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5 Ways Retailers Can Reshape Their Supply Chain

Imange of links in a chain

Even with the perfect merchandising plan, retailers can’t completely eliminate one factor: margin risk. However, they have the opportunity to reshape their supply chain into “a more predictable and consistent” process, leading to lower margin risk and higher margin performance.

This is according to an article on the Supply Chain Digest website, which outlines five ways retailers can reshape their supply chain.

  1. Increase on-time deliveries: It’s a priority to ensure that orders are delivered on time to merchants. This is “fundamental in reducing margin risk” and increasing sales, the article explains.
  2. Improve efficiency of supply chain lifecycles: The more streamlined and efficient retailers are with their ordering lifecycles, the leaner they’ll be. That means they can lower the safety stock they must carry. Longer order lifecycles aren’t as accurate and therefore more risk is involved. Some stores only know it’s time to reorder products when an employee manually counts what’s in stock and notices that they’re low. Retailers should be using a retail ERP system for this. The system can track sales and automatically issue notifications when it’s time to reorder.
  3. Select vendors with accurate delivery: An advanced shipping notice (ASN) offers retailers a bit of insurance. When the vendor ships a product, it sends a notice detailing how it’s being shipped along with the expected arrival date. If it’s on a ship from China, there obviously are a lot of variables that come into play. If it’s on a truck from Chicago, on the other hand, the retailer can be more certain the product will arrive on time. Retailers often make plans around ASNs, but it’s important to monitor the accuracy, which can vary widely among vendors.
  4. Evaluate the transportation process:  Aggregating products on one carrier might mean they arrive at the store slower, but you’re likely to save money, compared to having them ship one by one on a variety of carriers.
  5. Communicate with vendors frequently: Continuously relaying requirements and delivery scheduled to vendors can help keep the supply chain process on track. In general, larger vendors have facilities to monitor customer forecast information versus firm scheduled orders.

By reshaping their supply chain based on the above five steps, retailers can run a more predictable supply chain and mitigate events that lead to lost margin from having empty shelves.

Source: Supply Chain Digest, April 2013