The importance of supply chain dynamics as a way to drive efficiency through the downturn and finding out how other retailers operate is more vital than ever. Liz Morrell talks to key speakers attending Retail Week’s Supply Chain summit in May.
If retailers are to survive the downturn and thrive when a recovery takes root, its supply chain remains absolutely critical. From sourcing to logistics, an optimised and efficient strategy will not only cut costs but allow retailers to maximise their leverage of any upturn in consumer spending.
Sharing best practice within the supply chain – whether that’s across the business and between suppliers or, ideally, with other companies in the sector – can be a major step to growth. The Retail Week Supply Chain Summit is a key date for retailers to share learnings and best practice with their peers and industry experts, and to scrutinise their own supply chain practices in detail to ensure they are doing the best they can for their business.
Top of the agenda
Walmart’s supply chain is envied by retailers worldwide and the giant’s senior director of global supply chain initiatives Jim Stanway is one of the keynote speakers on the first day of the conference on May 15. He believes details vary across the sector but there are two main issues that must be top of the agenda for all retailers in the current climate.
“It depends what your supply chain looks like and what you are supplying, but in general, cost control and transparency are key,” he says. “Consumers are still watching their wallets closely so anything that has an upward push on prices has an effect. Also, you need transparency in terms of where things are being sourced to ensure they are being sourced responsibly.”
While cost control is vital, Boots director of supply chain development Mark Knowles, another speaker, says retailers need to remember the people side of their businesses, too. “It’s about controlling costs while also investing for the future. It’s ensuring we develop our people for the opportunities ahead,” he says.
Retailing heavyweights such as Walmart and Boots have invested heavily in improving their supply chains and are reaping the benefits as a result. Knowles says: “We’ve invested a lot of money over the past five years to modernise our supply chain. We are now focused on maximising the benefit from this investment and have a load of great opportunities to unlock even more value from optimising the end-to-end supply chain.”
But no retailer can ever sit back and think job done. Multichannel retailing has substantially increased the pace of change, says Dixons Retail UK logistics directorTim Allinson – a session panellist at the summit. A supply chain has to be fit to cope with ever-increasing multichannel requirements. The challenge, he says, iscustomers are becoming ever more demanding and want greater flexibility. They might see a product in stores and buy online, see it online and buy in the store, or get it via another delivery option, for instance. “You need to be able to meet that flexibility and ensure availability. It’s a challenge for us all. What that means for the supply chain is that it’s about agility,” says Allinson.
Working as one
Walmart is renowned for the leanness and agility of its supply chain, but Stanway says this can only be ensured through a collaborative approach with suppliers – a major focus for retailers and of the Retail Week Supply Chain Summit itself. It is one of the four key strategies that will be highlighted at the event – including in a panel session Stanway will take part in – for increasing efficiency, agility and flexibility in the supply chain. The others include the importance of valued partner relationships with suppliers, consolidation and reducing supply chain complexity by shortening and simplifying its end-to-end length.
Getting the most out of the supply chain really is a shared responsibility where all voices should be heard and all ideas considered, says Stanway. “It’s about being open to rethinking things. A lot of suppliers have great ideas and you have to make sure there is a mechanism to hear those ideas and encourage people to bring them forward. It is starting to happen more. For us it really is about supplier relationships and doing new things collaboratively.”
Allinson agrees. “The supplier relationship is absolutely key,” he says. Get that right and both retailer and supplier will profit to mutual benefit.
Key themes at The Retail Week Supply Chain Summit
Managing a supply chain that comprises stores and internet is hard enough, but when those retailers also have international businesses, or are beginning overseas expansion, the complexities increase. The conference will look at the optimum strategy for global expansion as well as how to devise business models for each territory – whether that is considering regional distribution hubs or how to understand cultural and regional differences to maximise efficiencies in the international arena.
Multichannel retailing is a given in today’s world, but many retailers are still getting to grips with what that means for their supply chains – many of which remain set up to manage their store portfolios rather than maximised for multichannel. But adapting the supply chain has numerous benefits such as reducing stockholding. Product should be accessible across the business – whether it’s through stores or the web and whatever location – leading to lower costs and higher margins and maximising the potential of full-price sell-through.
Speed of response is vital in a successful supply chain today because so much of the product is held further up the supply chain than ever before, allowing retailers to minimise stock in warehouse or stockrooms. Being able to react quickly to peaks in demand means the supply chain must be able to provide a quick turnaround that will enable retailers to draw in more resources and stock as and when needed. This will allow a little-and-often replenishment strategy if that best suits the business model.
For some retailers, stock is held as far back as the actual suppliers themselves. This allows retailers to take ownership of product from suppliers only when there is demand for it and replenish it as that demand dictates. For others, reducing inventory just means tighter stock controls to ensure there is less risk of stock overhangs at the end of seasons. Which inventory model works best depends on the retailer, its risks and the relationships with its suppliers, but an increasingly popular model is a single stock pool that services all channels for which a single view of the customer and product is key.
The supply chain has moved on from the days of them and us and retailers now work more closely than ever with their suppliers. This partnership approach brings benefits for both but essentially ensures both retailers and suppliers share best practice and work together – for example by sharing overheads or functions to cut costs and maximise efficiencies for mutual benefit. In today’s world, it is more important for survival than ever before and the creation of mutually beneficial relationships is critical for success.
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- The Retail Week Supply Chain Summit 2012, May 15-16, is at the Radisson Blu Portman Hotel in London. Click here for more details.