Have we reached optimal retail supply chains?

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Have we reached optimal retail supply chains?

  • Have we reached optimal retail supply chains?
2 minute read

This might seem like a strange question for a supply chain technology vendor to pose. After all, you can probably infer what our answer would be. (“No.”) But when we asked (in research conducted by Vanson Bourne on behalf of Blue Yonder), the response was less unanimous than you might think.

More than one-third (34%) of retailers surveyed believe that their organization’s supply chain is performing excellently today, with little or no room for optimization or improvement. That’s impressive, given the kinds of widespread challenges with which supply chains are dealing. It makes sense that there are leaders who are rightly confident in what they’re achieving, but it did make us think. 

We know (from the same survey data) that challenges are everywhere for retailers—99% told us they have operational or technological hurdles to face. We know that most supply chains have meaningful technological constraints. Maybe those challenges and constraints now feel almost inevitable for leaders? That might explain why one-third of retailers would see little or no room for improvement, even at the same time that they report increasing technological and operational difficulties—because it’s not easy to imagine how things could be different. 

However, in the same dataset, there’s a clue to how we can expand what’s possible, and make those challenges feel less inevitable for retail supply chains today. And for the two-thirds (66%) that see more scope for improvement in their supply chains, discovering new possibilities for how supply chains can work is just as valuable, as we’ll see.

Increasing challenges demand an increase in scope

Almost everyone (99%) acknowledged they faced technological or operational hurdles. Nearly two-thirds admitted that these technological (63%) and operational (62%) challenges have gotten worse over the past 12 months. And there are other gaps between what our respondents would like and what they have today.

90% of respondents in our survey stated that a single enterprise-wide platform for supply chain would benefit their role. Only 22% use one today.

A single supply chain platform, connected end-to-end, with real-time visibility and control across the chain, wanted by the vast majority and currently only used by a few—that could be the kind of paradigm shift that removes the constraints retailers experience today, and enables big improvements in key areas. 
 

Why 90% want a single end-to-end platform

Data sharing and integration (35%) and cost management (36%) are two of the top technology challenges faced by retail supply chain leaders. Operationally, the biggest retail supply chain challenges were cost management (41%) and supplier/vendor collaboration (36%). How much time does every team spend waiting for and battling with data from other parts of the business, or from trading partners? Leaders told us about hours wasted while aggregating data from “disjointed” tools and spreadsheets.

For most supply chain teams today, that’s just the way the world works.

It’s how it’s had to work, because, why should a TMS have data structured in a way that’s perfectly and constantly accessible to a WMS, for example, and why do either of those need to be constantly updating the inventory system? Those are different solutions for different tasks, right? You can integrate them together well enough to make it all work, and one team works in one and the other team works in the other, and they pick up the phone if they need to know what’s going on, or wait for batch processing to share the data from the last day. And that’s just inside the business—external partners (suppliers, vendors, logistics service providers, etc.) are even less connected.

That’s not how the world of supply chain management has to work anymore. The single platform model connects supply chain planning to execution, built on a unified data model, and extends that through the network of trading partners and suppliers. This new architecture means that the assumptions about how things “have to” work aren’t true anymore.

What an end-to-end retail supply chain fixes

Cost management and ROI are critical challenges, as noted. Data sharing is time consuming and collaboration with partners is second only to cost management in terms of operational issues.
If retailers can connect their planning and execution together, with a unified data model that allows that end-to-end connection to begin today, with their existing systems, then data begins to flow in real time. 
They can reduce those critical costs by:

  • Tracking inventory, shipments and sales performance against dynamic demand signals
  • Using real-time inventory decisioning to maximize the value of every last item
  • Fulfilling orders optimally with awareness of inbound shipments and stock levels across the network
  • Minimize out of stocks by intelligently rebalancing inventory
  • Boost margins with fewer markdowns thanks to reduced safety stock required

 

Retail supply chains aren’t quite optimal yet, and leaders know that they have to work within the constraints of the possible. But what’s possible is changing fast, and working in point solutions doesn’t enable these transformational opportunities. 

Discover how Blue Yonder enables true end-to-end supply chain collaboration

Eliminate silos, improve integration and collaboration, and achieve greater speed and scalability with Blue Yonder's end-to-end planning & execution. 

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