Supply chain strategy for retail: "Speed to market"
As the retail sector is experiencing very challenging market conditions due to the recent global financial crisis, many organisations are forced to review their entire operation to combat the range of factors that are inhibiting growth. The increased presence of online shopping, tightening of fiscal measures by banks and the escalation of operational costs such as transportation and rent are all barriers to growth for this sector.
From a supply chain and logistics perspective, some retailers have been quite slow to change their business models and are now facing extremely difficult times as opposed to the last two decades where margins were much stronger. Incorrect inventory buy decisions created a bullwhip effect down the supply chain adding substantial inventory and additional administration costs to manage the stock down. The retailer typically had two selling cycles to address excess inventory issues which were season driven and end of year clearance. The dynamics of the industry have changed and require your organisation to change and remain ahead of the competition.
Our 5 tips: "Your retail supply chain strategy"
- Buy and sell through strategy needs to be developed to focus on improving inventory management between stores, distribution centres, warehouses and suppliers. This will include the formation of an inventory policy, procedures and protocols.
- Know what it costs to run your supply chain footprint, from stores, warehouses, distribution centres to all of the back office systems, resources, technologies and inventory. Understanding the composition of your cost base requires amalgamating your financials to an entity which will support data mining and informed decisions when changes to the supply chain model are required.
- Implement the right inventory replenishment model to support a dynamic retail business. Increase the awarenes and knowledge within your business for inventory. From store operations back to the warehouse floor, all stakeholders understand the importance of managing inventory, the impact of poor decisions and the role that they play in the process.
- Collaborative exchange of data is essential between your organisation, its suppliers and key customers. Capturing data in the early stages will provide for more informed data analysis on forecasts, inventory projections and supply variances around product or leadtime. This information will be invaluable for implementing the right inventory optimisation strategy for your retail supply chain.
- Implement the right supply chain technology that makes life easier through integration. Dont limit the systems integration only within your organisation, rather encourage integration with your suppliers and their systems. By having this linkage, data may be recieved and viewed within real time, which will create a collaborative planning process that controls inventory investment without impacting on the supply chain performance.