- 10 Sep 2012
Retail Supply Chain Requirements
Nigel Illingworth, Chief Executive Officer of Merret at Retail Assist, discusses the types of IT developments which are currently driving retail supply chains. Nigel talks about the ways in which the requirements of retailers and their customers are evolving and the subsequent impact this has upon IT solutions providers.
The UK scene has changed dramatically over the past few years; with retailers keen to invest in new IT systems and omni-channel functionality, yet having to balance these developments with the tightened budgets which have become a reality for many following the economic downturn. Below are some of the top requirements of retailers when looking to replace their supply chain solutions.
Return on Investment
Possibly the most obvious and essential requirement of retailers over the past couple of years when selecting new IT systems has been value for money. Historically retailers highlighted this when looking for new solutions, but in some circumstances did not clearly identify what their return on investment (ROI) would be or how it could be achieved. Nowadays for example if an existing supply chain process requires 10 people and the retailer is hoping to streamline this to 5 people, then they are carefully planning the systems changes required to achieve this by providing tangible examples of the current and newly perceived business processes. Proof of ROI is encouraging for IT solutions providers, as it’s important when writing software to ensure that the finished product is commercially viable. For retailers it is vital to gain commercial advantage from implementing a product.
Quality of Delivery
Another key requirement is regarding the timescales of and quality of delivery expected of the systems provider. Retailers always want solutions delivered as quickly as possible because that’s the way their business works. Unfortunately a number of retailers have had software delivered from partner companies where the timescales have been reasonable but they have later found the product to be lacking in design or delivery quality. In these circumstances the software would have to be re-developed and re-tested. It’s therefore important that any software delivered is not only timely in the first instance, but also maintains certain standards of design and delivery accuracy because this means that subsequent implementation timetables can be adhered to and costs are contained.
Being part of a Community
Packaged solutions are key to being part of a community. Retailers are looking for positive roadmaps where they don’t feel that they are developing 100% of the product themselves. Meaning that they don’t bare the sole burden of cost for functional business driven changes being developed within the system.
In contrast, technical change, isn’t always business focused, but is key to keeping a product or package on track. Auditability, purging, re-platforming and performance are all things that typically don’t hit the headlines, however if you don’t keep putting effort and work into these areas, they slip behind and retailers can suddenly find that a product is no longer fit for use. A mixture of functional changes and technology platform changes are key to keeping a product fresh.
Ease of Use
As IT systems develop, there is a tendency for them to become more and more complicated. There is a balance between providing rich functionality and actually losing the intended audience. It’s key to improve functionality whilst maintaining a simple design to ensure usability. Tied to this is the requirement for auditability and visibility of processes. Individual users may need to track orders made by others for example. Processes should appear simple to the end user, whilst maintaining required levels of complexity ‘under the covers’.
The omni-channel click and collect process is widely recognized as being key to retailers maximizing their sales and also improving their supply chain. Underpinning the ability to make an order via the web are some important supply chain processes; the correct IT systems ensure that orders are fulfilled in the most efficient manner. Regarding delivery, this can mean that stock is collected from as few locations as possible.
Alternatively, systems can ensure that as much potential terminal stock is removed from the business as possible, by looking at where the highest covers are. Whilst this may not be the most efficient delivery process, it is preferable to completing seasonal recalls or inter-branch transfers. Admittedly the retailer is still moving the stock, but at least they are doing so with a resultant profitable sale.
The requirement of fulfilling orders across multiple countries or continents means that stock availability within any IT systems must be up to date in order to maintain and improve customer expectations and relationships. The ordering process is very much out in the open domain, but the fulfillment and availability processes are again kept ‘under the covers’.
A number of our customers are multi-brand retail groups that are looking for a package solution and uniformity of processes across their different brands. On the flip side, they do want to split their operations according to the different requirements of each brand. In some circumstances the clearance outlet on a website may be different to the standard stock process on the main site. The correct balance between uniformity and brand identity is essential. For example the way in which any IT systems allocate or, pick stock across different brands may be the same; however the way in which they fulfill or package stock for the separate brands might be different.
In conclusion, to truly be of service to retailers in today’s competitive retail landscape, their supply chain solutions must not only provide rich omni-channel, multi-country/currency and multi-brand functionality, but also be simple to use, good value for money, and provide a community experience.