Inventory forecasting and planning is continuously increasing in complexity while the planning and replenishment cycles must be shortened in order to increase accuracy and maintain inventory levels in the necessary purchasing channels. This becomes increasingly complicated because consumers are blending shopping and purchasing across channels now, creating a true omnichannel environment. In order to support these demands retailers must increase their level of collaboration across internal and external partners and most critically increase focus on collaboration with consumers. These demands and shifts in purchasing across channels can only be supported with the retailer increasing their level of collaboration with consumers.
The retail supply chain has become extremely complicated and this level of complication is increasing continuously and being driven by the changing consumer demands. In order to meet these challenges, the retail supply chain must:
- Increase levels of collaboration and cooperation across internal and external partners. This is required for an early warning and also, most importantly, clarification and response to the changing demands.
- Eliminate silos within the retail organization to reduce the friction and increase the collaboration across all partners.
- Change the culture to one of collaboration both internally and externally. This will probably be the most difficult requirement because of the cultural change required to truly achieve long lasting benefits.
In other words retailers must create a collaborative supply chain and this must start with collaborative inventory planning.
Consumers do not really care where the inventory comes from when purchasing online and that is appropriate. This is really the crux of the challenge for retailers; consumers want the product on their time requirements and delivered based on their need at the time. This means that consumers may place a mobile order while in the retail store because they cannot find a size or color, or they may purchase in the store based on an impulse at the time. Whatever the combination omnichannel retailers must be prepared for any eventually in the purchase.
These changes require investments in culture, collaboration, technology, people and the extended supply chain in order to meet these demands. Retailers must invest heavily now and they must be prepared for a continuous level of investment to sustain their relationship with consumers. Inventory management plays a critical role in these investments and consumer relationship going forward because the relationship from the consumer perspective is based on delivery. Effective inventory management requires collaboration across channels and most importantly communication and collaboration with consumers to understand demands in a manner and time period that allows the retailer to act.
The days of retailers remaining in a tower and providing the product in the locations and stores based on the methods that meet the retailer best interests and simplicity are gone. Consumers smashed this model years ago and retailers are now beginning to realize the impact on their operations. Retailers must open up and work with new and existing partners in a manner that supports the demands of the consumer. Retailers have been talking about ordering anytime and anywhere for awhile now and they are now realizing that consumers have defined this mantra to meet their lifestyles and this causing an upheaval in the marketplace.
And now for the audience participation portion of the show…
ECommerce will have wide ranging impacts on both the retail and manufacturing sectors. How can you focus these abilities to improve the consumer's experience? Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes. In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas. How can you support these continuously changing requirements?