Today's supply chains are complex networks of interdependent elements, says Retail Assist's Nigel Illingworth. Whilst each element must be optimised, nothing contributes more to supply chain excellence than good communication between all parties.
Retailers can put distance between themselves and their peers in an increasingly competitive market by good supply chain management. This can optimise product sourcing, manufacture, storage and distribution, thereby reducing operating costs and contributing to customer satisfaction.
Whilst sound supply chain management can deliver efficiencies and cost-effectiveness, it also ranks amongst a retailer's greatest challenges. This is due to constant change and the complexity of the elements that need to be managed and integrated. It is therefore best to regard supply chain excellence as a journey, not a destination.
One of the greatest contributions to supply chain excellence comes from improved communication with supply partners. That means extending internal collaboration to include manufacturers, involving all those upon whom the supply chain depends, and ensuring visibility of all activities.
Today's communications are developing fast and technology can be actively used to support collaboration for new supply chain efficiencies. Suppliers and retailers can push or pull data between them which directly helps the business and the customer experience. Within stores, uninterrupted broadband connectivity gives a real-time view of stock held in the warehouse or in networked stores. In short, with the tools now available, there is no excuse for poor communication across the supply chain.
Processes, people and products
The supply chain is often only seen in terms of physical elements and stock flow, but it's also about information flow. Far from the strong, interlinked structure from which it takes its name, a supply chain is more commonly a loose amalgam of processes, people and products whose interaction constantly evolves and demands improvement. Too often, one part of the chain operates to the detriment of others.
Many recent supply chain improvements have been in planning, enhancing systems and the means by which data is passed to the buyers. There is much to be gained from including supplier management within the planning workflow, taking it from sourcing to storefront, although a fair bit of this activity is still paper-based and far from interactive.
The supply chain is too often thought of as warehousing and undue attention is focussed here. With technologies such as RFID for scanning and tracking, and robotics for picking, sortation and despatch, warehouse management can be automated, producing operational efficiencies, cost savings and increased throughput.
Distribution and logistics
Slick warehousing notwithstanding, when it comes to transportation of goods from supplier to warehouse and from warehouse to the point-of-sale or directly to the customer, there is little more to be done to overcome the physical limitations of transport logistics.
Today's retailer has to have the right stock in the right place or available on very short cycle times to protect profit margins and to please customers. Whilst most retailers can do more to reduce inventory levels and improve replenishment timing and accuracy, forecasting and matching of supply to demand is a constant challenge.
Omni-channel retailing adds its own complexities to the supply chain. Multiple channels increase choice and reinforce brand loyalty. However, the need to support customer self-service puts an additional strain on the supply chain. In the early days of online trading, some retailers struggled with the logistics, buying stock specifically for the online channel and often outsourcing its management, which added to their problems. Lessons have been learnt and many retailers have now refined their processes, holding and managing a single stock source available to all channels.
For today's retail supply chains to succeed, everything must work in concert, requiring not only harmonisation of technology and process but also a common culture and the free flow of information between all parties.