Retail supply chain: rising to the challenge


It should have been an easy process. All I wanted to do was return a sweater to a large department store. But because I’d bought it online, the process of returning it to the store became a huge hassle, and I ended up ricocheting from customer service to the checkout and back. The process was discouraging, and if I went through that more than once, it would definitely make a dent in my loyalty to that store.

I’m sure my experience wasn’t unique. It’s got to happen time and again and it was frustrating that the store didn’t have a system in place for dealing with my return. I began to think about the supply chain—the garment was made, shipped to a warehouse, distributed to the online retailer, and then sent to me when I ordered it. There was no way to put it back into the system because the physical store’s supply chain differed from the online store’s. It seemed crazy, but in fact, most consumers have increasingly high expectations for this kind of exchange, and the supply chain needs to keep up.

The old world of retail supply chain planning

Brick-and-mortar stores are embroiled in battle with online-only stores because consumers have so many options at their fingertips. Traditional retail is up against a slew of challenges, from store closings and falling stock prices to massive job cutbacks and the failures of iconic stores like Toys“R”Us. It’s so much easier to wait a couple of days for an item to arrive on your doorstep than to deal with parking and crowds.

In the pre-Internet sales days, old-school supply chain tracking methods were adequate. If an item shipped from a distribution center, it was to be sold in a store. The distribution center kept track of the coming and going of their stock and the stores kept track of theirs. There was no need for the two stages to combine information about inventory. Even after computers made communication easier, only sales associates and warehouse managers could see—or needed to see—their inventory using point-of-sale and store systems.

Despite the simplicity of such systems, the big picture of how the business fared was very hard to calculate. Add Internet sales, multiple distributors, manufacturers, warehouses, and delivery modes, and you’ve got a supply chain of real complexity. In order to stay successful, you need to know the general health of your supply chain so you can know the health of your business.

A new paradigm 

Today’s dynamic supply chain must adapt to demand from many different places in the network and convenience, supply/demand flexibility, and response time are today’s differentiators. Omnichannel fulfillment is the new norm, and it takes a bigger toll on retailers than traditional fulfillment.

That’s because the omnichannel supply chain isn’t a chain. It’s a flexible, dynamic network. Because the new market demands it, retail companies should fully embrace this new way of thinking and how to manage the risks that come along with large-scale process changes. This means tracking supply and demand in a new and more informative way than ever before.

Raising the standard of retail supply chain planning success

In retail, a real-time view of demand is key to managing the supply network, from factories to transit and storefronts. An old-fashioned simple tally isn’t dynamic enough to handle the complexity. That’s where planning platforms can help. Next-generation supply chain planning platforms enable that real-time connection between merchandise and assortment plans in a single solution.

A key element of this new way of thinking about supply chain is a needed increase in collaboration between supply chain planners and store leadership. These two groups can work together to strengthen their store’s fulfillment capabilities as they gain visibility into history, trends, and projections into the future.

To support today’s multiple streams of demand, a single inventory tracking tool is necessary, where all the data regarding stock, information about inventory at warehouses and distributors, and activities at brick-and-mortar and online stores can be collected in one place. You need agile fulfillment that empowers the dynamic review and allocation of inventory and leads to a cost-effective and efficient fulfillment of omnichannel demand.

In the past, strategies for inventory optimization could be periodically developed offline. Someone collected data, usually in a ledger or, later, a spreadsheet, and then updated it when things changed. Accuracy depended on how busy the responsible person was or how often they could get to this task. Human error was common and the data was out of date nearly as soon as it was entered into the system.

It’s time to ask “what if?”

Today, real-time optimization is required to handle consumer expectations, returns, and multiple demand streams. It’s not possible to keep track of inventory levels that change with the speed of a mouse-click only using a manual system anymore. And it’s just not good business to be perpetually in “react mode.” You need a plan in place ahead of the demand if you’re going to be successful.

To get visibility into the future, you need the power to run “what-if” scenarios using next-generation supply chain planning platforms. With such a tool, you can take a snapshot of today’s inventory and tomorrow’s expected inventory and look at the impact that a promotion or a factory shut-down might have on your ability to meet demand. With this kind of analysis, supply chain management and business leadership can make better-informed decisions throughout the entire network. And they can probably handle a simple return from a different origin than the purchase.

Think about it. Is your retail supply chain prepared? To dig deeper into these concepts and find practical tips to make sure you’re ready for the challenge, download Anaplan’s white paper “Five strategies for retail planning success.”

Note: a version of this post was originally posted on Total Retail.

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