A SUSTAINABLE RETAIL SUPPLY CHAIN

A sustainable retail supply chain is something many in the industry have been chasing for some years.  Veterans of supply chain work can testify that the sector has not always been plain sailing, with visibility issues and communication problems leading to backlogs of work and disappointed consumers.  Sustainability issues are particularly sensitive to the retail supply chain, given current fierce competition, intensive resource use and the exposure of penurious labour conditions in some regions.

Retailers are making the move from multichannel and segregated fulfilment to a truly omnichannel model, where fulfilment capacity and stock availability can be flexibly deployed into any channel as dictated by customer demand.  A way of making sure that customers are never – or seldom – disappointed.  Whilst this is a step in the right direction, they find themselves challenged by the complexity these efforts pose for logistics support systems. One of the issues facing retail supply chain is, and has been for some time, inventory inaccuracy.  This negatively affects performance in a retail supply chain and is something that any practitioner within the industry needs to address.

A retailer’s ability to survive depends heavily on its ability to fulfil the consumer’s constantly changing needs in a timely and accurate manner.  Customer purchase decisions are progressively made based on the overall shopping experience, which in turn drives the whole relationship.  Consumers need visibility regarding when they can expect product and reassurance that if they don’t buy it right now, it’ll be there when they want it.

As retailers pursue openings through mergers and acquisitions, it’s inevitable that operations won’t be able to keep up, at least temporarily.  Managing rapid change and the complexity that accompanies acquisition is difficult for a retailer to execute. Although a fix for this is thinking about the retail supply chain in terms of legacy, rigid enterprise systems and disparate processes can hinder collaboration and communication between key supply chain functions.  Today’s retail supply model is far less linear, requiring more flexibility and responsiveness.

Retailers and their suppliers who have a networked view of their supply chain will be able to share information faster and more effectively and ultimately better serve their customers.  Retailers need to say goodbye to their old and inefficient IT systems and embrace the new digital age of supply chain.  Everything consumers want or need can be obtained with just a click of a button or tap of a finger.  Technology will continue to advance and consumers will gain more and more power – and with more power comes higher expectations of a great customer experience.

Some key technology that retailers should be embracing to drive customer experience is being used across a plethora of fields and industries.  The Internet of Things has the power to transform how we shop.  In today’s world, availability is critical, and we have already discussed the visibility problems for retailers in the supply chain.  Enabling more advanced business visibility by allowing retail inventory to be ‘seen’ and connected by both staff and customer alike, is an important way of attempting to address this problem.  Whilst some may argue that visibility for retail supply chain is better than ever (and with advancements in technology the issue will soon be a thing of the past), on average only 65% of inventory reported through retailers’ inventory management software is correct.  This is a phenomenal figure in relation to the industry and a clear indicator that we need to continue to work on visibility in retail. 

Some of the biggest retailers throughout the world have seen the advantages of managing their supply chain efficiently. It seems that they have created a system of successful negotiating with their   suppliers. Smaller retailers have often felt that they can’t compete with the likes of Amazon because they just aren’t equipped to do so.  They don’t have the same tools, budget, and relationships, however, with the right supply chain in place, perhaps they can. There’s a lot of variability from one business’s supply chain to another, but you can optimise your current processes through best practice, strategy, and integration.  It takes time and investment, but it’s worth it!  Your customers will thank you.

Matt Dailly, Editor, FORWARDER magazine

2018-06-13T09:48:32+00:00June 13th, 2018|Categories: FORWARDER Focus|Tags: |
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