In the last blog we looked at how customer service expectations can shape a multichannel supply chain. But there are other benefits to being able to respond to customer requirements, particularly with regard to ecommerce.
As published in Retail Week & DWF Supply Chain: Trends and Innovations in Retail 2014-15 report
As the supply chain director of a fashion retailer explains. “The pace of change from a customer perspective is daunting. Basically in a multichannel/omnichannel environment the customers’ requirements are fast evolving. The pace of change inside the supply chain is slower than the customer change; therefore deciding how you position yourself with regard to customer requirement is a challenge.”
“If you are watching your competitors, which all retailers do, and you say to yourself everybody is doing this so we must do it too, what you find is that by the time you have made those changes the customer has moved on. It is an evolving customer-requirement landscape to which the supply chain needs to be responsive. But you also have to judge where the customers are going because the changes in lead times are real. It is a complex mix. It was a lot easier in the old days when you had single channel strategies and single channel inventory but it is no longer profitable to do that.”
The retailers interviewed for this report stress how collaboration between supply chain teams and other functions within retail businesses has increased, and ecommerce is often cited as a case to point. As most retailers move towards some form of omnichannel model, there are many reasons for collaboration with ecommerce, but a supply chain director for a specialist retailer emphasises the benefits it brings to his job in terms of consumer intelligence.
“We are also working more closely with ecommerce because of the growth in online,” he says. “They have more say in outbound activity than they used to. Collaboration with them helps me in terms of what customers are telling them in real time.”
The challenges which moving to an omnichannel model place on the supply chain function are clearly considerable. This is where pureplay online retailers have a great advantage and why they are leading the way in supply chain management, in the opinion of a department store distribution director. “For me it is still very much the pureplays that are leading the way in supply chain because they are not adapting an existing solution to fit a new omnichannel world,” he says. “They designed their systems for that new world.”
Different retailers are at different stages in terms of effecting the evolution from multichannel to omnichannel retailing but wherever they are on that progression, it is a process in which supply chain professionals are closely involved and where their decisions will be instrumental.
Watch out for our next blog post which will look at the key logistics priorities within your business.
If you have any questions or would like more information, please contact Hilary Ross Partner & Head of Retail, Food & Hospitality sector.This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.