An efficient, well-run supply chain is essential for retailers to achieve operational, financial and customer fulfillment success. Today’s retailers aren’t just chasing sales; they’re chasing inventory management to drive millions of dollars in revenue and expand their customer base and in some cases, their global presence. As such, efficient supply chain applications are a must as retailers cannot afford to overlook complicated internal supply chain applications that can seriously impact revenue and a customer’s brand perception. Whether items are purchased online for home delivery, picked up in-store or purchased in-store at a brick-and-mortar retailer, retailers must ensure that their back-end supply chain applications deliver exceptional performance in addition to meeting customer demand.
Address the application challenges
Applications that perform poorly and are unreliable or slow can have a devastating business impact for three reasons.
The impact of global trends—Trends including global sourcing and broader geographic distribution of stores mean that today’s supply chain involves many more partners and locations than it did in the past. A supply chain is no longer merely a system for sequentially tracking parts and products as they move unilaterally from suppliers, through to production lines, warehouses, logistics providers and ultimately to store shelves. Rather, the modern supply chain is a vast, far-reaching collaboration network fostering tight communication links among supply chain participants. It enables supply chain partners to access and share critical information in order to stay connected and productive. And, it is heavily dependent on properly functioning IT systems and networks around the world.
Just-in-Time Model Adoption—To increase their competitive edge, today’s retailers and their suppliers are increasingly adopting Just-in-Time models, which depend on up-to-the-minute visibility into fluctuating inventory and demand levels. Gone are the days of betting the business on sales forecasts. Instead, retailers need accurate, real-time visibility, coupled with the high-performance applications to support it, to achieve a lean enterprise and improved price competitiveness. Just-in-Time models can also help retailers better capture fleeting (and sometimes random) revenue opportunities, such as when the demand for hand sanitizer skyrocketed following initial news of the swine flu outbreak in 2009. Finally, these Just-in-Time models extend over greater geographical distances, making interrupted collaboration with logistics providers all the more detrimental.
The ‘smart’ consumer—Customers are more empowered than ever in terms of not just their service expectations but the way in which they interact with stores, which increasingly means the mobile Web. PayPal recently reported that global mobile shopping over the Thanksgiving 2012 period more than doubled than 2011. Compuware research showed massive spikes in tablet traffic on Thanksgiving night, as consumers shopped from the comfort of their couches. The mobile Web allows consumers to compare prices; check inventory and shipping status; and enter orders a dozen times a day rather than two or three times a week, from virtually anywhere. While this may seem like a positive for retailers (i.e. more sales) the mobile Web and other forms of omni-channel shopping place great pressure on supply chains, calling for exceptionally high levels of precision, timeliness and agility in managing cross-channel inventories.
No time or place is good for downtime in the modern supply chain
Clearly, critical supply chain systems and their applications—including sourcing, inventory and demand management, transportation and order fulfillment—must exhibit superior resilience and performance. Research shows that supply chain application outages and subsequent business disruptions can have a long-lasting impact. In fact, supply chain disruptions can reduce shareholder value by as much as eight to 10 percent, according to the “Reducing the Impact of Disruptions to the Supply Chain” report from SAS. Disruptions expose businesses to additional risks including lost revenue, damaged reputation and increased regulatory scrutiny.