How a Proactive Supply Chain Benefits Retail
Good news for retailers – according to the National Retail Federation (NRF), last year’s global holiday sales were expected to increase 3.7% over the previous year and top $630.5 billion. While price remains shoppers’ primary driver, options that save time and provide added value like free shipping also win. That’s likely why leading shippers were also expecting record numbers over the holiday season.
Everyone is happy when sales are strong of course but retail’s busiest time of the year can also put a magnifying glass to any slow-downs or errors in the supply chain that could occur at any point across the process including: omni-channel service delivery, in-store stock replenishment and the drop ship process. These issues are costly any time of the year. Examples include:
- Product substitution – your customer receives what they did not order or only a portion of their order
- Product out of stock – store shelves are empty and your customer receives nothing
Regardless of the type of error possible throughout the supply chain, the ongoing challenge is to detect such conditions and remedy them before they disappoint your customer. All too often it takes a customer complaint before the business is even aware of a mistake. Then the problem must be “patched up,” costing time and money and turning what could have been a positive experience for your customer into a negative one. In today’s busy, highly competitive retail environment, fix-on-failure can no longer be an option.
It’s Time to Be Proactive
The key to supply chain success in the retail market must come from an organized process rooted in a proactive philosophy. In a well-run operation, each stakeholder is expected to achieve measurable performance objectives and those objectives should map to the organization’s customer commitments. For example: deliver the customer order on time; have the customer order ready for in-store pick-up; on-board suppliers within defined SLAs; ship the right amount of ordered product; process payment on time, etc. Performance objectives should also align with regulatory compliance obligations and current business drivers that support strategic initiatives such as improving the customer experience, increasing operational efficiency, boosting top-line revenue, mitigating risk, etc.
You want to empower individuals to proactively focus on what is most important for achieving their operational objectives. To do so, equip them with tools that enable real-time, end-to-end visibility so they can proactively and positively resolve issues.
Visibility into the supply chain is critical and that of course includes traceability of purchased goods to understand the location of an order and how it is being processed. But monitoring should also be done at both the technical level, which could include the number of transactions per day and the number of failed transactions as well as at the business level which includes discrepancies between forecasted and received products, the number of delivered products, percentage of completed deliveries, preparation and expediting delays and elapsed time for order reception.
Now take this concept one step further. Perhaps even more important for a business to take in is predictive visibility. Predictive analysis captures any given moment in time and can alert the business to a potentially undesirable event (the order will be 2 days late or an invoice is blocked therefore on-time payment should not be expected) so appropriate people can take proactive steps to correct the situation or at the very least, minimize the fall out. Proactive monitoring of the ordering and shipping process anticipates risk rather than simply detecting problems after the fact.
Predictive visibility goes a long way in satisfying demanding customers. Not only will it ensure a smoother ordering process for them, predictive visibility can lower out-of-stock rates, shorten order-to-delivery cycles, reduce safety stocks to the lowest possible levels and protect revenues by sharing physical store sales with digital channel sales, instead of losing them to pure ecommerce players. Predictive visibility drives operational intelligence in the areas that really make a difference for your bottom line.
A multitude of retail options, mobile shopping and e-commerce all point to an increasingly complex flow of information. Visibility is key and with predictive insight and alerts, supply chain execution simply runs smoother. In the end, this helps organizations deliver as they committed during the ordering process. During the frenzied holiday shopping season and throughout the year, that is very good business.
Antoine Rizk is Vice President, Marketing Supply Chain, Axway