A Current View of the Retail Supply Chain

Introduction — Who Delivers Multi-Channel? It’s Supply Chain

Most of the press in retail this year was about mobile. Although mobile and social are priority areas for retail, the bigger dollars are being spent on operational challenges such as customer experience touch points (single view of the customer, POS, store and web design); IT infrastructure challenges from web to wireless in the store; and supply chain, which includes inbound merchandise allocation, replenishment, inventory management, and fulfillment to the customer. This is great for supply chain professionals, who mostly have been relegated to worrying about dreary topics like port congestion and strikes, vs. what they can really contribute — shopping nirvana!

Beyond the Omni-, multi-channel madness is merged-channel nirvana: the heavenly state of complete integration of customer information, no matter what channel is used, and inventory visible across the entire trading network to fulfill demand. Listen up, B2B businesses! This problem is not exclusive to retail. But the sheer scale of dealing with ‘one-each’ businesses can provide the ultimate proof point of superior, precise management whose lessons are transferable to most industries — if retail can get this right.

Where Will the Money Be Spent?

So, what activities that we have seen this year will continue to grow next?

WMS — The various warehouse technologies to support inventory management and Omni-channel fulfillment. The past model of web-only or catalogue-only inventory really infuriates potential buyers. Amazon has shown the way here — talk about lean! They have the inventory status of their partners, other merchants and manufacturers to locate specific products across their trading network. This puts private label retailers to shame, because they actually own their end-to-end process from manufacturers to point-of-sale. They can’t seem to provide seamless inventory locating and fulfillment. And yet Amazon can do it without owning the back of the supply chain. Ah, the value of collaboration and process mastery!

Source tagging and B2B transacting — RFID, bar-coding and EDI/AS2 will continue to grow to provide seamless communications and visibility across the trading network. The old VAN models are dying out as Amazon, Walmart, and others expect AS2 over the internet.

Transportation and Trade — Logistics technology and process methods such as collaboration for carrier consolidation to improve inbound coordination and bottlenecks.

Mobile and Wireless — Our research showed more mobile spend for supply chain than for the shopper experience! End-to-end visibility and coordination with third-party services such as in-store merchandise services, direct store delivery, and same-day customer delivery will grow. The in-store wireless infrastructure will grow, not only to support mobile checkout and tablets for sales assistance, but for store operations such as inventory management and pricing.

Demand Management — Demand processes and technologies continue to evolve. One method yet to be mastered is how to make sense out of the great customer insights coming from social media. There are solutions that provide this function, but they are newbies. Few traditional demand-forecasting players provide them — at their peril. Retailers and brand companies are reaching beyond the traditionalists to access those solutions.

Social Enterprise — There are three flavors of social: one for customer-facing marketing and customer support, one for B2B collaboration, and one for knowledge sharing in the enterprise. The latter two we call Enterprise Social Networking. Retailers will begin to understand the differences and not use social networking solely for marketing.

Conclusion

There is validation of the importance of integration in retail between the ‘supply chain department’ and marketing and merchandising. For example, the technology market mega-merger mania within the last year promoted multi-channel as a big motivator for those investments. (Read about RedPrairie, JDA, NCR, Retalix, Symphony, and Aldata here.) But these mega-mergers have not stopped smaller innovators from taking their fair share of the deals, as retailers seek new ways to stay ahead of the competition and the consumer.

Retail is by no means the domain of the big tech companies. Many of the bigger players failed to detect changes in the market, or got bogged down with technical issues and integrating their acquisitions, or are not on board with new demand-sensing and customer-engagement techniques. Not that they are doing poorly. The point is — take heart. The ‘way things are done’ in mobile, social, and the customer experience — well, the playbook is yet to be written. But this is great territory for innovators.

And to quote the maestro on the web and mobile, “It’s only ‘Day One’.” — Jeff Bezos

To view other articles from this issue of the brief, click here.