Today's consumers are growing impatient and retail supply chains more complicated. Shoppers are able to research, compare and order products and services from anywhere at any time. And they are becoming increasingly expectant that as the time it takes to purchase an item declines, so will the amount of time they have to wait to receive it. Delivery times and costs have become critically important in purchasing decisions and have left many merchants trying to figure out how to lower both without losing profits. Achieving this goal is further complicated for online sellers that are struggling to adjust operations to an omnichannel environment, with the rapid accumulation of channels, devices and platforms creating hurdles in efficient order fulfillment and inventory management processes.
Earlier this month, retail giant Target Corp. revealed it was putting more pressure on its suppliers to improve its supply chain workflow. By implementing tighter deadlines and delivery terms, the corporation hopes to improve the shopping experience for its customers. And it seems this step taken by the brand might be the start of an emerging trend.
Looking to improve and accelerate logistics
Fleet Owner recently reported that Brian Gibson, an Auburn University professor of supply chain management, named "speed to market" as one of the most important functions of retail companies, driving them to put a strong emphasis on logistics and supply chain operations. To the source, Gibson elaborated on some of the findings he gathered from interviewing 24 senior-level industry professionals. He indicated that order and distribution management is about making sure the product is delivered to the appropriate point of the supply chain which, contrary to popular assumption, doesn't automatically mean the node located nearest to the consumer.
"A lot of retailers are getting smarter and saying it's not just about transportation cost optimization over speed, they're looking at a multitude of factors," Gibson said, according to Fleet Owner. The retail logistics are becoming more about making sure orders made online can be fulfilled while adequate levels of stock are maintained.
The source suggested that retail supply chain optimization it is no longer just about delivery times, transportation or merchandising costs but, rather, how quickly the product can get to the market. Gibson told the source that many companies feel this pressure because "customers are far less loyal today than they were in the past; therefore how effectively [the] supply chain can fulfill demand becomes a competitive differentiator as opposed to that loyalty."
He added that the focus has moved from marketing-based operations to supply chain management.
Retail Industry Leaders Association Senior Director of Retail Operations Jess Dankert noted that the central area of importance for retail companies now involves taking a customer-first approach to operations. And, considering the platforms being used and buying behavior of consumers are evolving, so must the process for fulfillment and distribution. Put simply, satisfying the customer is becoming increasingly difficult to do without efficient logistics and supply chain management.
Preparing retail supply chains for future
Dankert explained that the retail sector, as well as its logistics managers and suppliers, must operate in a way that is more about being predictive than responsive to consumer needs. Retailers must optimize their supply chain by implementing the sourcing tools and strategies needed to better forecast and anticipate what's to come, instead of simply reacting once it does.
An effective way for an organization can ensure this happens, the source indicated, is to eliminate the fragmented and siloed environment and move toward a more integrated, collaborative system. By connecting all units of the supply chain - from procurement and merchandising to transportation and logistics - the retailer will be better prepared to thrive in omnichannel.