March 2011 | Commentary | IT Matters

Retail Recovery Depends on an Integrated Supply Chain Strategy

Tags: Logistics I.T.

Jim Bengier is global retail executive, Sterling Commerce.
617-908-9720
jim_bengier@stercomm.com

Although retail sales have shown some increase in early 2011, many economists caution that spending will remain modest as long as wages stay flat and job creation weak. Even as consumers begin to loosen their purse strings, it is essential for retailers to remain cautious and operate at the most efficient levels possible to ensure a speedy economic recovery.

The success of online retailers over the past few years has encouraged catalog retailers and department stores to focus their energy on e-commerce, providing a broad range of products online. Not only do these retailers have to focus on providing customer service and garnering shopper loyalty, but they must also handle the challenges of cross-channel retailing and multi-brand management.

The downfall of multi-brand selling, as well as multi-channel selling, is that retailers may be inclined to run their operations as though they are managing several independent businesses, with separate warehouses and, most importantly, separate logistics and fulfillment processes. This is by no means an ideal retail strategy.

To successfully manage multi-brand and multi-channel selling, retailers need to optimize customer order fulfillment across all brands and channels. This is only possible if they break down silos and have inventory visibility and third-party supplier management.

bedeviling details

The devil is in the details, and the details required are independent inventory allocation and fulfillment per customer order line item. To do this, retailers need full visibility of their warehouse management systems to determine just how much stock they have left to shift.

They also need a reliable tracking system for their products all the way through to proof of delivery of their supplier’s “drop ship” supply chain— the primary method of offering an expanded product assortment online.

In addition, retailers need to ensure that they are not sending out a delivery fleet for multiple orders from one consumer across their different brands. They cannot achieve this knowledge unless they have clear cross-channel order visibility.

Without inventory visibility and management across all brands and channels, delays and cancellations may occur due to out-of-stock goods and the inability to obtain stock in a timely manner from suppliers. Profitability may also be damaged if retailers are forced to retain too much stock to compensate for inadequate inventory management.

Ultimately, these shortcomings can affect customer satisfaction, leading consumers to shop elsewhere. And with the wealth of online shopping options available, it is unlikely they will return to a retailer that failed to satisfy them.

rising to the challenge

Making the first move toward a fully integrated multi-channel, multi-brand environment can be challenging. Ultimately, the decision comes down to the retailer’s management style and the strategies it adopts to take advantage of greater consumer confidence and increased spending.

In most cases, however, successful retailers who have managed to achieve growth, or stay well afloat during the recession, will have deployed a single integrated cross-channel, multi-brand strategy across their business and have integrated supply chain processes to support that strategy.