Demand now swings in sharper, less predictable cycles. Transportation costs fluctuate week to week, and labor availability changes month to month. Yet retailers and suppliers are still expected to deliver precise, reliable execution with almost no margin for error.

Teams aren’t just trying to stay ahead of trends anymore; they’re trying to stay ahead of volatility. In that environment, predictability becomes a strategic asset. And across the market, retailers are already making the shift:

• They’re building more resilient and transparent supply chains designed to withstand disruption — not react to it.
• They’re tightening control and increasing item-level visibility as demand becomes harder to forecast.
• They’re using digital planning tools to stabilize inventory instead of responding to every fluctuation in real time.

In short, retailers aren’t chasing chaos anymore — they’re engineering calm. The shift toward steadier, data-driven operations is clear. Yet even as supply chains become more resilient, one quiet destabilizer remains: constant order changes.

The mid-cycle adjustments, delayed acknowledgments, quantity edits and shipment updates that happen after a truck is already rolling may seem minor on their own, but together they’re costly. They disrupt planning, confuse systems, slow execution and quietly drain cash, undermining the very stability retailers are working to build. And they happen every day, often unnoticed and almost always underestimated.

The data tells the story

When SPS Network Intelligence examined the real movement of orders across the retail network, the pattern became impossible to ignore. The analysis covered 1.2 million purchase orders, 4.8 million associated documents and $9.7 billion in merchandise volume — a scale large enough to reveal where volatility starts, how it spreads and what it ultimately costs.

Across that dataset, one signal cut through: order volatility is far more common, and far more expensive, than most teams realize.

The findings were consistent across categories and order types:

• 6.5% of total merchandise value, or $634 million, was exposed to volatility-related risk. That exposure represents inventory sitting longer, shipments moving inconsistently and cash tied up for days or weeks longer than planned.
• Every 1% reduction in volatility returned $9–10 million in cash flow back into the operation.
• Even categories known for stable, predictable demand — including grocery — showed meaningful volatility, underscoring that this isn’t an issue limited to seasonal or trend-driven businesses.

The operational consequences were equally clear.

Every small change — whether a timing update or a line-level edit — creates a series of downstream ripple effects: delayed shipments, mismatched inventory, extended dwell times and lost sales opportunities. A single mid-cycle adjustment can trigger rework across ERP, WMS, transportation and store systems.

As one retail operations leader put it: “A single delayed PO can freeze a week’s worth of sales and tie up millions in inventory.”

Volatility doesn’t just slow down one order. It compounds across the network, introducing friction at every handoff and silently pulling performance, liquidity and customer experience in the wrong direction.

Explore the complete findings in our on-demand webinar:
Pulling back the curtain on network-level volatility

What order volatility is and how it drives cost

Volatility isn’t just a process issue. It’s a financial one. At its core, order volatility is the variation or fluctuation that occurs throughout a purchase order’s lifecycle: timing updates, quantity edits, line-level changes or shipment corrections. These shifts often seem routine, but they introduce uncertainty at every step. And uncertainty creates rework, delays and added cost.

Volatility can originate from multiple touchpoints:

• Timing updates that adjust acknowledgment or ship-by dates
• Quantity changes made after the PO is issued
• Line-level edits affecting individual SKUs
• Shipment corrections made after goods have already left the warehouse

Each update triggers a downstream chain reaction. A single header-level change may force multiple revisions across ERP, WMS, carrier or 3PL systems. That rework absorbs time, slows decision-making and reduces the predictability of both shipments and inventory placement. SPS Network Intelligence found that even minor fluctuations compound as they move through the network, lengthening cycle times and increasing operational strain.

How volatility impacts financial performance

The financial impact is equally clear. When orders change mid-cycle, inventory spends more time in transition, tying up cash and extending the cash conversion cycle. Carrying costs — often 20–30% of inventory value — rise as goods sit idle or move inconsistently. Teams lean on expedited transportation to recover lost time. Missed windows introduce penalties, deductions and lost sales opportunities. The ripple effect touches every KPI:

• Delayed orders
• Higher fees
• Reduced operational efficiency
• Lower OTIF
• Narrower margins and tighter cash flow

Across $9.7 billion in analyzed order volume, SPS identified more than $600 million in merchandise value exposed to volatility risk. The pattern is direct: the more an order changes, the more value is put at risk.

This is why predictability matters more now than ever. In a market defined by thin margins, tight schedules and unpredictable demand, stability isn’t just operational efficiency — it’s liquidity, profitability and resilience.

How leaders are fighting back

Volatility has become a direct threat to profitability, especially as margins shrink and demand grows more erratic. What used to be minor exceptions now trigger downstream delays, stranded inventory and costly last-minute workarounds.

The retailers making progress have one advantage: earlier visibility into when, where and why orders are changing. With that clarity, they plan better, react faster and prevent issues before they spread.

Predictability strengthens execution by improving visibility across the PO lifecycle, reducing shipment mismatches, sharpening cash-flow accuracy and enabling clearer retailer–supplier communication. Unpredictable orders do the opposite — slowing goods midstream, weakening forecasts and compounding cost across the network.

Leading organizations counter volatility by focusing on a few core habits:

• They benchmark how often orders change and what it costs.
• They connect POs, acknowledgements, ASNs and shipments into a clear real-time view.
• They create shared accountability with suppliers to address issues early rather than react late.

These behaviors are part of a broader journey toward operational maturity. Most retailers progress through four stages of predictability, moving from reactive processes to more stable, data-driven execution. Each stage builds greater visibility, reduces variance and strengthens financial performance — especially in high-volatility environments.

Organizations that reach predictive maturity consistently see 12–18% better on-time delivery and 20–30% faster acknowledgment cycles, leading to fewer surprises, faster turns and stronger liquidity.

Predictability doesn’t remove problems — it reveals them early enough to stay in control.

The bottom line

Order volatility is the quiet force undermining even the best-built supply chains. Small changes ripple into delays, deductions and trapped cash — costing far more than most teams realize.

Leaders who take volatility seriously are already seeing the difference: fewer surprises, stronger turns, higher OTIF and more confident planning.

In a market defined by tight margins and unstable demand, predictability pays off — every single time.

Learn more with the predictability pays off analysis

Explore the research, data, and frameworks behind these findings in our new analysis,
Predictability pays off: How retail and supply chain leaders turn order volatility into a competitive advantage.

Pull back the curtain to build trust

While the news may focus on social media backlash against retailers based on customer service issues, politics or polarizing trends, what I’m excited to see in social media is a new brand vulnerability.

Companies are inviting customers behind the scenes to share how their products get to the shelves of their favorite stores. It’s driving customer affinity, and with that comes value, both in new customers and repeat purchases. Some examples:

• Betty Jo’s Ice Cream shares how they have gone from social drops to a pop-up location in their popular video.
• Kikiz Cosmeticz gained thousands of likes for sharing how they ship their orders.
• Batch Cookies celebrated their path from a farmers market tent to a new storefront.
• Bobbie Goods and Fayt racked up over 100K combined views with their warehouse tours.
• Waterbody shared how they got their skincare line sold at over 100 retail shops.
• Carpe, with over 25K TikTok followers, posts regularly from their warehouse, not only about their product but their process.

How SupplierWiki makes supply chain fun and useful

SPS Commerce is learning from this approach. At SPS SupplierWiki, we’re leaning into this trend and translating the fascinating, complex world of retail supply chains into bite-sized stories, explainers and tools.

As we dig into the details of retailer relationships, including quick explainers on how planning, compliance, and fulfillment all align, SupplierWiki brings the “how it works” magic into the mainstream.

The big idea: make supply chain the star

Supply chain is no longer something you need to hide behind your marketing, it is marketing.

By showing the behind-the-scenes work that goes into moving products to shelves, brands can spark curiosity and build loyalty. And it doesn’t look like more promotional noise.

Because when customers see what it takes to get their favorite items from the warehouse to the store shelf, they don’t just like the product, they feel part of the journey.

Start to explore and keep informed

Our online knowledge base is free and easy to browse for topics that interest you. Check out the hundreds of resources available at SupplierWiki today.

Companies like LVMH are embedding AI across their entire operations, while fast fashion players use it to accelerate everything from forecasting to logistics. Every day more brands are turning to AI to optimize production planning, predict equipment maintenance and streamline fulfillment processes.

As we’re seeing across thousands of supply chains in our network, AI isn’t just about gaining a competitive advantage anymore; today it’s table stakes.

According to Gartner’s 2025 Supply Chain Symposium, 74% of CEOs believe AI will have the most significant impact on their businesses over the next three years. But it’s critical to understand: your AI is only as good as the data you’re feeding it.

What’s working with AI today?

Every day we’re hearing about new uses of AI in the marketplace:

• Generative AI for scenario planning: Cutting edge retailers are using AI to run “what if” scenarios—simulating demand spikes, supplier issues and logistics constraints through digital twins. Instead of being stuck in reactive mode, they’re testing their responses before disruptions hit.
• Turning waste into wins: Companies are applying AI to optimize returns, cut packaging waste and forecast more precisely to avoid overproduction. Traditional cost centers of waste management and sustainability are becoming margin protection tools.
• Connected automation: From smart warehouses to exception automation, retailers are using AI to reduce manual work and simplify operations. Gartner calls out “connected supply chains” and workflow automation as must-haves for 2025.

How’s your data? A reality check

When it comes to where we see AI working in supply chains, the companies winning with AI aren’t the ones with the fanciest algorithms—they’re the ones with the cleanest, most standardized trading partner data.

And here’s why:

• Your AI may build beautiful supplier disruption models, but if the lead time data is inconsistent, its recommendations are worthless when real problems hit.
• Optimizing returns with AI should work, but without accurate item data from trading partners, AI can’t tell the difference between defects and customer preferences.
• While your customers expect flawless execution, your AI can only deliver if your partner data is consistently accurate across every single relationship.

What do you need for a better data foundation?

Across our retail supply chain network, we see that the companies who successfully apply AI are using standardized, real-time partner data. Without it, AI can’t deliver.

The foundations required for AI implementations include:

• Clean EDI data: AI systems need consistent product info, order acknowledgments and shipment notifications. When this varies across trading partners, your AI models produce unreliable outputs.
• Standardized communications: Exception automation requires partners to communicate disruptions in standard formats. Manual, inconsistent communications break AI workflows every time.
• Real-time visibility: AI lives on current information. You need up-to-the-minute partner feeds, but across diverse trading relationships, most companies can’t maintain them.

When AI ideals meet reality

While new technology is always part of the discussion in modern business, what we’re hearing about AI usage across customers is consistent: Companies start excited about the possibilities of what AI can do for them but quickly realize it won’t work without first standardizing their data.

The dilemma:

• The most sophisticated AI fails if trading partners can’t feed it accurate, timely information.
• Manual exception handling is getting replaced by automated workflows, but only when the underlying data triggers actually work.

Where are we heading?

The future of supply chains may actually be written by AI.

We’re moving toward autonomous systems that respond to disruptions without human intervention: connected ecosystems, with AI orchestrating workflows across all trading partners, and sustainable applications optimizing resource usage.

But how well this works (or not) will depend on if there’s standardized, reliable partner data.

Build your foundation now

The companies who’ll win with AI understand that AI transformation begins with better data. They’re investing in standardized trading partner data formats, real-time partner performance visibility and automated workflows that eliminate manual errors.

AI has incredible potential to transform retail supply chains. But you must have a foundation of clean, standardized and real-time supplier data.

Want to see how leading retailers are preparing their supply chains for the future? Explore our latest insights.

But a significant shift is changing how companies track and identify products throughout the supply chain. 2D barcodes are emerging as the next standard, and they pack dramatically more information into a compact square format. While a UCC-128 shipping label might hold 48 characters of data, a 2D barcode can store thousands of characters, including serial numbers, batch codes, expiration dates and much more.

Major retailers are preparing for 2D barcode adoption, and new industry standards will require point-of-sale systems to accept 2D barcodes globally by the end of 2027. This means businesses across the supply chain must understand how 2D barcodes work and prepare their operations for the transition.

Why 2D barcodes are replacing traditional barcodes

The push toward 2D barcodes comes directly from consumer demand. According to recent research by industry standards body GS1, 77% of shoppers say product information is important when making purchases, and 62% are willing to spend more on products that offer detailed information. Additionally, 79% are more likely to purchase products with scannable codes that provide extra product details via smartphone.

The information consumers want most includes nutrition facts, materials and ingredients, safety information, country of origin, allergen warnings and recall alerts—far more than a traditional 1D barcode can hold.

Consumer pressure has accelerated industry adoption. The transition is already underway, with 2D barcode technology being tested in 48 countries that represent 88% of the world’s GDP. Major retailers are preparing for 2D barcode adoption, and new industry standards will require point-of-sale systems to accept 2D barcodes globally by 2027 under the GS1 Sunrise 2027 initiative.

What are 2D barcodes?

A 2D barcode stores information in two dimensions—both horizontally and vertically.

In contrast, a 1D barcode stores information horizontally.

The most common types of 2D barcodes include:

QR codes are square, pixelated codes you scan with your smartphone. Originally developed in Japan for tracking automotive parts, they’re now everywhere from restaurant menus to marketing materials.

Data matrix codes are smaller, more compact squares often used in manufacturing and healthcare. You might see these on prescription bottles or electronic components.

PDF417 codes are rectangular barcodes that look like tiny bricks stacked on top of each other. These are commonly used on driver’s licenses and shipping labels.

So, is a QR code a 2D barcode? Absolutely! QR codes are the most recognizable type, but they’re just one variety of advanced barcode technology.

How do 2D barcodes work?

2D barcodes work by encoding information in patterns of dark and light squares, rectangles or dots arranged in a grid. Instead of reading information linearly from left to right like traditional barcodes, scanners read 2D codes in multiple directions.

Here’s what happens when you scan a 2D barcode:

1. Pattern recognition: The scanner’s camera or laser identifies the finder patterns (those larger squares in the corners of QR codes, for example) to understand the code’s orientation and size.
2. Data extraction: The scanner reads the arrangement of dark and light modules across the entire code, converting the visual pattern into digital information.
3. Error correction: Most 2D barcodes include built-in error correction, meaning they can still be read even if part of the code is damaged or obscured.
4. Information output: The scanner processes the data and presents it in a readable format, whether that’s a website URL, product details or other encoded information.

How much data can a 2D barcode hold? It varies by type:

• QR codes can store up to 4,296 alphanumeric characters.
• Data Matrix codes can hold up to 2,335 alphanumeric characters.
• PDF417 codes can store up to 1,850 alphanumeric characters.

The massive capacity difference explains why 2D barcodes can include detailed information like batch numbers, expiration dates, serial numbers and even complete product descriptions.

Creating and scanning 2D barcodes

How to create 2D barcodes

Businesses have several options for generating 2D barcodes, depending on their volume needs and technical requirements.

For small-scale needs, online generators offer a simple solution. Search for “QR code generator” or “2D barcode generator,” enter your information (text, URL, contact details) and download the resulting image.

For office integration, creating 2D barcodes in Excel is possible through add-ins or formulas that generate QR codes.

For enterprise operations, businesses choose between dedicated barcode software for bulk creation or integrated solutions that connect with existing supply chain systems. Many companies prefer platforms that generate compliant barcodes and integrate data with trading partners.

How to scan 2D barcodes

Many small businesses begin by using mobile phones to scan barcodes. On an iPhone, open the Camera app and point it at the barcode. A notification will appear at the top of the screen. Tap it to view the information. Most Android phones offer a similar experience.

As a business grows, receiving processes often become more complex. At that point, companies typically move to tablets or dedicated scanners. These devices may be handheld or mounted and are built to handle higher volumes. They also connect directly to ERP or WMS systems, making it easier to manage inventory at scale.

Most modern scanners can read both 1D and 2D barcodes. If you’re using older equipment, look for “2D imaging” or “area imaging” capabilities. Laser-only scanners may not support 2D codes.

Scanner compatibility and technical questions

One of the most common questions businesses ask is: can a 2D barcode scanner read 1D barcodes? The short answer is yes, almost always.

Modern 2D scanners use imaging technology (essentially tiny cameras) that can capture and decode both 1D and 2D barcodes. This means businesses can upgrade to 2D scanning equipment without losing the ability to read traditional UPC codes and other 1D formats.

However, the reverse isn’t true. Traditional 1D laser scanners can’t read 2D barcodes because they only scan in one direction. If you’re still using older laser scanning equipment, you’ll need to upgrade to 2D imaging scanners to read the new barcode formats.

When evaluating scanner upgrades, consider:

• Imaging vs. laser technology: 2D scanners use cameras, 1D scanners use lasers.
• Reading distance and angle: 2D scanners are generally more flexible about positioning.
• Durability requirements: Industrial environments may need ruggedized 2D scanners.

Benefits of 2D barcode technology

2D barcodes provide several key benefits:

• Enhanced traceability: Batch numbers and expiration dates encoded in the barcode improve recall response and inventory management.
• Supply chain transparency: 2D barcodes track detailed product information from manufacturer to consumer.
• Consumer engagement: Shoppers scan products with their phones to access detailed information, reviews, recipes or promotional content from the same checkout barcode.
• Operational efficiency: A single scan captures pricing, promotional details and inventory data, reducing checkout errors and speeding up transactions.
• Regulatory compliance: Pharmaceutical and food industries increasingly require detailed product tracking that 1D barcodes can’t support.
• Better product authentication: 2D barcodes combat counterfeiting and build brand trust through verified information.

The transition to 2D barcodes won’t happen overnight. Businesses need to upgrade point-of-sale systems, update packaging processes and get their supply chain partners ready. But the benefits, from improved food safety to better customer experiences, are expected to drive rapid adoption across retail chains.

Common applications and use cases

2D barcodes are already transforming operations across industries:

Retail and consumer goods: Companies authenticate products, share ingredient information and run promotional campaigns that connect physical products to digital experiences. 2D barcodes on shipping labels consolidate shipment details, item information and receiving instructions into a single scan, providing complete supply chain visibility from warehouse to store.

Healthcare and pharmaceuticals: Medication tracking creates full traceability from manufacturer to bedside, reducing medication errors and meeting regulatory compliance requirements. Healthcare providers can track batch numbers and expiration dates throughout the entire supply chain.

Manufacturing and automotive: Quality control systems track parts throughout complex supply chains and rapidly identify defective components. Production data, batch numbers and quality control information travel with products from manufacturing through distribution, creating complete visibility into the production process.

Food and beverage: Lot tracking systems enable rapid response to contamination issues and provide consumers with detailed sourcing information. Companies can trace products from farm to table, improving food safety and meeting transparency demands.

Electronics and technology: Manufacturers embed serial number tracking, warranty information and anti-counterfeiting measures directly into product labeling. This creates visibility into product authenticity and ownership throughout the device lifecycle.

The future of 2D barcodes

2D barcodes are more than just a technical upgrade. They open the door to entirely new ways for businesses and consumers to interact with products. As scanning technology advances, expect to see:

• Dynamic content: Barcodes that link to real-time information like pricing, availability, or promotional offers
• Personalized experiences: Product scans that deliver different messages or offers based on the user, time, or location
• IoT integration: Barcodes that connect physical products to smart systems for reordering, maintenance, or usage tracking
• Enhanced security: Built-in authentication features that make counterfeiting much more difficult
• Sustainability tracking: Lifecycle data that helps consumers make environmentally responsible choices

2D barcode technology is already in use, and early adopters are seeing strong returns. As momentum builds, businesses that prepare now will be better positioned to take full advantage of what’s ahead.

Getting started with 2D barcodes

The simplest approach involves starting small by creating a 2D barcode for a business website or contact information to test customer response. The barrier to entry is lower than most expect.

Begin by examining current barcode scanning equipment and identifying where 2D barcodes could add value. Try testing 2D barcodes with key processes before expanding across your company.

Organizations worldwide are already implementing 2D barcode technology across their supply chains. Understanding how they work and planning for implementation now positions operations for the transition to this new standard in B2B commerce and product identification.

Scanning for what’s next

2D barcodes give you the detailed data you need: batch numbers for recalls, expiration dates for compliance and serial numbers for authentication. But having this data only helps if you can act on it across all your sales channels.

Ready to put your data to work? Omnichannel fulfillment turns improved data into seamless experiences online, in-store and everywhere customers shop.

Today’s customers are conscientious and want to know more about the products they purchase, especially for health and personal care items.

According to a Forbes article, a recent report by Label Insight found that 94 percent of consumers would be more loyal to brands that practice transparency, while 56 percent claim that brand transparency would make them “loyal for life.”

Read on to learn more about the importance of transparency for building brand trust.

Keep it clean: ethical sourcing and sustainable practices

When consumers demand “clean” products, they’re not just talking about product ingredients. They want to see transparency in the supply chain—from the origins of ingredients to the ethical practices behind them. Key issues include:

• Clean beauty movement: There’s a growing desire to see transparent ingredient lists and “clean” formulations.
• Ethical practices: The conditions under which items are produced matter, including Information about labor practices, animal testing and sourcing.
• Sustainability: Green initiatives are driving demand for eco-friendly products and sustainable practices, including packaging, sourcing and production.

Companies who offer transparency in their sourcing practices boost consumer trust. When brands openly share where and how they source their ingredients, they also demonstrate a commitment to ethical practices.

Brands who can share information about sustainable practices throughout the supply chain also elevate their credibility as conscientious, trustworthy companies.

Provide clear information: safety through traceability

Health and personal care suppliers rely on traceability to ensure product safety and quality, but the complexity of global supply chains makes it challenging to keep track.

To modernize, suppliers are replacing manual processes with digital solutions for everything from tracking raw materials to fulfillment and transportation logistics.

Innovations such as blockchain technology and the Internet of Things provide real-time, end-to-end tracking, allowing every step of the supply chain to be recorded and monitored.

These digital solutions can not only enhance efficiency, visibility and accountability, but also ensure the safety and quality of products and improve the ability to manage recalls.

Be proactive: effective recall management

The way a company manages a recall can make or break consumer trust in their brand.

While a poorly managed recall can damage a reputation, a well-managed recall not only demonstrates a commitment to safety and transparency but also encourages loyalty.

Key strategies for a proactive recall include:

• Develop a process: Plan a clear and efficient recall process to ensure that any issues can be addressed swiftly and effectively.
• Communicate openly: Provide all necessary information and updates openly and honestly, including detailed information about the recall process and what consumers need to do.
• Be visible: Use multiple channels to reach consumers, including social media, email and company websites.

Being proactive not only mitigates the risks of immediate harm to your reputation but also reinforces consumer confidence that they can trust your products in the future.

Authentic transparency builds success

In an era where consumers demand access to complete product information, transparency in the supply chain is not just a nice-to-have; it’s essential. Brands that can provide clear, detailed and honest information will be the ones that thrive.

By prioritizing ethical sourcing, embracing digital traceability and implementing proactive recall management strategies, you can build and maintain consumer trust.

SPS Commerce is ready to be your partner in building a more robust and transparent supply chain, with our team of experts offering the people, processes and technology to not only make you more efficient, but support trust in your brand to maximize your success.

Understanding what’s at stake

For grocers, retailers, distributors and foodservice companies, FSMA 204 means capturing and maintaining detailed data from every supplier. This includes Key Data Elements (KDEs) like lot codes, harvest dates and critical tracking events. While compliance is essential, standardized and accurate data also plays a key role in recall management and daily operations.

Consider a typical scenario: Your suppliers range from large producers with sophisticated systems to small suppliers relying on spreadsheets. When a safety issue arises, your team must quickly trace affected products across your network. Without standardized data, this process can take days instead of hours, putting operational efficiency, customer safety and your reputation at risk.

Poor traceability impacts every aspect of your business. Inconsistent and inaccurate data leads to inventory challenges like overstocking or stockouts, while inefficient recall processes can escalate into costly crises. Most importantly, inadequate traceability undermines consumer confidence and brand loyalty.

The importance of supplier buy-in

Success requires making traceability manageable for suppliers of all sizes. Leading companies are taking practical steps like:

• Implementing uniform processes for recording and reporting traceability data
• Using automation to minimize errors and enable real-time data exchange
• Setting clear expectations and guidelines for accurate traceability data
• Supporting suppliers with training and implementation resources

By automating data capture through standard business documents like purchase orders, ASNs and barcodes, companies can help suppliers maintain consistent data formats while protecting their brand.

SPS Commerce and iFoodDS: A collaborative solution

Recognizing the need for enhanced traceability and supply chain visibility, SPS Commerce has partnered with iFoodDS to expand our retail cloud service offerings. Through integration with iFoodDS Trace Exchange™, we provide a comprehensive solution that supports the largest grocers, retailers, distributors and foodservice companies, along with their supplier networks.

With a high-tech, high-touch approach, our combined solution simplifies data collection and standardizes traceability processes across your trading partner network. Our team works with suppliers of all sizes and technical capabilities to drive successful participation and efficient FSMA 204 compliance.

For more information about how SPS Commerce and iFoodDS can enhance your traceability and supply chain visibility, visit SPS Commerce or iFoodDS.

1. Digital transformation accelerates industry-wide

The food and food service distribution industry is rapidly evolving as companies adopt digital solutions to improve operations and gain a competitive edge. Large distributors are leading the charge, while small and mid-sized players are rapidly closing the gap. This transformation focuses on upgrading core business systems, including ERP, inventory and order management systems.

However, the true opportunity lies in integrating supplier data with these systems. Forward-thinking distributors recognize that robust data exchange is essential for real-time updates and accurate information flow throughout the supply chain. This integration empowers distributors to communicate more effectively with customers and suppliers, streamlining processes like placing orders, managing inventory and tracking deliveries.

2. Traceability demands intensify across the supply chain

Traceability and transparency initiatives are key priorities, driven by heightened consumer awareness and stringent regulatory requirements like FSMA 204. Digital technologies are at the forefront of this transformation, enhancing visibility throughout the supply chain. Food distributors are rapidly adopting these tools to meet compliance standards and consumer expectations.

For instance, Gordon Foods overcame traceability and compliance challenges by automating data exchange across its network of over 500 suppliers. This strategic move improved FSMA preparedness and yielded significant operational benefits. The company improved inventory management, reduced lead times and gained better insights into pricing and margins.

As the 2026 FSMA 204 deadline approaches, distributors must prioritize the implementation of robust traceability systems. These efforts are not just about compliance. They’re reshaping operations, enhancing efficiency and building consumer trust in an era where food safety and transparency are paramount.

3. Data analytics reshape supplier relationships

Data analytics and predictive modeling are revolutionizing how food and food service distributors manage their supplier relationships. Distributors can leverage advanced analytics to answer critical questions like “Who are my most important suppliers?” “How are my suppliers performing” and “How should I work with suppliers differently?”

Distributors are leveraging this data to enhance their services and work more effectively with suppliers. Predictive analytics can forecast potential supply chain disruptions, supporting proactive planning with key suppliers on mitigation strategies.

By harnessing the power of data, distributors are not just making existing processes more efficient, but fundamentally reimagining their supplier relationships for greater mutual benefit.

4. Customer expectations reshape service standards

Rising customer expectations force food distributors to elevate their service offerings. The demand for faster, more flexible delivery is intensifying, with customers expecting shorter delivery windows and the ability to accommodate urgent orders.

Seamless digital ordering experiences, proactive communication with real-time order tracking and consistent on-time delivery are standard expectations rather than differentiators. Distributors are also expected to offer flexible order quantities without excessive premiums, as they balance minimum order requirements with the need to accommodate smaller, urgent orders.

For example, Shamrock Foods faced delays and poor fill rates with specialty items from small suppliers. To address this, they implemented a solution to efficiently share order, shipping and invoice data with 350 suppliers, many with limited technical capabilities. This initiative resulted in normalized inventory levels and improved pricing accuracy, empowering them to offer the flexible, reliable service that customers now demand.

Ready to transform your distribution business for the challenges and opportunities ahead? Contact our team for more insights on navigating this changing terrain and positioning your business for long-term success.

This creates a complex balancing act for retailers who need to keep shelves stocked with the right products at the right price while also reducing their environmental impact. Miss either mark and retailers risk losing sales, customer loyalty and brand value.

Why sustainability matters now

Modern consumers are pushing retailers to think differently about how products move through the supply chain. But the shift toward sustainability isn’t just coming from consumer pressure. Here are other factors driving change:

• Supplier business practices matter more than ever, as retailers need partners who share their commitment to sustainability and can support a green supply chain.
• Investor pressure continues to grow, as environmental, social and governance (ESG) factors become key drivers in investment decisions.
• New regulations mandate that large organizations report on their environmental practices, including the emissions stemming from their supply chains.
• Supply chain risk management has taken on new importance, with sustainability helping protect against disruptions from environmental issues, regulatory changes and social concerns.

Collaboration is key

The sustainability challenge extends far beyond a retailer’s own operations. To achieve sustainability goals, retailers must collaborate closely with their suppliers. According to CDP, supply chain emissions are typically 11.4 times higher than operational emissions. While nearly 70% of retailers are already working with suppliers to improve sustainability, retailers face two significant hurdles: getting accurate supplier data and driving meaningful supplier engagement.

That’s where the partnership between SPS Commerce and Optera comes in. The Retail Sustainability Collective combines over 20 years of supplier network expertise from SPS with Optera’s leadership in supply chain emissions management. The partnership applies a proven data collection framework to sustainability metrics, creating a streamlined approach for both retailers and suppliers.

For retailers, this partnership delivers:

• Comprehensive primary emissions data across their entire supplier network, moving beyond category averages
• A unified solution that bridges sustainability and procurement teams
• Expert support for supplier outreach and response validation

Actionable insights for emissions reduction based on actual supplier data

Suppliers benefit from:

• A single, standardized data process for sharing emissions data with their retail customer network
• Built-in calculation tools for companies new to emissions reporting
• Valuable benchmarking insights to improve sustainability performance

The journey toward sustainable supply chains requires both expertise and scale. Through the SPS Commerce and Optera partnership, retailers can build resilient, efficient and environmentally responsible supply chains that meet both customer expectations and corporate sustainability goals.

For more information about the Retail Sustainability Collective pilot program, contact Scott Williams at scott.williams@spscommerce.com.

Optera helps corporations measure, manage, and reduce their carbon emissions up and down their value chains, backed by comprehensive and trusted data. Learn more.