In today’s difficult economic retail climate failures are daily news, and retailers and brands face a myriad of struggles just to survive. To maintain margins and competitiveness plus ensure survival, retailers rely on strategies like sourcing direct from suppliers and increasing their sourcing and private/exclusive label programs.
Retail supply chains today are incredibly complex, with multiple steps, processes and milestones involved from the concept or planning stage to the point of product delivery and sale to the customer. In order for new competitive strategies to work, retailers need to ensure that their supply chains are fully optimized with built in visibility, collaboration and efficiency. As the number of products sourced increases, numerous functional areas in different countries need to collaborate and plan to respond to change effectively.
If communication and collaboration is ineffective, bottlenecks occur, production and delivery dates are missed, margins are squeezed and the bottom line takes a hit.
Production delays are often a result of not being able to automatically connect information from different processes quickly and accurately. Information required through the product lifecycle comes from different sources including spreadsheets and third party systems and there is often no automatic way to overlay this information into one clear view.
Major pains of retail supply chains
Retailers face quite similar issues with timing product delivery through their supply chain. These issues are mostly related to operational efficiency and the ability to respond to retail market trends.
- Demanding market
Whereas in the past retailers could get away with only a few assortments per season, today they might rotate stock every few weeks. Consumers are increasingly demanding and trends change fast, so staying competitive means finding ways to quickly match demand. In most cases, consumers want a mix of variety, fashion and quality along with a socially responsible product at a cost-effective price. Successful global apparel retailers like Zara and H&M understand this and are able to respond to these demands effectively through short product lifecycles and a strong sense of consumer demand.
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- Murky vision
As supply chains grow in complexity with increased product volumes, processes and links in the chain, information visibility becomes critical. Unfortunately, it also becomes more complicated as multiple versions of documents like cost sheets, design samples and supplier scorecards are created in different formats. Problems occur when information is not centralized or there are inadequate ways to share information. The result of such information gaps is a lack of awareness into potential supply chain problems and an inability to provide early warnings and synchronize real time responsiveness.
Manual processes
Given the complexity in today’s supply chains where multiple internal departments and third parties are involved, the reality is that each link in the chain might have their own information management processes which are not linked to the broader supply chain. These processes are often not automated and might involve a separate ERP system, spreadsheets, PDF’s and communication such as phone calls, faxes and emails. Sharing and updating information is often done manually, resulting in delays and errors in information sharing. These processes are often cumbersome and don’t easily scale when the operation grows.
Pressure points
As retailers struggle to maintain margins and meet market demands, the pressure on supply chains has increased, requiring leaner inventory and more efficient processes. These pressures include demands for sourcing lower cost raw materials, relying on higher quality suppliers, producing and shipping products faster and just-in-time with shorter lead times and managing a longer list of KPI’s to ensure quality, compliance and supplier performance.
Complex needs
One of the challenges that both hard and soft goods retailers are facing is how to manage their unique and complex product workflow needs across multiple product lines. Retailers with large product variety and volume typically rely on workflow process tools referred to as calendar management or critical path management to manage their various product flows. These tools provide a way to connect different processes together into an organized way with full visibility.
Critical Path Management is a forward thinking tool designed to help retailers navigate the complexity of today’s global sourcing environment. While it is currently used to some extent by retailers, the potential of CPM is only beginning to be utilized. In today’s challenging economic and retail climate, companies will continue to look for ways to optimize their operations and reduce costs. Increasingly they will turn to tools such as CPM to enable such efficiency and savings.
Download the full Critical Path Management white paper here.
About the author:
Tim Chiu serves has the senior vice president of client management for CBX Software. He has over 20 years of experience in supporting global sourcing automation and information technology that enables collaboration between global commerce communities. Tim has helped numerous leading retailers and brands improve global sourcing efficiency by implementing retail merchandising, global sourcing, vendor management, and vendor collaboration solutions that provide measurable benefits. With a varied background in IT and workflow process consulting, Tim is a frequent speaker on the topic of global sourcing for the retail industry.
About CBX Software:
CBX Software has simplified the business of global sourcing; transforming traditional methodologies into fast, friction free supply chains through our real-time cloud based Total Sourcing Management Platform (TSM). We help retailers, brands and manufacturers manage and empower the supply chain from plan to pay – one intelligent collaboration solution for an enterprise to plan, spec, source, assure quality, order, make, inspect, ship and pay. Over 20,000 users in more than 30 countries rely on CBX including: Target, Safeway, Kmart and others. For more information, visit www.cbxsoftware.com, follow us on Twitter at @cbxsoftware.com, like us on Facebook or visit our LinkedIn page.