Guest Post: Supply Chain Management in the Retail Industry
Supply chain management, as the name tells it, refers to controlling the flow of goods and services. The supply chain management practice also includes active streamlining of supply activities within the business. The supply chain is a practice to gain a competitive edge in the marketplace, source the product, elements, and components, and provide service to different locations within or outside the country.
Supply Chain Management in Retail Industry
In the retail industry, supply chain management involves all the methods for storing and moving the raw material. It refers to in-process inventory, raw material sourcing and handling, and finished goods.
Supply chain management optimizes your operation and maximizes the speed of your product reaching the market. Significant industries like e-commerce, retail, and logistics are in severe need of supply chain management.
These large-scaled industries that offer no matter what kind of products are being manufactured, all of these products end up in customer's hands because of the supply chain that various organizations are using.
The Rise of Supply chain Management
At the time of COVID-19, when the whole world went upside down, creating a global humanitarian crisis, the significant industries came across various challenges that had never been seen. A sudden increase in demand for hygiene products was observed. There was a sudden change in the shopping patterns of the consumers, and overnight the priorities of consumers just flipped, and some of the changes were forever.
There was a breaching, unavailability of products, and shortage of items, because of the reduction in the supply chain. The imbalances in the supply chain management caused a panic situation for consumers. Therefore, it creates a situation that needs to be fixed by the industry giants using supply chain management.
The industry giants like automobile companies, food industries, clothing manufacturers, and the fashion industry have extensive scaled supply chain management systems because of the diversifying needs of consumers.
The Automobile industries have extensive networks that help gather resources, components, and materials from around the globe. Likewise, if we talk about the 2nd largest industry which is fashion industry, Custom clothing manufacturing is a new and rising trend that are adopting supply chain practices. To meet consumer demands, companies have elongated their supply chain and sourced the fabrics, resources, and materials their consumers need.
The Rising Complexity of Supply Chain in this Digital Age
Based on consumer demand and the pressure from the competitors, the supply chain complexity is increasing globally. All around the globe, there are many selling channels, and one new factor is increasing the complexity.
Within these multiple channels, some consumers are expecting and looking for a seamless experience from the seller side, and the customer always looks for a stable connection, support, and provision of on-demand products
The best practice that can help in tackling the issues is to combine the retail industry knowledge with logistics & supply chain management to understand the global practices and, assist the clients and keep full end-to-end strategic planning in all the channels that are working together, and this also helps in keeping the customer's expectation in mind and operating according to it.
Major woes in the retail industry and Supply Chain Management
In the retail sector, there are many pain points like delayed delivery times, increased demand for products, market, and supply issues, costing, shortage of products, shipping issues, and inventory management. These issues can be overwhelming. Here is a list of some significant challenges in the retail supply chain.
The irregular consumer demand
One of the significant challenges in the retail industry is the sudden change in consumer demand. You need to be fully equipped with all the products and services that consumers demand because these consumers have now started to opt for convenience. Consumers might switch and shop from your competitors, and you are not fulfilling their demands.
In the post-pandemic situation, a common issue was the irregular demand of the consumers and a change in consumer buying behavior. The significant differences were seen in these areas: visits to stores, shopping mode, brand preference, exploring new channels for shopping, and more.
Also, read for top 5 customer retention strategies.
Delivering the product right where a customer needs
After the Covid-19, the e-commerce industry rose highly, while shopping in brick-and-mortar stores declined. Around 93% of consumers did online shopping, and even after the pandemic, online sales keep growing.
That's because the consumer finds it easier to shop from their home, making this change a permanent change. The physical stores are also switching their presence to online and catching the new trend. Getting the products delivered to your home is the latest trend. The retailers are looking to accelerate their supply chain procedures to be competent.
The distribution strategies
As the online market is increasing daily, there are more and more channels that people are shopping from. This means that the retail industries now have more and more channels to distribute their product, and that’s the reason global parcel tracking is now essential today.
These channels sell some of the products from their physical store, company website, e-commerce store, or any 3rd party sellers. While some people are convinced and always satisfied and love to do grocery shopping on their hands, many people are happy with the idea of online shopping.
The retail industries and brands use supply chain management and distribution strategies to cope with problems and maximize opportunities through multiple selling channels.
SKU management
SKU refers to "Stock Keeping Unit" in simple terms; SKU management refers to keeping track of inventory and products digitally. The SKU helps in managing your inventory and keeping track of the products.
It'll be difficult for retailers and brands to study the selling unit and sales cycle, determine profit and loss, spot best and worst products, and near expired or expired products from the inventory.
Stock management strategy
Here is another crucial challenge for the retailers is the stock management strategy. This involves keeping track of your stock. In this high, ever-growing market, you need to have a strong strategy to grow along with a visible end-to-end supply chain with real-time inventory management.
Product mixing
Retailers use product mixing and assortment strategies to maximize their sales. It's a common issue that retailers use, as this issue becomes more and more visible when a retailer needs to explore a new audience or more extensive market. As a seller, you must understand your product assortments and adopt new strategies for product mixing.
Best Practices of Supply Chain
Here are the best practices of a supply chain that you can adopt to create effective supply chain management across your brand network.
Setting up a supply chain management team
A strong supply chain management team might help you provide a crystal clear, practical, and functional strategy. You need to identify leaders for your supply chain management. There are some issues in the supply chain, and a small team of SCM experts could help you engage and solve problems.
Moreover, with a supply chain team, your communication with other teams improve.
Use Advanced and Effective Technology
The standard practice is for retailers to buy and then figure out things later. By using the new technologies and structuring the workflows in advance, retail industries can make the most of the supply chain.
The best way to modernize is to use software solutions, which will help you keep a detailed data report, methods, and processes. Moreover, the software makes it easier for you to access the data accurately and helps you move forward quickly.
Also read: 6 ways to stream line your ecommerce supply chain
Maintain Healthy Relationships
To perform better in supply chain management, you must have good, positive, and successful relationships with your suppliers. The best way is to work with them by considering them as your alliance so that both parties work along to achieve the common goal of enhancing the buying and supplying relationship.
Strategies build-up
J.paul Dittmann from the University of Tennessee said, "The successful supply chain has 05 proficient key pillars of excellence, i.e., Technology, Talent, change management, internal collaboration, and external collaboration."
These are the significant steps and strategies considered the best practices in supply chain management.
Optimize inventory
Optimizing inventory is one of the significant components that you need to understand. The inventory placed on your shelf is literally the cash on your shelves. You also need to ensure that your inventory levels are balanced with your business requirements.
You can work with your suppliers and add more emphasis on demand and supply and forecast to ensure optimal inventory amounts.
The Final Words
If you are running a small business, then you might have that you don't need a supply chain management team, but if you often face difficulties like those mentioned above, then you are advised to follow the practice mentioned above.
These practices are highly applicable to larger companies. We hope that you find this article helpful and understand the best way to adopt supply chain management in the retail industry. If you are experiencing pain points in the logistics, delivery time issues, shipping issues, and then these strong supply chain practices are the best solution.
About the author
Tom Brady currently works as the senior content editor at Zega Apparel. This is where private labels can acquire the best clothing manufacturer services. During his free time, he likes to meditate and practice mindful yoga.
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