The role of supply chain management in retail scenario of today

October 17, 2019

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The role of supply chain management in retail scenario of today

66% of the shoppers today prefer the same day or next day delivery while 27% are those who are not willing to pay extra for fast shipping, claims Zebra’s 2018 Shopper Vision Study.

With such heightened delivery expectations, are you equipped to deal with these challenges?

With 41% of consumers using two or more channels during the buying process, achieving flawless fulfillment has become more of a challenge than ever.

In this article, you will get to know about how to keep up with the omnichannel demands. Before that, let us tell you what is Retail Supply Chain Management.

What is Retail Supply Chain Management?

All the processes that you utilize to ensure your products reach the customers, starting from obtaining the raw materials, managing inbound materials & production processes to last-mile delivery of those products at your customer’s doorstep, are together known as retail supply chain.

When you optimize all these processes to increase both speed and efficiency, it becomes retail supply chain management.

All that is needed to be done is to optimize the processes in such a way that you are able to deliver the products in your customer’s hands as fast as you can but at the same time, you don’t want to pay an exorbitant amount to do that.

Hence, retail supply chain management calls for your processes to be both efficient and affordable. Now that you know what is retail supply chain management, let us tell you its importance.

Role of Supply Chain Management in Retail

The differentiating factor of retail supply chain management from other supply chain management is in the volume of product movement and the fast-moving nature of the products of the retail industry.

The retail supply chain has to be monitored very closely and has to be free of glitches as the products are always on the move and the cycle time is very low.

According to Zebra’s 2018 Shopper Vision Study, “53% of in-store and 51% of online shoppers are not satisfied with the returns/exchange process.”

Logistics can be very challenging at times and when you are new at retail they may appear to be overwhelming.

If you are encountering problems like delayed fulfillment times, high fulfillment costs, and the inability to offer competitive shipping options and prices, then it’s high time to streamline your supply chain.

Want to know how? Follow these five steps

1. Optimizing Storage Space

If you investigate how you are using your storage space, you may find that you are paying for too much space. You might even be wasting your money paying your staff to search for stored items.

Another possibility is that as your warehouses are not efficiently designed in terms of item storage, the time taken to do inbound and outbound processes are greater and difficult to manage.

An effective storage strategy can help you reduce your storage space and personnel cost. Automation and process consulting can help improve productivity and profitability. The less human touch is there in the inbound and outbound processes the better in terms of reducing errors and eliminating bottlenecks.

Automated warehouses enable easy collection of data across the supply chain which also helps take better decisions via real-time collaboration between departments. Layouts that are efficient also help in a smoother transition to complicated and advanced operations, such as cross-docking, bulk-breaking, etc. reducing overhead charges and manual errors.

2. Use of Multiple Suppliers

Putting all your eggs in one basket is never a good strategy. If you only use one supplier, you are eliminating competition for your orders.

Find several suppliers who can compete on price, and use several of them at all times so you can avoid costly delays in receiving products. Using multiple suppliers protects you from spending money on less-than-satisfactory service.

Dealing with multiple suppliers at the same time creates a bargaining power which isn’t only limited to monetary benefit, but also in terms of product quality and delivery time. As suppliers compete to become the preferred choice, they supply better quality of products at a competitive rate, if there are economies of scale to achieve. This in turn reduces your return costs, ensuring higher revenue and higher profits.

3. Faster Movement of Supplies

If you can find ways to expedite shipments from suppliers, you can order closer to the time you need the supplies. Ordering far in advance can incur warehouse costs because you have to store them so that they’ll be available, and products are more likely to get lost or damaged.

In addition, examine whether you can shorten the time it takes you to transport supplies from where you receive them to where you need them.

The easiest way to achieve this is by using an optimization program to create efficient pick-up & inbound routes. This can be done by a simplex function on your spreadsheet or can be achieved by specialized software in case your business scale in larger. Optimizing this process reduces the cost of after-order replenishments, hence reducing overhead costs and eventually boosting your bottom-line.

4. Evaluating Customer Demand Patterns

Evaluate customer-demand patterns frequently to see if you’re seasonal and even monthly assumptions hold up.

Adjust your supply ordering based on your most recent evaluation, and you will be ordering in a way that’s more closely tied to what you really need to have on hand. Based on how you want to manage your inventory, you can choose to either lag the demand (keep somewhat less inventory than your demand in the warehouse) or lead it (keep more than the demand).

The most efficient way to manage demand patterns is to have access to clean and clear data across your entire supply chain and have real-time visibility of the inventory lying at different locations. Once you have the historic data, all you need is to analyze what’s going on from that you can come at the conclusion of the inventory levels you need to have. You can choose to keep a safety stock with you, which act as a buffer for a proverbial rainy day and on top of that, any strategy amongst LIFO (Last In First Out), FIFO (First in First Out) etc. depending on the category of products you are dealing with.

Seasonality of demand is another variable that you need to consider. In case you are dealing with products where sales are highly seasonal, you have to be prepared for a particular season well in advance. However, during the other seasons, you can choose to reduce manpower or inventory levels making sure you don’t overshoot from your yearly budgets and also don’t end up with large amounts of unsold inventory. So plan your employee numbers and stocks efficiently to manage this.

5. Optimizing Ordering Process

Part of your supply chain costs come from your ordering system. If you have multiple people filling out requisitions, using multiple software or even paper checklists, you could be over-ordering.

In addition, if there’s no approval process and individuals have the power to order supplies whenever they want, you could be ordering things you don’t need. Examine your ordering process to see if it is causing waste.

Automating orders with the help of a warehouse management software or warehouse control systems are the best choice for this scenario. Create your own algorithms to calculate inventory and place delivery or replenishment orders as quickly as possible when it goes below a certain level, will reduce turnaround time and manual errors. You can use a spreadsheet too, however ensure that you have real-time updates coming in from multiple sources so that you don’t miss out on any.

You can make use of Advanced Shipping Notice (ASN) for regular delivery schedules too. These ensure that you don’t have to keep more inventory with you and you can seek regular delivery from your suppliers. As you establish an optimized cycle, it will be easier for the suppliers as well to plan production and shipping.

In Summary

When you streamline your supply chain management process, you can operate more efficiently. You’ll speed up order processing and save yourself money.

You will be able to perform processes like splitting orders for optimized fulfillment, manage multiple suppliers or fulfillment locations, manage Dropshipping and much more.

All it takes is assessing your present procedures and figuring out where you can make enhancements. We can help you do that. To know how we help brands like you optimize the supply chain process, make a business inquiry.

Want to grow your business?

Your staircase to
growth is here!

Quick tricks for growth:

  • Reconciliation of overcharges
  • Single inventory dashboard
  • Reduced order processing time
  • Standard and accurate data

Want to know how to do this? Don’t worry!



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4 years ago

Nice article on optimizing retail supply chain.

4 years ago

Thanks for the article! What modern customers want is faster and more transparent delivery. It’s great to have an app for tracking every step of the process.