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
As part of the multichannel revolution, consumers are demanding and being offered an ever wider choice of options on how their products are delivered, presenting supply chain teams with new challenges regarding how to manage outbound logistics. As a supply chain director for a fashion retailer pointed out in the previous chapter, the “flow pattern of fulfilment is infinitely more complex”.
Ensuring supply chain agility was nominated as being among the three most pressing overall challenges facing supply chain teams by a third of the supply chain directors, and a supply chain director from a major nationwide retail group stresses its importance with regard to the growing choice in fulfilment options. “Nobody quite knows how the percentages and fulfilment options are going to be resolved in respect of what customers will want next,” he says. “So you have to have an agile base for fulfilment in order to give numerous choices to customers.”
It was found in the report that pureplay online retailers have a significant advantage over bricks and mortar retailers because they are not adapting legacy systems to the multichannel age. However, a supply chain director at a national retailer points out that in some respects the defining attribute of a traditional retailer, its physical estate, offers a significant logistics advantage.
One of the greatest impacts multi/omnichannel is having on the retail supply chain function is, he says, that “the distinction between warehouses and stores is blurring and will continue to blur.”
He continues: “The one big advantage we have over pureplay companies is the fact that we have stores that can double up as warehouses all over the country. From a customer collection point of view and a returns point of view this is a much more attractive proposition for customers.” However, he adds that this places the onus on improving store stock and distribution centre accuracy.
Delivering the goods
For a supply chain director of a major national retail group, “the debate about immediacy versus convenience”, is a critical question. “Understanding whether the customer wants it next day more than in a two hour time-slot” and then “trying to design a network which delivers both” is among the top three challenges facing his supply chain team. He suggests some retailers excel at immediacy and others at convenience, but “no one excels at both because postcode versus time-slot is a very difficult balance, and it’s very expensive.”
Watch out for our next blog post which will look at how supply chain professionals are addressing logistics challenges.
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.