Retail Supply Chain of 2017

Industry Insight

You’ve heard it time and time again: the world of retail is changing – fast. Ecommerce isn’t just a way to shop; it’s the way to shop. Omnichannel commerce is no longer an option; it’s a necessity. Fast shipping doesn’t mean 2-3 days, it means same day. Why? Modern retailers have limited control of what, when, or where their customers are buying. Instead, retailers must be flexible to unique and fluctuating customer demands.

So what does this mean in terms of the supply chain? This article aims to discuss the changes in the retail supply chain in 2017, and specifically, address what processes and elements need to be adjusted to improve and conform the retail supply chain to the current customer-centric world of retail.

1. Acquiring A Real-Time View of Supply Chain Data
Guesstimating inventory isn’t acceptable. If you provide your customer with the option to pick up in store, and she drives to the store to pick up her item, just to find that the item isn’t in stock, what’re the chances she’ll buy from you in the future? Slim to none. Real-time inventory data is critical for the various fulfillment options customers have grown to expect. Without it, retailers can expect to lose customers.

2. Exposing the Customer to Supply Chain Data
Once you have real-time inventory data, the next step is to share it with your customers. Imagine this scenario: a customer goes online to order an item, only to find it’s out of stock. Rather than waiting for this item to restock and be shipped out to her home (which could take weeks) she’s likely to order from your competitor. However, if you notify that customer that the out of stock item is available in a store location 5 miles from her home, she has the option to pick it up that day. Having quality and timely supply chain data, and exposing your customer to that data, pushes the supply chain closer to the customer, thus giving them more actionable information, making them less likely to turn to a competitor.

3. Providing More Options for Customers Through a Responsive Supply Chain
Customers want options – next day delivery, pick up from store, delivery with installation, etc. With more options, comes more flexibility and convenience for the customer, but makes business operations more complex for the retailer. However, better data can ease these complexities, making your supply chain more responsive, and therefore, more competitive. So if you know your customer wants next day delivery, and your supply chain data shows a drop shipper within 15 miles of your customer, you can fulfill that order quickly and easily.

4. Utilizing Assets More Efficiently
Utilizing assets properly to achieve a more efficient supply chain is just as crucial as obtaining accurate supply chain data. Why? Because better utilization of assets allows you to allocate more of those resources towards improving the customer experience. For example, our client Zumiez better leveraged their 600+ retail stores for inventory fulfillment, rather than relying on a central warehouse for fulfillment. Zumiez implemented a new omnichannel management system that created a seamless shopping experience for their customers as they move between its physical and online spaces.

5. Adjusting Supply Chain Operations to Efficiently Manage the ‘Endless Aisle’ and Returns
The concept of an endless aisle sounds great – both to retailers and customers. Customers have extensive options and retailers can sell products without having to worry about inventory costs. It sounds great … until the returns start coming in. What happens when these items that were originally drop shipped to the customer, come back into the store? Typically, they must be marked down to be sold in store, or they just sit on store shelves – wasting inventory space and money. And let’s not forget the reality that the home is replacing the fitting room, which is convenient for customers, but complicates the returns process even further for retailers. However, with customizable work flows, the returns process can be planned out and mapped accordingly, in order to simplify this area of the supply chain.

If retailers want to keep up with customer expectations regarding ecommerce, shipping, fulfillment, and what’s yet to come, it’s vital for them to adjust their supply chain processes. To do this quickly and cost effectively, retailers should look into technologies that offer supply chain management, order management, and fulfillment solutions.