- 20 Sep 2007
Achieving supply chain excellence in Retail
By Alan Morris Managing Director of Retail Assist
The supply chain is the foundation of every retail business. Retailers can put distance between themselves and their peers in an increasingly-competitive market by good supply chain management which optimises product sourcing, manufacture, storage and distribution. A good supply chain will reduce operating costs and contribute to customer satisfaction. A poor one will result in a poor business.
Not surprisingly, this area remains a major investment priority for UK retailers, albeit semantics play a part in clouding the picture. There is much talk of retailers investing in systems for business planning, buying, merchandising, warehouse management and ecommerce. At the end of the day, they all come down to one and the same thing: they are all, or should be, interdependent elements of what are today’s complex supply chains.
The best supply chain solutions have much in common with ERP systems and the characteristics that we associate with them. They provide a single, unified system to cover all elements, integrating processes and providing a source of and repository for common data. This puts an end to dissension between functions, as both the finance people and the merchandisers calculate margins from the same base data, and to differences between financial and unit stock values held by various systems.
Just as a single data source makes sense for ERP, so it makes sense for the supply chain. A simple approach works best, with multiple functions sitting on top of a common infrastructure that includes common data. In this scenario, best of breed systems can integrate – rather than merely interface – to create a holistic platform that covers all facets of the supply chain.
Multi-channel retailing adds its own complexities and the need to support customer self-service puts an additional strain on the supply chain. Many retailers embarked upon online trading without getting the logistics right. Some bought stock specifically for the online channel, often outsourcing its management which added to their problems. Lessons have now been learnt and many retailers are bringing processes back in house, holding and managing a single stock source themselves and making it available to service all channels.
It’s clear that supply chain management is not a trivial undertaking. It is not always implemented well, even by the largest retailers. For those outside the top tier, a unified, all-encompassing supply chain can seem out of reach and available systems over-engineered. This doesn’t stop smaller retailers from aspiring to enjoy the same functionality as their larger peers, but they tend to be put off by cost of acquisition and of employing the skills to optimise and manage the system reliably.
For these retailers, the best option is usually a packaged offering which turns a tailored, multi-faceted application into a managed service. This unites the application, skills and hosting into a single solution, within the terms of a single contract. Smaller retailers can then maintain a strategic package at an affordable cost, safe in the knowledge that it will be regularly upgraded and managed on their behalf in a structured way.