By Robert Sutton, managing partner, Innova Supply Chain
One of the constants in Business is change. This is particularly relevant in the Supply Chain
not because the logisticians have nothing better to do, but simply because the Up, Middle and Downstream elements are in a constant state of flux.
To illustrate this lets take a look at a specific sector Retail
Retail is an extremely dynamic sector and often impacted by multiple internal and external factors, the diagram below illustrates some of the more
common ones:
The Retailers Dilemma
As consumers or buyers we all contribute to the challenges faced in this sector. The growth in online retail vs. traditional retail remains a key challenge and opportunity in many markets. Retailers know that access, speed and availability are key triggers for the consumer and in todays e-driven market its taken for granted that the range, price and delivery options will flex to meet the buyers needs.
Traditional retail will never completely disappear and in many markets will continue to be the mainstay of the retail brand however, as markets mature the transition between traditional and digital channels will create a significant number of challenges (as shown in the diagram opposite) for the retailer and the entire supply chain as it attempts to serve the often conflicting demands of multiple sales channels.
In a Franchise or Representative market this transition needs to be considered and understood as it has the potential to impact their overall portfolio and the balance of investment/return particularly where inventory is maintained at the franchisees expense.
Creating Value for a Retailer
For todays Retailer the ability to identify and work with partners that not only understand this complex and often conflicting business, but are also able to deliver a value, service and price commitment, is invaluable as the majority of Retailers would rather focus on marketing, sales and product/range. Even historically core activities like sourcing are now considered as candidates for outsourcing and as the sourcing map continue to transition from China and core Asian markets to a mix of near shore and formative African markets then we can expect there to be increased demand for supply chain solutions in support of new sourcing strategies.
For service providers they must be able to demonstrate a clear focus on the core business requirements whilst also ensuring that their organization and service menu can flex ahead of and/or with the changes in the market. The traditional menu of services (warehousing, transport, order fulfilment, etc.) is unlikely to attract new retail partners and will need to expand to include Omni-Channel distribution and fulfilment strategies, Digital Retail solutions, Value Deferment solutions, i-tagging and comprehensive risk management solutions amongst many others.
In summary
The Retail environment has been and continues to be amongst the most dynamic of Supply Chains, sourcing maps change based on cost, speed, political, environmental and socio-economic factors. Sourcing is no longer based around a China/Asia footprint but continues to fragment/expand into South America, Africa and Eastern Europe. Demand planning no longer relies upon store ordering but has to increasingly consider the much more fickle digital demand. Inventory agility is a key competitive advantage. Given these changes/trends you should expect that resilience of supply is high on the agenda and will increasingly play a major role in partner selection.
The demands on Supply Chain partners are high but those that are able to rise to the challenges can be assured of an attractive long term revenue stream underpinned by increasing demand for both service and continuous innovation.