August 2012 | Commentary | Checking In

Supply Chain Therapy Strikes a Balance

Tags: Retail, Supply Chain Management

Felecia Stratton is the editor of Inbound Logistics magazine.

There's nothing like a spur-of-the-moment urge, then splurge, to improve temperament. Retailers today are all too willing to facilitate "retail therapy" and oblige customers by making it easier than ever to satisfy their random impulses. Advertising—subliminal or overt—is quick to connect happiness with material possession, regardless of what kind. Then the supply chain takes over.

Retailers are hyper-sensitive to consumer proclivities because they have to be. Demand forecasting is a competitive differentiator, especially when consumerism is fickle in a rebounding economy. Knowing whether a product is likely to sell or not triggers new product orders, then fulfillment, inventory management, and replenishment machinations that keep supply flows in check with demand. Stocking too little or too much can make a world of difference at the bottom of a balance sheet.

As retailers look to grow their business, the challenge becomes exponentially greater—especially as new channels emerge. Amy Roach Partridge's article, You Are Everywhere: Mapping the New Retail Supply Chain explores how apparel retailers are managing an increasingly diverse supply chain stream that includes brick-and-mortar stores, outlet locations, e-commerce sites, social and mobile commerce, catalogs, pop-up stores, and broadcast retail.

The pharmaceutical sector has found a similar purpose by steering strategy toward a more conventional means—reducing costs. In Navigating Pharma Logistics, Merrill Douglas reveals that while pharma companies have long relied on supply chain management best practices to deal with temperature control, security, chain of custody, and regulatory compliance, a trend to outsource certain logistics functions—especially as popular drugs come off patent and profit margins shrink—is emerging.

The food service industry illustrates another example. Restaurants want speedy replenishment so they can order in small quantities, use fresh produce, and reduce spoilage. Consumers want their orders faster—and cheaper—without sacrificing quality. When consumer and market pressures pull restaurants in different directions, the supply chain logically becomes a pivot for balancing these opposing challenges to find shared gains. You can read about this in Restaurant Logistics: Serving Up the Perfect Meal.

Regardless of industry, supply chain management is an important platform—internal therapy group even—where organizations can exorcise the inevitable costs and inefficiencies that come with brand building and market expansion. It's a place where marketing impulses, logistics constraints, and operational reality converge and strike a balance.