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Supply Chain Management: Converting challenges into winning opportunities for retailers

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Consumers expectations are growing with the changing times. Well-travelled consumers of today expect the right product to be delivered at the right time. To match these rapidly evolving needs of consumers, retailers are investing huge amount on supply chain management (SCM).

SCM ensures the flow of goods and services at a faster pace. It involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods from point of origin to point of consumption.

“An efficient SCM system enables planning of inventory, transition of products and the point of sales – which ultimately plays a key role in customer satisfaction, ensuring better availability of sizes/options and that the right product reaches the consumer at the right time,” says Vasanth Kumar, Managing Director – Lifestyle International Pvt Ltd.

The diff erentiating factor of retail supply chain management from others is the volume of product movement and the fast moving nature of products. Since, supply chain operations are becoming complex and driven by uncertain customer demands, responsiveness of supply chain plays a significant determinant weapon to not just deliver seamless experience to customer at low cost but also to deliver strategic opportunity to out-perform competitors.

“Especially for a fast fashion retailer, supply chain management is very important to stay relevant to the customers. Ensuring supply and demand of goods are matched with each other is a very important directive for the supply chain,” states M Srinivasan, VP – Planning and Supply Chain, V-Mart Retail Ltd.

SCM also helps in saving operational cost, reducing lead time and offering merchandise competitively to consumers. “Technology-enabled SCM allows effective management of stocks and also consolidates and reallocate stocks basis dynamic market conditions, thereby ensuring the best sell-through rates. The right SCM strategy also ensures optimal working capital and space utilisation at stores thereby managing overall costs efficiently,” states Anand Aiyer, SVP & Business Head – Easybuy (Max Retail Division).

Importance of Technology in SCM

Technological advancements now enable businesses to build end-to-end supply chain solutions that speed up the processes and avoid bottlenecks in the supply chain. Traditionally, retailers expect technology to improve stock visibility, accuracy, reduced layers of movement, value chain automation etc., however,these have now become basic hygiene requirements.

“We expect technology to enable SCM, develop an eco-system which is developed around customer and market consumption dynamically. For example in fashion retail, it goes to the extent of size, color, size, fit at a catchment level within the same city. SCM technology is evolving to enable this,” asserts Aiyer.

Technology has helped in designing systems to manage and enhance the exchange of information of various supply chain partners to attain outcomes like increased control over demand planning, better inventory management and effective and near real-time tracking and delivery.

“At Lifestyle, technology plays a big role in supply chain management. Taking a leap towards automation, a ‘Put-to-Light System ensures effective storing and distribution at our warehouses. Single view of inventory for efficient execution of online orders has been implemented in key stores across the country as well. This has resulted in the increase of online orders,” reveals Kumar.

Implementing Real-Time Data Analytics

Real time data analytics in SCM help improve inventory management, increase efficiency of warehouse operations and distribution centres, allow better understanding of consumer needs and solve challenges like restocking.

“Yes, implementing real-time analytics does improve efficiency, since it creates strategic advantage amid volatile environments by providing required real-time insights from operational data to improve performance visibility and insights. This ability helps to analyse data in the moment and plan or combat any potential bottlenecks across the supply stream. It helps inmitigating most significant challenges for supply chain efficiency by providing visibility into supply chain performance, reducing operation costs through process optimisation and in enhancing customer satisfaction by improving supply chain responsiveness and product quality,” M Srinivasan states.

Changing Supply Chain Mechanics

With rise of e-commerce, Omnichannel players competing in the marketplace are getting more cognizant about time definite logistic services. Retailers are working towards flawlessly integrating distribution channels to improve visibility of inventory in order to meet customer expectations in a better way.

“At Lifestyle, our warehouses are fully equipped to handle the demands that the digital age brings with it. A thorough order processing system along with stringent quality check ensures that there is no scope for error in every order undertaken, be it online or offline. Being a true Omnichannel player, our supply chain mechanics ensure a frictionless experience for the customer,” says Kumar.

With digital revolution, there is no doubt that the retail has been experiencing disruptive changes. With technologies and accessibility to improve, customers have become more demanding than ever.

“Supply chain players need to include a number of delivery and return strategies to meet the demands of Omnichannel consumers. Each delivery and return is distinctly unique in terms of application and logistical requirement. It may include strategies like drop shipping, click-n-collect, same day delivery etc.,” explains M Srinivasan.

With the digital age, the reach of retailers can enhance exponentially to locations where they could have taken years to set up stores. However, retailers need to consciously develop a hybrid approach to supply chain when it comes to Omnichannel retail. It is critical to have the efficient end-to-end SCM system ensuring last-mile delivery at optimal costs which is the biggest challenge. The system must also take into account reverse logistics, leveraging physical store stocks, online-offline integration on returns and exchange and so on.

“With growing demand from Tier II & III markets in India, the role of supply chain is not just to ensure delivery, but to enable profitable business without compromising the shopper’s experience through an eco-system which is inclusive of not just the value-chain, but the end customer,” states Aiyer.

Roadblocks in Successful Implementation of SCM Supply chain systems are constantly going through changes and improvements. The success of it is purely determined through how effective the challenges are transformed into winning opportunities.

To keep up with ever evolving consumer expectations is a challenge that every retailer faces. Another big challenge in retail supply chain that the retailers are facing is to manage supply for demand variability which in peak days and festivals goes beyond 100 percent in terms of the average volumes.

“For a fast growing organisation like ours where our CAGR is 30 percent, scaling our supply chain model to meet the aspiring goals of growth that our organization is poised to and keeping our all variable within the limit would be the other big challenge,” says M Srinivasan.

“As a fast-fashion retailer working on ‘mind to market’ concept, we introduce lots of ‘mini-seasons’, create new looks every week, hence our supply chain is agile enough to offer merchandise on shelf in a matter of weeks from manufacturing,” he further adds.
Another challenge that retailers are facing is delayed deliveries from vendors which further leads to loss of sale.

How Retailers are Staying Relevant

Value retention, a thorough order processing system, stringent quality control, ample safety measures and quick adaption to technology are a few steps that Lifestyle is taking to ensure smooth functioning of its supply chain.

“Our home-grown allocation tool has been designed to be reactive and responsive to customer demand at stores. This has been built on a flexible platform so that any logic or algorithm based on the change in business need, can be relatively easily incorporated,” says M Srinivasan.

“Reducing our ‘mind to market’ time is something that we have been working continuously by bringing in more visibility in the value chain. Ensuring that the chain is agile is a continuous process for fast fashion retailers like us, to capture the changing fashion trends in the market and then react to it as fast as possible is an ongoing journey for us,” he adds.

Retailers are also focusing on unique sorting mechanism and merchandise return management through optimal mix of technology and insights. This has been unique and new to the industry and it reduces the processing cost, helps in processing faster.

“At Easybuy, we are focused on SCM efficiency to support our low-cost backend model and an eco-system which works efficiently only when the whole value-chain works in tandem. Our end to- end SCM systems are fully online with full visibility till last-mile delivery. Given that our stores are of smaller sizes, it is imperative that the system functions accurately to ensure stocks flow through as per the plan without any hitches,” says Aiyer.

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