Can you guarantee you have the flexibility in your supply chain to meet retail demand? No? Here’s what you need to do… Whatever your office, we’re your Office Depot
Audit your supply chain to improve processes and add value
The supply chain has evolved significantly over the past five years, as the growing diversification of product and service offerings, together with the challenges of finding innovative ways of combining and consolidating business processes, has driven its evolution. But increasingly, customer requirements are changing and becoming more immediate, which has led to retailers requiring far more agility from suppliers than ever before. It is therefore essential for retailers to audit supply chain processes, to ensure suppliers are adding value where possible.
In the past, the supply chain was both static and one-sided, with day-one ordering, day-two delivery. Now, with enhanced business models transforming operations from a simple stock and distribute focus, to a complete virtual model direct from vendor to end-user, supply chains are evolving in order to house fast-paced, time-driven, on-demand services that must be three or four dimensional and deliver through several outputs.
When you audit your supply chain ensure suppliers are housing a package of services designed specifically around your needs â€“ for example, same day and evening deliveries, as well as click and collect on demand. Suppliers need to understand the importance of maximising the number of options available, therefore supporting your business by increasing the level of agility will ensure demand is always met. This is especially pertinent given the widespread cost-saving approach that exists within this industry, following the difficult years of downturn.
Does your supplier support your business needs? The diversification of customer requirements and the subsequent need for suppliers to offer more, means that competition has intensified. Retailers must use this increased competition to their advantage, and look to suppliers to show how they can effectively support a businessâ€™s objectives through innovation, and therefore respond far quicker to demand.
Recommendation Assess the level of understanding your suppliers have of your business culture, but also the ability of your suppliers to anticipate both the products and levels of service that will allow you to react to fast-paced demand. Insist upon constant assessment to ensure their approach continues to deliver results.
Ensuring a level of flexibility There are multiple influences that feed into a high level of flexibility. The consequences of a range of supply chain break downs could have catastrophic effects on a retail business, and it is therefore essential for suppliers to have safeguards and the right level of flexibility in place to protect against these. However, to properly implement this on a day-to-day basis requires regular on-site consultation and assessment by supplier account managers, while an in-house team is needed to be on hand for requirements that need to be addressed immediately.
Recommendation By ensuring day-to-day control and management of supply chain matters is a two-way system, you will be able to challenge your suppliers to add value. This hands-on approach also allows for early identification of any problems, combine this with clear lines of communication and your suppliers will be able to meet any challenges head on. This approach to client management and building relationships should run throughout the year, day-in day-out, and be firmly embedded as a matter of course. After all, you need long-term business partners which can be relied upon to provide a consistent service.
Implement a culture of collaboration for improved efficiency
It is essential for retailers to collaborate regularly with suppliers in order for them to understand and support the business as a supplier. Suppliers must be selected wisely, choosing a few key suppliers based on levels of quality can simplify the supply chain and improve efficiencies.
Thereâ€™s no doubt that this continues to be an era of squeezed margins where, for the retail sector especially, a key priority is ensuring profit is protected as much as possible. However, it can be difficult for retailers to implement a fully-visible process for managing the flow of stock without close collaboration with supply chain partners.
Is your supplier fully ingrained in your culture?
The role of supply chain partners is essentially to encourage and implement the flow of products, and information, throughout the supply network they have established with retail customers. For a supplier to properly support the sector, retailers should expect regular operational meetings to be held to anticipate any issues early and to address them quickly and efficiently. To ensure proposed solutions are relevant and fully embedded, suppliers need to have a strong stakeholder network within the retailer and be fully integrated in their culture and processes. Furthermore, as omni-channel retailing comes to the fore, and the lines between channels become increasingly blurred as mobile-commerce, in-store consumer specific marketing, online purchases, and click and collect all merge into one total retail experience, this requirement is only going to become greater and a more essential factor to expect from supply chain partners.
Recommendation Suppliers must actively help you in meeting the â€˜right now, any timeâ€™ culture head on in order to better guarantee availability. However, this works both ways, you must capitalise on this by ensuring you have full visibility of stock which suppliers have on immediate standby. However, itâ€™s the supplier which must recognise the role they can play in managing stock flow efficiently. Encouraging suppliers to visit your distribution centres can be an essential step towards engraining them in your culture, giving them a hands on view of how your business works at ground level.
Rationalise your supplier base To increase efficiencies cutting the number of suppliers used to a wisely chosen few can reap massive rewards. This approach will give you the opportunity to build and improve close supplier-client relationships, while also increasing cost efficiencies through increased buying power. However, the focus should not simply be on cost, increasing process efficiencies is also important. For example, reducing back-door disturbances by shrinking the number of deliveries, will allow your employees more time on the shop floor and, importantly, less time spent handling deliveries.
Recommendation Looking to work with suppliers which have a worldclass accredited logistics infrastructure can offer piece of mind that your chosen suppliers will always strive to ensure good levels of stock availability and delivery, when and where products are needed. However, quality is key when choosing suppliers and it is essential to ensure that if there is a surge in demand, the supplier base can meet any peaks.
Measure supplier success by proactivity, not just delivery
Growth of the digital landscape, which has brought immediacy and choice to procurement purchasing decisions, means that suppliers have had to look far beyond their product choice and pricing structures to deliver a robust, 360 degree approach for retailers. It is essential for suppliers to add value by being at the forefront of sector trends and product innovations. The supply pool is growing and diversifying, and suppliers must therefore be able to keep ahead of these advances and be able to advise on what will get the best results, combined with best value, for a retailer. Suppliers must show they can effectively support a retailers needs through innovation, in order to allow the business to respond far quicker to demand than has ever before been needed. Evaluating the level of success of a supplier is essential, and this must include the effect they have on the bottom line. This can be measured through a range of accreditation and external benchmarking processes.
Benchmarking for suppliers is very much driven by customer demand and expectation. Suppliers should be incorporating your own targets and delivery objectives within their own, to make sure that product needs are not only met, but also that suppliers go above and beyond by adding value through additional services and business support. Over recent years, this has very much been guided by the need for costreduction but also retained value, and while this is still an important priority, other business objectives have come to the fore, i.e. sustainability, logistics capabilities and innovation. Suppliers must continue looking beyond core objectives to ensure that a holistic approach is facilitated. Suppliers should provide regular reports, relating to cost efficiencies for example, which will allow you to see where and how improvements, linked to your business objectives, are being made. This way, improvements will be gained year-on-year, with your business and the supplier both benefitting.
Use technology to improve the flexibility and the reactive nature of your supply chain Look to your suppliers to add value through the development of their logistics programmes.
Customer purchasing has never been more fast-paced, and the time between purchase and supply has never needed to be more immediate. This requirement, if not carefully managed, has the potential to cause multiple problems, for example within warehouse operations such as stock control or even the supply chain, such as late or missed deliveries. Suppliers must therefore use customer buying behavior to benchmark their operations and work with retailers to make sure they can exceed their delivery objectives and keep apace of market requirements. Demand for services that fit around the busy and fast-moving retail industry has a direct impact on the speed with which goods have to be conveyed. Automated offerings are a vital component of this, as online ordering and the demand for quicker deliveries drive a number of warehousebased efficiencies.
For suppliers, maximising space within the storage facility should be a key consideration in order to meet your needs. It is not worth using automated systems to pick items that are rarely ordered â€“ these can just be collected manually by warehouse staff, for example. However, for faster moving items, mechanised picking systems can save valuable time, ensuring customer demand is met. You must ensure suppliers are not just using new technology, but assessing the right solution your individual business needs.
Insist that suppliers upgrade due diligence plans to ensure fastmoving demand is met
In a competitive marketplace, it is vital that the supplier knows their retail customers inside out â€“ simply supplying products is not enough. Suppliers must add value through anticipating (and responding) to fast-changing needs relating to stock management and surges in demand. Given the pressure that sales periods and peaks in demand can exert, the support (or in some cases the lack of it) that a business receives from regular suppliers can make or break sales levels in what is a small window of opportunity â€“ success can only be achieved through the development of an integrated account management team and a detailed understanding of the retail market in question.
This has become more crucial than ever, due to the need to make up for falling year-on-year sales across many retail sectors at key seasonal points throughout the year. In order to help retailers meet this need to generate revenue head on, it is crucial that suppliers have due diligence plans in place, and therefore properly anticipate potential uplifts in demand by putting solid stock management and market behaviour recognition tools in place.
Recommendation It is vital that suppliers implement the internal resources and infrastructure that will facilitate quick and decisive responses to the spontaneous and unplanned requirements that govern accelerated consumer demand. Adaptability is key, so being culturally aligned with the ebb and flow of your specific retail sector, as well as your individual business, is the only way suppliers can attempt plan to for the unexpected.
and m e D er m o t s Cu