Trends-November 2007

Traffic at the nation’s major retail container ports dropped below last year’s levels late this summer, and the peak monthly volume for 2007 is now expected to fall slightly below last year’s peak, according to the National Retail Federation and Global Insight’s recent Port Tracker report.

“These figures reflect the weakened U.S. economy and retailers’ cautious outlook for this year’s holiday season compared with last year,” Global Insight economist Paul Bingham says.

“A slower economy means fewer imports, and that means fewer containers coming through the ports. The good news is that lower volume means the ports are free of congestion and that the goods coming in should move smoothly all the way from ship to shore to store.”

Given these circumstances, smart retailers are planning their inventories carefully to ensure they properly match supply to demand and eliminate overstocks.

Surveyed ports were expected to handle 1.52 million TEUs of container traffic in August, a figure that would have broken the record high of 1.51 million TEUs set in October 2007, which was also the peak monthly figure for that year.

Actual volume, however, came in at 1.46 million TEUs, up 1.5 percent from July but down 1.4 percent from August 2006.

September 2007, which was expected to tie September 2006 at 1.48 million TEUs, is now estimated at 1.46 million, down 1.9 percent from a year ago.

October is traditionally the peak month of the year as retailers rush to stock shelves for the important holiday season. This October was previously forecast at 1.54 million TEUs, but is now forecast at about 3,300 TEUs short of last year’s 1.51 million total.

Following this trending, the report has revised forecasts for the remainder of the year with anticipated volumes to miss the mark on previous estimates, but still match or surpass 2006’s end-of-year volumes.

Customer-Driven Intelligence Key to Retailer Success

Savvy retailers know the importance of keeping track of consumer signals to best align and streamline inventory strategies and manage their global supply chains from demand to supply.

But new data from RSR Research indicates that companies can drive even greater value within the enterprise by properly sharing and disseminating point-of-sale data. This enables retailers to understand what products sell where and when, but also who is buying them.

Businesses have been collecting consumer data for years, but this level of information has historically been unavailable to the enterprise according to RSR Research’s report, The Next Generation of Business Intelligence: Driving Customer Insights across the Retail Enterprise.

Its findings confirm that using customer-driven business intelligence to inform assortment and space planning processes is a key component of retail success.

“Now, retailers see the collation of this information as a means to respond to rapid changes in consumer demand, improve the relationship between the products they sell and the consumers that buy them, improve the productivity of the merchandise they sell, make better choices in opening new stores, and provide consumer-relevant differentiation from their competitors,” the report states.

Gathering and analyzing customer and product information at point of sale empowers retailers to drive efficiencies elsewhere in their operations.

The report highlights three ways this visibility can open new opportunities for improvement and create competitive advantage:

• Retail winners tend to view their greatest opportunities in taking the steps to drive customer retention, while all other respondents just focus on customer retention as an end, losing sight of the steps required to achieve that retention.
• Smaller retailers see opportunities in improving the trajectory of new store openings.
• In general, retailers selling fast-moving consumer goods tend to lag behind general merchandise and apparel retailers in using customer data to drive top-line improvements. Instead, to their detriment, they continue to focus more on cost-saving measures.

The convergence of product and customer information therefore shows great promise for improving efficiency. A far higher percentage of retail winners have embraced the use of customer-driven business intelligence to inform their assortment and space planning processes, while average and poor performers lag significantly in this usage of data.

Businesses engaged in lean logistics strategies aren’t satisfied by silo success, with 41 percent of manufacturers five years or more along with lean initiatives indicating they are in the process of extending these practices throughout the supply chain, according to a recent Aberdeen Group Lean Supply Benchmark report.

The quantitative study polled nearly 300 companies, including W.E.T. Automotive, TRW, Harley-Davidson, Caterpillar, and Coca-Cola.

More than 60 percent of best-in-class companies from the study are coordinating lean efforts throughout the supply chain, and focusing on the core tenant of lean process improvement and the true path for operational excellence: being agile and responsive to the customer.

“As lean moves from the plant floor to the supply chain, it becomes more difficult to orchestrate activities without automation,” says author Maura Buxton, a manufacturing research analyst for the Boston, Mass., research group.

Issues of maintaining visibility for customers and suppliers and standardizing practices are driving more manufacturers to adopt technology solutions, with 60 percent of companies strengthening core ERP, 56 percent investigating supply chain management solutions, and an additional 32 percent evaluating supplier relationship management solutions.

In terms of organizational strategies to foster lean processes throughout the enterprise, the report reveals that better-performing companies are achieving success by:

• Striving for agile, same-day manufacturing execution capabilities with minimal variability in order to meet real customer demand.
• Including major suppliers, customers, and partners as part of the audience during the transition to lean concepts, both in production operations and as they are deployed across the supply chain.
• Integrating IT applications for synchronized business processes that connect customer demand to business execution.