increasing headcount or costs.

At the same time, compliance must be elevated from a control function to a strategic capability. This includes:

• Real-time trade and tariff optimisation based on evolving geopolitical and customs rules
• Rapid response to cross‑border movement restrictions and sanctions
• Embedded sustainability and waste‑reduction compliance across sourcing, fulfilment, and returns

Ultimately, operational agility in retail supply chains is not a one-off project but a continuous state of evolution. It requires a foundational change in how data flows through the organisation, breaking down the silos between procurement, logistics, and sales.

Businesses that successfully integrate these disparate functions into a single, responsive ecosystem will not only survive the next wave of disruption but will redefine the competitive standards of the retail industry.

How Infosys BPM can help

Building supply chain agility requires connected operations, intelligent automation, and the ability to respond quickly to changing market conditions. Infosys BPM helps retailers improve end-to-end visibility, optimise inventory and fulfilment processes, strengthen reverse logistics capabilities, and unlock actionable insights from operational data.

These capabilities help organisations strengthen retail supply chain resilience, navigate disruptions with greater confidence while delivering consistent customer experiences.