When supply chain directors were asked what their specific logistics priorities were, cost efficiency features prominently, with agility, efficiency, lead times and speed to market the other recurring watch words.
As published in Retail Week & DWF Supply Chain: Trends and Innovations in Retail 2014-15 report
In fact, 33% of directors say agility, flexibil¬ity and efficiency is their key logistics priority, closely followed by cost effectiveness, for 27%, and customer focus, for 20%.
“A big one and an obvious one for all retailers is the relentless focus on cost and the need to be able to deliver everything we have done in the past, but more efficiently,” says a supply chain director from a major national retailer.
More for less
Even where other issues, such as flexibility, stock availability and service efficiency, are the main concerns, cost effectiveness is a major part of the discussion, as a department store distribution di-rector explains. For his company, the logistics priorities are to increase levels of availability of stock “right the way through the logistics operation”, he says, to ensure “we are flexible and reactive enough that we have the product in the right place at the right time, and trying to do that as cost effectively as possible”.
The distribution director of a fashion retailer adds: “The board want more service at no more cost or a very limited increase in costs. They want more service and more responsiveness and more agility but they don’t want an increase in costs that is proportionate to what they are demanding.”
There is a veiled suggestion from the same distribution director that the consideration supply chain professionals are now having to give to other functions within the business is not always reciprocated. “The thing about logistics and supply chain is that it is always the safety valve and the last man standing,” he says. “Everything else can go wrong but we are expected to cope or put it right.”
The distribution director of a cosmetics retailer points to differing definitions and parameters for the logistics function across the retail sector, but says the primary logistics priority is to improve lead times.
“People define logistics in different ways,” he says. “If you are including planning as well, our key priority is improvement in lead times overall. Lead times to market, that is from source to store or consumer. That’s the key element.”
His reason is simple. Lead time is linked to so many other criteria by which supply chain effectiveness is measured. “Lead time is one of our biggest metrics because lead time reduction is linked to service, it’s linked to stock in pipelines and it’s linked to quality,” he explains.
“Speed to market” is the key logistics priority, says the supply chain director of a fashion chain. “Logistically, it’s about making sure that we’re delivering as fast as we can.”
And that, in many ways, takes the discussion back to the customer, as one succinct observation from the supply chain director of a major specialist retailer suggests: “All the [logistics] priorities are customer facing,” he says. Nowhere can this be more clearly seen than in the increasing flexibility retailers have to offer customers in out-bound logistics and fulfilment.
Watch out for our next blog post which will look at the key logistics challenges faced by supply chain professionals.
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.