3
December
2014

Why Retailers Should Plan in Advance for Better Supply Chain and Distribution Management

We are done with Thanksgiving and racing through the Holiday season, officially! Black Friday, Thanksgiving and Cyber Monday may not have made retailers truly happy but they haven’t lost all hopes yet. Customer turnout at the beginning may not be up to the mark but businesses realize that compared to earlier times, the sales spree will continue. Naturally, profit and loss should not be measured as per their performance on these special days.

Supply Chain and Distribution Management

Like many other beginning-of-holiday sales, on this year also, retailers didn’t come up with something ingenious to draw customers in-store, except more attractive, aggressive discounts and keeping stores open for longer than before. Essential aspects like customer engagement or customer empowerment within the store are essentially missing. Alongside, it is equally important that storeowners stay ready with their plan for advanced supply chain management and improved distribution system.

Though these factors are not directly associated with store operations, their contribution cannot be overlooked when it comes to guaranteeing overall customer satisfaction. As the holiday season nears the Christmas and the New Year, pressure of customer demand will keep mounting retailers. Now, without a closely weaved supply chain and distribution mechanism, the pressure will reach the breaking point, causing the entire operation to snap. Without planning in advance for better supply chain management and distribution system, brick-and-mortar retail businesses may experience the following,

  • Negative impact on revenue and meeting target margin
  • Modern customers absolutely despise empty stocks or delay in order processing
  • Greater risk of wrong product allocation in-store, contributing to customer frustration, affecting the overall brand-building and profit earning opportunity

Does It Mean Retailers Don’t Plan Ahead of Peak Season? Why Do they Fail Then?

Meeting the pressures of peak season head-on without any planning would be the same as committing suicide. Majority of retailers plan and yet the proportion of failure is quite large. Why? Experts are of opinion that strategizing is often done as per top-down process, whereas the planning should be done as per bottom-up model. It has further been suggested that top-down model is more appropriate for understanding sales volume and creating blueprint of supply networks. But, bottom-up model is more suitable when it comes to chalking out the right plan for store allocation. Unless retailers start embedding the bottom-up model with top-down one, it would be impossible to make their planning strong enough to withstand the pressure of peak season.

Multi-channel Retailing – the Newest Area of Concern?

Multi-channel retailing is often cited as one of the major obstacles that stop retailers from developing a foolproof plan for advanced supply chain management along with an integrated distribution system. The shift from warehouse-to-distribution center model to direct association with customer satisfaction model is something that retailers are still finding difficult to adapt. With this shift, retailers are under the compulsion to fulfill delivery commitments. The additional channels, generated from multi-channel retailing, have made things more complicated by imposing challenges to physical logistics and solid management of customer satisfaction related issues.

Multi-channel Retailing and Technology

How Technology Addresses These Issues?

While on one hand, multi-channel retailing offers brick-and-mortar stores with tremendous opportunity to guarantee customer requirement, on the other hand, lack of infrastructure is the primary stumbling block when it comes to integrating the massive chain of action. Experts have voted for tracking tools that are meant for delivering necessary information to retailers and accordingly empower them with the decision-making capacity. However, the challenge, as we discussed before, for retailers is not just receiving details about how efficiently the supply chain is performing; rather distribution channel should also be provided with equal importance. Thanks to smart and strategic technological inputs, now retailers can opt for systems that will deliver real-time data to store managers about status of the retail chain, current inventory situation and store departments that need replenishment and that also at what time. How these aspects make things simple for retailers?

Simple! Now, you keep receiving real-time information about performance of your supply chain. At the same time, you get to know the approximate time for the assortment to get delivered. In case, the timeframe is not satisfied, you can come up with necessary measures for damage control. The system will also tell you factors stopping your retail chain from performing up to the best potential and you can take the corrective measures to remove those obstacles. In-store product distribution and allocation also becomes easy. Store personnel now would know the right place where they should place the right product as the information will be visible to their mobile devices. Customers will also be delivered with the valuable information about correct location of the product and how can they reach the spot without roaming around, all puzzled, throughout the store. If the product is off-the-shelf or out-of-stock, the notification will also receive both store attendants and customers. While the initiative to refill the empty space can be initiated immediately, on the other hands, customers will be saved from travelling all the way to the aisles can find it is out-of-stock. 

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