Retailers must urgently tackle omnichannel supply chain shortcomings

If the growth of e-commerce continues at its current rate, retailers could see one point of failure in the increasingly complex and fragile supply chain spark a catastrophe. And this would push many of them over the edge.

That’s the view of Phil Barron, a director at Clear Orchid who was also recently Interim IT Director at L.K. Bennett. In a LinkedIn post, he writes: “When I started my life in retail (a few years ago), the golden rule was to move stock as little as possible. Every time you touch it, you are incurring a cost. Now, however, we seem to have loosened the shackles of cost consciousness in favour of chasing every sale possible, regardless of the impact on margin.”

Retailer should be making better use of systems to intelligently track and predict true stock requirements, and the true associated costs; shipping, counting, moving, packing, inspecting, re-packing and then paying people to explain why reports don’t match. “In the last decade, we have gone from lean supply chains to stock piling up just about everywhere you look. But worst of all, it's the wrong stock in the wrong place.”

A return to true data insight across the entire supply chain (including all channels), demonstrating the real value of retail sales, may lead to a change in behaviour, Barron argues. “Maybe not in all cases, but I see very few decisions being made with all the information required. And by all information, I am including customer demand and satisfaction, cash, indirect costs and a well qualified view of lost margin.”

A greater emphasis on finding the right balance of retail channels and locations based upon better designed enterprise data, and a focus on exploiting the wealth of data available rather than creating demand through markdowns, could be the difference between a retailer staying afloat or not.

“After all, we're not buying less, we're just being told that online is the best option available to us. This new decade will doubtless have a greater focus on understanding the balance of online and in-store demand and building a supply chain to match, which will make retailers more competitive,” Barron concludes.