In a challenging market, supply chain management plays a crucial role in driving success and can give your retail business a competitive edge. But where do you start?
Running short on stock or missing an order not only means disappointed customers but a dent in profitability. So, when it comes to meeting your customers' needs, optimizing operations, and reducing costs, effective supply chain management is a welcome solution.
Getting on top of supply chain management affords you flexibility, whether you are experiencing a slow period or fast growth — be that opening multiple stores, adding an online element to your operation, or seeing more footfall generally.
The supply chain includes everything required to bring your products to your customers. Supply chain management optimizes the associated processes to make the flow of goods in your business faster and more efficient. It encompasses everything from obtaining the raw materials to production to delivering that product to your customers.
Supply chain management delivers. Retailers with a well-oiled supply chain are able to maximize customer value (and thus customer satisfaction), gain a competitive marketplace advantage, and reduce related operating expenses — ultimately, maximizing profitability.
Further, by using data and analytics to forecast trends and customer behavior, you can better predict demand and set your strategy by your expected needs. You’re creating an efficient supply chain with tighter controls, little waste, optimum delivery, and a higher bottom line.
Like most things in life, there is no one size fits all when implementing supply chain management in your retail business. However, there are some key points to consider, outlined below.
We love a strategic plan. Nothing sets you up for success, like knowing your objectives, knowing how you'll achieve them, and how you’ll measure success.
In retail – no matter your niche – your supply chain is the backbone of your business. Building supply chain management into your wider business plan is essential. It should be intrinsic to your operational processes and your longer-term goals, and its structure and efficiency can support future growth by enabling you to scale as required.
For any process to work optimally, you need staff buy-in. Supply change management is no different. Your staff need to be fluent in all aspects of your supply chain but also need to see the bigger picture and where everything fits into the process.
Knowledgeable staff are more productive, can support each other, and rise to the challenge when issues occur. Responsibility breathes job satisfaction, and delivery breathes customer satisfaction – the perfect segue…
To acquire and retain customers, you need to deliver quality products on time. Implementing supply chain management can help you achieve just this. It can also help you to unstick any issues that arise, quickly and transparently.
Consider this: you are a fashion retailer, and you have recently set up an eCommerce store in addition to your brick-and-mortar store. As a result, you’re experiencing a surge in demand. You need to balance and manage in-store and online demand. Having the right infrastructure in place provides you with a comprehensive overview of your stock on hand, as well as insights into which products are performing well so you can prioritize these and ensure that extremely popular jacket is in stock and your customers enjoy their experience.
Technology is a supportive tool, not a driving force. When looking to purchase technology to facilitate supply chain management — or anything, for that matter — ensure that you have your strategy in place first. With an understanding of objectives, processes, and resources, you can select the right tools for the job.
It’s good to start with the ‘what’. Do you need to streamline inventory? Should you connect your eCommerce platform with your ERP or shipping software? Or, is your focus integrating payments? Then move on to the ‘how’. How will staff use the technology? How will customers engage with it?
Successful relationships with suppliers are invaluable. Consider them as partnerships with a mutual purpose: to collaborate to deliver quality products to your customers. The benefits of positive supplier relationships may be trust, reliability, comfort, and communication.
There’s also opportunity to grow together. For example, if you run a jewelery store, it’s to your advantage to establish strategic partnerships with suppliers — perhaps large ones, perhaps local designers — early in your operation. With such partnerships in place, as you grow, your relationship can grow. Close working partnerships can ensure constant supply and quality.
Just remember, as with any relationship, communication is key.
As a small business owner, it’s all about the bottom line. Which makes it all too easy to choose suppliers based on upfront prices rather than considering strategic sourcing. That’s where procurement based on the total cost of ownership (TCO) comes in. TCO includes the purchase price, plus operating, storage, and transportation costs; it covers the lifecycle of every asset you purchase.
While it makes the product acquisition process a little more complicated, ensuring that you are considering these often forgotten factors can help you reduce costs and increase efficiency.
If there’s one thing you take away from this, let it be the following: balance your stock with demand. We’ve all been into those overcrowded shops that have a little bit of everything and a lot of everything else — with most of everything gathering dust.
Inventory is money sitting on your shelves and inventory carrying costs can add up – quickly! Inventory carrying costs generally total about 20% to 30% of a business’ total inventory costs.
To optimize your inventory, regularly review levels and ensure that they’re aligned with your needs. With supply chain management, you get a real-time view of your inventory levels so you can balance stock with demand. Plus, the right technology provides the data required to inform accurate demand planning and forecasting – so you can ensure you’re appropriately stocked for all seasons and all cycles.
Supply chain management helps you review your processes and policies to ensure they are compliant and current, and catch any issues early and proactively resolve them. Mitigating risk is a collaborative effort that includes your team, suppliers, and any other partners you may have.
In one sense, it starts with undertaking some due diligence and choosing reliable partners. There are a couple of actions you can take to sustain a dependable relationship. Focus on forecasting techniques to inform decisions on budgets, sales, marketing, materials, production, risk assessment, and even hone shipping/ delivery times and cycle variations. Constant review and implementing triggers to alert your team when there are issues, delays, or other, will help you maintain a smooth operation.
COVID-19 accelerated an existing trend in customer behavior and a move away from brick-and-mortar stores towards eCommerce. An omnichannel operating model best facilitates integration of physical and digital retail channels. Using technology to manage storage and transportation, purchasing, shipping/ delivery, and tracking, you deliver a streamlined and excellent customer experience.
Supply chain management also includes reverse logistics — aka returns! Failing to manage your returns processes effectively can negatively affect your bottom line, especially if you are an online retailer.
Customers expect free returns as much as they want free delivery. So, it's important that you factor in your returns policy and process when assessing your supply chain.
It’s not always easy to pander to the changing demands of customers. However, with a solid supply chain management infrastructure in place, you'll find yourself well-positioned to roll with the punches, adapt quickly, and, most importantly, deliver quality products on time to satisfied customers – cost-effectively. Win!