Managing a retail supply chain involves overseeing a complex web of logistical steps, from forecasting market demand and sourcing materials to controlling inventory and orchestrating the delivery of the right products in the right quantities at the right time. All of these processes must be streamlined if retailers are to successfully meet customer expectations while keeping their supply chains functioning as efficiently as possible.
Managing the supply chain has been especially challenging in recent years, due to rising materials costs, labor shortages, regularly occurring stockouts, expensive and unpredictable shipping conditions and constantly shifting consumer behavior. Efficiency and agility are the keys to maximizing supply chain success under these conditions. Conversely, delays and inflexibility can lead to higher operating costs, unhappy customers and a negative impact on a company’s bottom line. To help address the many supply chain challenges retailers face today, this guide provides tips on how to build, manage and optimize supply chain processes across the board.
Supply chain management involves overseeing the inbound and outbound logistics for every product a retailer sells, which includes all of these links in the chain, and more. Every process in the retail supply chain, from demand planning, sourcing materials and coordinating suppliers to tracking inventory, monitoring warehouse operations and manufacturing and delivering products, must be managed effectively for optimal supply chain performance.
The business objectives of a well-managed supply chain are twofold. First, a smoothly running supply chain helps retailers optimize their supply-side functions to cut costs and work in a more agile way. Second, an efficient supply chain allows businesses to deliver goods to customers more quickly, which gives the business a competitive advantage and helps build stronger customer relationships over time.
The Importance of Retail Supply Chain Management
Effective supply chain management is essential, as retailers look to increase their output and revenue while keeping their operating costs to a minimum. Not only does a well-managed supply chain result in higher profits, an agile and responsive strategy also helps retailers consistently predict and meet customer demand.
Retail habits after COVID-19 brought a step-change in consumption habits, and consumers have increasingly embraced online shopping, as well. As a result, many retail businesses around the world have been rethinking their logistical plans and adopting new digital strategies that allow for more flexible delivery options.
In the face of shifting consumer behavior, retailers must build a resilient supply chain, one that can both adapt to pandemics, economic shifts and other disruptions and evolve as new supply chain processes and management methodologies emerge. According to McKinsey, building long-term resilience into the supply chain can help businesses boost their sales by 3% to 7% and improve cash flow by 15%.
Specifically, supply chain management can help retailers improve their operations, drive revenue and position their businesses for long-term success by:
- Determining Ideal Inventory Levels
- Reducing Costs Through Automation
- Streamlining Processes
- Allowing Retailers to Remain Agile
- Ensuring Consistency Across Product Lines
Retail Supply Chain Management Challenges
Businesses face a range of challenges that can disrupt their supply chain operations, drive up their inventory costs and, in the worst case, lead to missed targets and dissatisfied customers. From the intricacies of managing multiple vendors to opportunities for improving customer experiences, supply chain challenges include:
- Managing Multiple Vendors
- Optimizing Inventory Levels
- Dealing With Global Shortages
- Managing Shipping Delays
- Reducing Costs and Time to Market
- Weathering Economic Sanctions
- Improving Customer Experience
The Future of the Retail Supply Chain
The only constant in the retail supply chain is change. The ability to understand and adapt quickly to change will be a major differentiator for retailers in the years to come. But that doesn’t mean retailers should focus only on short-term decision-making. Many retailers are now rethinking the way they build, organize and manage their supply chain networks at every level, so they can become agile enough to make changes quickly and with confidence.
Many businesses are also becoming more data-driven in their decision-making. End-to-end visibility across the processes that are part of retail planning, supply chains and customer experiences is the Holy Grail; it allows retailers to make cross-functional decisions that balance customer success with a focus on driving down operating costs on a more global scale.
To satisfy customer preferences, omnichannel purchasing journeys and fulfillment drive the need for a data-driven supply chain process. Real-time data on suppliers, inventory and delivery can be matched with more accurate demand forecasting across channels to help retailers expand these revenue streams and improve the efficiency of their functions on a daily basis.