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Future Supply Chain : SCS 13
challenge
accuracy completely off-track. Historical, year-on-year
analysis of data plays a much lesser part in a dynamic
environment – and so building inventory to service
forecast demand will no longer be a sound approach
for 2010. Businesses will have to adopt more agile
processes that are able to respond quickly, in realtime,
to changes in demand. But to achieve this, they
will first need absolute visibility of inventory across
their entire supply network.
Smith sees the process of evolution from “bricks and
mortar” to multi-channel retailing as one of the biggest
problems facing established large brands. “Moving from
a comparatively uncomplicated process of supplying
and replenishing high street stores – with some added
complexity around special promotions – to an online
presence with fulfilment from either a store or a
warehouse, be that dedicated or part of an existing
Opportunity clicks.
Historically
retailers
used to
treat their
dot-com
business
as another
store, but
it’s not
another
store. It’s
avery
different
channel
to market.
facility, creates complexities associated with singles
picking, small order volume, the number of deliveries,
time limits, availability issues, and so on,” says Smith.
“But then when you overlay a catalogue service or
perhaps a telephone ordering service – or what most
retailers are starting to do now, which is collection in
store – it starts overlaying all sorts of delivery
complexities that aren’t that familiar to the business.”
He continues: “So for instance, more frequent,
multiple deliveries to store may be needed for dot-com
order – collect from store.”
All this requires Assortment Planning, Forecasting
applications and Distributed Order Management
capability to determine how best to create availability
and fulfil the order at the lowest possible cost.
Extended Enterprise Management applications are
also used to give visibility as to where products are on
the inbound cycle. Has it arrived at the warehouse? Is
it about to arrive? Can I offer this product as an
“available to promise” part of my inventory
availability? These are important ways of exchanging
inventory for information – using information to make
more intelligent decisions, and so enabling an
enhanced service offering to the consumer.
E-tail versus retail
“Historically, retailers used to treat their dot-com
business as another store, but it’s not another store. It’s
a very different channel to market,” says Smith. “There
are a lot of significant differences between an e-tail
and traditional retail operation, the obvious one being
the single-pick environment.”
The complexity of the pick operation for a dot-com
operation is quite profound. “Hit rates are much lower
–theaveragehitonaweborderisone,sothereisalot
of travel involved and the cost of that is quite
significant,”saysSmith.Thisisdrivingthetrendfora
greater use of automation in the picking process,
particularly if the product is repeatable – and this can
be seen in the music and games industries.
Patrick Wall, chief executive of MetaPack, believes
there are two approaches being taken by companies
when it comes to moving to multi-channel retailing.
Some are taking a tactical approach, whereas others
are being more strategic. “There are a lot of retailers
that think that collect-at-store presents the largest part
of a multi-channel solution, but it’s much larger than
that. Those looking more strategically realise that’s just
a small part of the solution,” says Wall. “Those likely to
be more successful will be those who look beyond
incremental changes to their supply chain structure,
but think ‘what should multi-channel offer a
customer?’ And once you’ve created that vision, ‘what
type of supply chain is needed? What type of systems
are needed to support that?”
He believes companies require a “blueprint” for a
longer-term programme of say, two to four years, so
that the short-term work isn’t just tactical, but fits
into the long-term goals of the company’s multichannel
strategy.
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