Successful businesses rely on access to information and data, which shows revenues, profit margins, and underlying performance. For retailers and their trading partners,supply chain visibilityis an essential component in managing the fine line between profit and loss.
According to the most recent Retail Vision Study report, 72% of retailers were planning to update their supply chains for real-time visibility and automation. As e-commerce continues to grow, this is increasingly becoming a business necessity rather than just a luxury.
There’s also the added factor of compliance. In the retail industry, a fully compliant supply chain is a visible one. In a world with a plethora of laws and regulations, it’s essential for trading partners to be fully transparent and adhere to the highest standards possible. Without visibility, there can be no certainty on whether all trading partners are compliant, risking reputations and businesses across the chain.
What Is Supply Chain Visibility?
There are several descriptions of supply chain visibility (SCV) online, but for retailers, it can be described as:
The ability to track all products and parts from the manufacturer to the store or customer. This involves making information at all points including the ordering, build, and shipping visible by all parties involved in the supply chain.”
If you are using a traditional, paper-based system, then achieving SCV would be a complex challenge. Many retailers are still playing catch up in terms of using the latest technology for supply chain solutions.
Problems Caused by Lack of Visibility
Retailers experience several issues when they cannot see the whole supply chain. These include:
Over-supply of stock:A common consequence of uncertainty in the supply chain is having too much stock. Retailers lose an estimated 30% of potential earnings through the excess stock.
Stock-outs:At the other end of the scale, not having enough stock can prove equally costly for retailers, particularly in e-commerce where shoppers can quickly leave your site to find another one. A study by Retail Dive discovered stores could be losing nearly $1 trillion in potential sales.
Inability to respond to issues in real-time:Supply chains generally have a few glitches every so often. If you can tackle the minor issues in real-time, then you’ll be able to minimize any potential disruption. However, without total visibility, retailers may only notice the issue when it’s too late.
Product organization:One of the trends in online retail is the high return rate. In e-commerce, around 30% of products are returned, compared to just 8.89% for brick and mortar stores. This means it’s as essential as ever to have visibility at all points in the supply chain in order to make sure returned products do not get mixed up with new ones.
Changes to business rules and compliance:Business “rule-books” are commonplace across the industry. These documents, which cover areas includingEDI, order fulfillment, shipping, and more, are subject to adjustments and changes on a continuous basis. It can be a challenge to synergize the changes with your trading partners, and this could lead to costly compliance breaches.
Cross-border supply chains:In today’s globalized world, cross-border supply chains are the norm. This poses not only logistical challenges but also legal challenges too, with multiple laws and regulations to consider.
In essence, the lack of visibility leads to a disjointed and inefficient supply chain that costs retailers dearly through lost sales, excess stock, as well as compliance breaches. Fortunately, as many retailers are beginning to realize, there are plenty of solutions in place.
Steps to Real-Time Visibility
The key to securing visibility is to take a proactive approach to supply chain management. It involves integrating organization, excellent communication, and the latest technology. There is no single solution, but if you follow these steps below, you will put your retail business on strong foundations:
Prioritize:Identify the critical elements of the supply chain, such as stock control and returned products. Also, retailers need to consider the shopper’s experience and how you can optimize the supply chain for the benefit of the end customer. For example, being able to see whether their selected products are in stock in real-time.
Research:There’s a variety of platforms that offer solutions for different businesses. Take the time to research to find the right one for you.
Invest in technology:Given the fact supply chain inefficiency can cost retailers dearly, it’s worth making investments in the right areas. Up to datesupply chain management softwareis now an essential component for successful retail businesses.
Integrate different systems:A common challenge for many retailers is managing different systems within the business. From accounting to ERP to supply chain, it’s likely you will have different platforms for each process. It’s critical to ensure these systems can integrate where necessary. For example, if you have stock visibility, then you should consider finding a way to display this information on the product page of your online store.
Ensure trading partners buy-in:As with any chain, it’s vital each link is as strong as the other. You may have a fully optimized supply management system within your business, but if your suppliers are not on the same level, they will be the weak link. For instance, if a supplier has missed an order for a major sales event, the ramifications could be damaging for all concerned. This shows the importance of a collaborative approach.
Build an extended ecosystem:The ultimate goal is to integrate the supply chain into an extended ecosystem, where you can easily access the key information in real-time. As we’ve detailed before, it’s essential to collaborate with other stakeholders in the supply chain and ensure all the vital systems are integrated, leading to an ecosystem for your retail business.
Enforce business compliance:WithDicentral’s Managed Service, you or other trading partners can make changes that will be visible in real-time to all relevant parties. This preventative approach leads to consistency and a fully compliant supply chain, with no risk of breaching laws and regulations.
Selecting the Right Supply Chain Management Software
At the heart of any supply chain, there should be a platform where you can manage the different processes and access the information you need. Increasingly, retailers are turning to supply management software for such a platform.
There are several products on the market, so to find the right software for your business, ask the following questions:
Can the product be customized to your needs?Within the retail industry, each business will have its own requirements. For example, a mid-market apparel store will have different needs from a high-end jewelry store.
Is the software compatible with all trade partners?From the manufacturers to the 3PLs, supply chain integration is critical for retailers. The software needs to be compatible with all the trade partners in the chain.
How reliable is the vendor?The reputation of the provider is an important factor in the selection process. Not only are you relying on them to deliver robust software, but you will also need areliable support infrastructure. Take the time to read customer reviews and to understand what each vendor can provide.
Answering these fundamental questions will lead you to the right software that delivers the supply chain visibility that any retailer needs.
The supply chain is an integral part of a modern-day retail business. The thin profit margins leave little room for error, and it’s often in the supply chain where profits are made and lost. As we’ve seen, a single oversight can lead to several thousand dollars in costs, eating into the potential profit. The same principle applies to compliance, where breaches, however unintended, could lead to hefty fines.
Ensuring visibility across the whole supply chain, from the supplier to the store to the shopper, will lead to a compliant, efficient process and allow you to maximize profits.
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