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Retail Supply Chain Execs: Technology is the Cure for Industry Ills

The rapid evolution of the retail sector, pushed speedily ahead by the e-commerce phenomenon and the consumer demand for at-once gratification and delivery has merchants laser focused on ways to improve their supply chain.

These factors were evident in the 2018 Retail Supply Chain Report produced for the D3 Retail Supply Chain Summit: New York by Teknowlogi and EFT.

“What the retail sector is in dire need of is a practical and relevant way to understand and predict consumer behavior, while delivering an on-demand end consumer experience,” W. Spencer Askew, CEO of Teknowlogi, said in the report. “We are quite adamant that there is a path forward that will enable the retail sector at-large to live-on and there are solutions to not just keep retailers in the game but to accelerate their ability to win in this on-demand world we are all living in.”

The study notes that technology is being counted on heavily by retailers to achieve the correct balance in inventory management. In this area, 56 percent of respondents said inventory management–key for increased demand fluctuations and shorter sales cycles–was the top priority, followed by warehouse management systems and forecasting at 50 percent each.

“WMS clearly plays into the inventory thinking–a well-managed warehouse helps inventory visibility,” the study said. “Additionally, a well-managed warehouse helps drive fulfilment and respond to demand fluctuations. Demand fluctuations… is one of the key variables for determining an ideal inventory capacity. It also speaks to the increased need for forecasting. Any insight that can help guide a retailer towards optimum inventory. However, forecasting is an imperfect art and still represents an immense challenge for retailers.”

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Among the key challenges facing retailers is demand forecasting, with two-thirds of the 142 senior retail supply chain executives citing it as the top hurdle to overcome. Contributing to this is fading brand loyalty, greater retail choices, on-demand expectations and variables like extreme weather.

Inventory optimization was second (63.4%) to forecasting in terms of retailers’ biggest challenges. The study noted that “having an inventory strategy can help retailers better cope with the unpredictability of the industry today.”

One of the constants in any supply chain discussion is collaboration, the study said, stressing the importance of finding synergies and areas to innovate, and of driving efficiencies.

“In understanding the average number of logistics providers and suppliers a retailer uses, we see an incredibly complex situation,” the report said. “On average, retailers use 94 different logistics providers and 1,343 suppliers. If you [roll] in technology service providers, you’re looking at well over 1,500 different relationships that require management.”

In the all-important area of fulfillment, the study noted that costs have increased by an average of 12 percent, respondents said.

“We expect this number to continue to increase as e-commerce volumes continue to rise and automation is slow to catch-up,” the study stated. “Additionally, consumer demands and expectations, as well as retailer differentiation, will continue to put upward pressure on costs. Retailers are starting to understand the fact that fulfilment isn’t just a process, but also a differentiator. Amazon led the way by making next day delivery standard, but others are following-suit with their own versions of this.”

PUDO CEO Kurtis Arnold, commenting in a separate communication, said e-commerce is in a last-mile crisis of sorts and stakeholders are turning to a variety of solution to meet the call. This includes installing un-manned pick-up lockers, courier home-access and car trunk drop-off to fix the gridlock and connect people with their parcels, Arnold said.

“The ultimate solution will be open source (courier-neutral) elegant, intuitive and above all secure and convenient,” he said. “PUDO has been working on its parcel traffic control and reverse logistics multi-platform technology for several years, with a team of logistics designers and engineers skilled in elegant back-end solutions that, while highly complex in their design, are seamless to stakeholders in the supply chain network.”

On the topic of automation, inventory management and tracking were the two most common levels of automation retailers had implemented in their owned, operated or leased warehouses, with 38.5% of respondents saying they had each of these capabilities.

Summing up the study’s key findings, Askew said, “A core ‘hair on fire’ topic that is being addressed by the retail sector is the element that shipping is definitely not free. Consumer demand for this has negatively impacted businesses’ P&L. When coupled with the consumer’s need to have everything right now, it’s worthwhile for retailers to explore investing in innovative solutions to drive more productivity into current business processes and current software systems.”