This guest blog was kindly contributed by the tech magazine, Enlightened-Digital.
Napoleon Bonaparte famously said, “The amateurs discuss tactics. The professionals discuss logistics.” Successful deployment and management of a variety of disparate logistical elements is a hallmark of forward-looking business strategies. This is especially true for industries such as retail sales, in which a competitive edge is frequently predicated on the consistent flows of raw materials and finished products to meet public demand.
Retail supply chains
Supply chain management, in a retail context, describes the processes by which businesses get products into the hands of consumers. It sounds simple enough, but supply chain management involves a complex set of steps from one end to the other. Whether sourcing raw materials, finding a manufacturer or selecting the best method of order fulfillment, all supply chain components must work together seamlessly to satisfy increasingly fickle customers.
No operation is too small or straightforward to benefit from a supply chain management system, as technology and strategic insights are more accessible and affordable than ever. Having solid plans and processes in place can benefit single-store retailers or single-product ecommerce specialists just as it benefits big-box retailers and ecommerce giants.
McKinsey has found that integrating technology into supply chain management can increase distribution throughput by more than 40 percent, reduce lead time to customers by as much as two days, and produce at least a two percent growth in revenue, simply from an improved customer experience. These issues bedevil all retailers, large and small, but the right blend of tech, logistics, and support can help any business overcome common supply chain struggles and reap greater rewards.
Cloud computing and the supply chain
Cloud-based applications have emerged in recent years as more efficient and adaptable solutions for supply chain management. Retailers fight never-ending battles against the capricious nature of consumers, so agility and the ability to pivot are key to succeeding despite rapidly changing consumer trends.
“Retailers struggle to balance uncertain consumer behavior and long, complex supply chains,” says Kurt Cavano, Vice Chairman & CSO of GT Nexus. “These two challenges make it harder than ever to align supply with demand, which can quickly impact margins and sales. A solution to this is to implement a supply chain network in the cloud that tracks inventory and demand changes, and allows retailers to respond to the latest demand signals in near real-time.”
Greater flexibility and functionality confers other benefits as well, as discussed below.
1. A unified omnichannel approach
Today’s consumers use a variety of devices to find and buy products. Retailers need to keep pace with a supply chain that offers a consistent end-to-end experience regardless of channel. Additionally, omnichannel supply chain management must take into account the time it takes to implement system-wide changes. A scalable back office system built specifically for retailers, such as Brightpearl, is an attractive option to many. One-touch integration allows retailers to spend less time on administrative work, and instead focus on addressing evolving consumer demands.
2. Effective data analysis
Cloud industry executive Mark Hurd recently forecast the emergence of artificial intelligence and machine learning in cloud-based supply chain systems and anticipated the benefits of this new technology. “The amount of information and amount of data companies have is beyond the ability of even the most sophisticated data scientist,” he said. “Not true of machine learning. The opportunity to turn all that data into information that helps you sell more, that helps you save more -- AI will [address] both.” Aggregating, managing and learning from data with superhuman speed and accuracy can present retailers with a compelling advantage.
3. Cost-effective scalability
Retailers often find that their Enterprise Resource Planning (ERP) solutions typically can’t grow along with them, leading to costly overheads and operational inefficiencies. With cloud-based systems, users are only charged for the services they use and the amount of resources they need. This also means that cloud-based systems can expand with their customers. The highly competitive cloud marketplace drives down prices while regularly adding new functionality. It’s a win-win for cloud customers.
4. Greater convenience
Convenience has always been a major selling point for retail consumers, and this becomes more important as the world becomes more connected. Since 72 percent of consumers now say they’d like to see where their order is at every step of the process, accessibility, ease of use, and speed have become crucial components of the convenient retail experience.
Cloud-based systems offer lightning-fast updates throughout the process. Many brands, especially ecommerce brands, are also using or investigating cloud-optimized order fulfillment options, including drop-shipping. Lead and delivery times are one of the most powerful factors influencing customer retention, so every hour and day shaved off the process will benefit retailers.
By 2021, 71 percent of logistics leaders believe that their supply chain will be a major player in the success of their overall business strategy. However, more than half of those surveyed continue to view the supply chain as a supporting function rather than a core business priority. Supply chain management is the backbone of any smart future retail strategy. Gartner has forecast that 90 percent of ERP spending will be cloud-based by 2020. Retailers need to leverage the technology at their disposal to better utilize modern tools, stay on top of current trends, and above all, to stay competitive.