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Top 3 Priorities for Omnichannel Supply Chain Growth

Retailers need perfect or near-perfect assortment sets in local markets in order to respond to the omnichannel SKU growth and category rationalization priorities that consumers expect today.

In response to this trend, the top merchandise or product differentiation actions that five out of 10 U.S.-based omnichannel retailers are undertaking include: offering products tailored to customer needs, adding new product categories and features, and introducing more private label products to the current assortment.

Preparing for omnichannel growth requires an innate understanding of current and future consumer needs for both branded and private label products. But investing in the right network of suppliers, factories, brokers, agents and other partners that enable strategic sourcing, timely and agile product development and end-to-end product or merchandise collaboration, is equally important. This strategy ensures that the entire product value chain stays nimble enough to support sales and margin goals.

Both online and offline branded and private label product development and merchandising teams face several day-to-day operational challenges. Buyers, planners, quality and product development managers make last-minute and often costly buying decisions for seasonal selling due to sudden demand-shifts or market uncertainties. Moreover, some retailers suffer from an over-dependence on traditional consumer segments, fixed branded catalogs and inflexible supplier lead-times.

Retail enterprises still rely on internal inter-departmental hegemony, established sourcing sites, known factories and suppliers. All these stakeholders can be impacted by sudden organizational change, shifts in raw material prices, production capacity changes or other macro-economic factors. These events can hamper an entire line of profitable products or the timely entry of new seasonal merchandise, causing economic loss to retailers and their network.

In situations like this, there are three top priorities retailers and their supply chain partners should consider as they look to fulfill omnichannel demand through existing and future product catalogs or assortments (both online and offline).

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Staying ahead of the trend

Several retailers are engaging in reactive product innovation, with positioning, planning and development that is often behind the consumer demand trend rather than ahead of it. Staying ahead of the trend has inherent risks like higher pipeline inventory in the supply chain and pressure to sell-through merchandise faster than the average sales cycle. However, category leaders always stay ahead of the curve with detailed and comprehensive omnichannel assortment product development planning and channel execution. Among other strategies, these companies leverage:

  • Strategic and ethical multi-tier and multi-country sourcing destinations for online and offline private label and branded product-mixes.
  • Internal (merchandising, product development, supply chain) collaboration based on an integrated set of common product or merchandise performance metrics.
  • External partner (supplier, factory, for example) collaboration that identifies and proactively responds to market demand shifts using item-level data related to things like quality, regulatory compliance or shipment.

Leveraging data

A big part of omnichannel growth comes from agile and predictive value from product data and not just sales or customer data.

Creating one view of product from purchase order all the way to invoice, shipment and fulfillment is critical for increasing efficiencies at every stage of the product or merchandise lifecycle. Large and even mid-size retail organizations create large volumes of product data and are challenged with providing user-level insights at an item-level during various stages of product development – concept, design/development, sample, quality, compliance, purchase order and finance.

Product data users must be given the flexibility to access demand and supply-side information on products, fixed and variable KPIs (internal and external), reports and performance management tools in real-time, or data files that are updated at least daily. As a result, retailers can reduce their omnichannel go-to market latency and increase product diffusion for store/channel-level sales uplift by updating private label and branded product data access for all internal and external stakeholders.

Having a roadmap and support

Single or double-digit cross-category and omnichannel growth requires a formidable roadmap for merchandise or product development and introduction across channels.

Product or merchandise lifecycle management roadmaps must have a beginning and end of lifecycle definition and product profile (including specifications and other important product attributes) for top sellers and slow moving items. These profiles need to be updated on the product lifecycle management platform and this information sharing needs to vetted and internalized before shared externally with partners.

Any growth-oriented omnichannel product development technology strategy needs to consider that there should be a fine balance between existing assortment maturity and new product introduction for incremental sales, margin up-lift, cost of ownership and return on investment. This roadmap needs product innovation/management process and technology buy-in from upstream partners like raw material and finished goods suppliers. Buy-in should also come from internal merchandising, supply chain, marketing/branding and other sourcing and procurement partners.

By applying the aforementioned strategies, companies can execute an ideal branded and private-label mix for channels that is better positioned for responding to consumer needs, margin challenges and competitive offerings in agile ways.


About the author

Tim Chiu 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