The most effective way to gain an understanding of a company's supply chain is to break it down piece by piece and model all of the current processes in a visual format. Once the process is modeled out it becomes apparent where the problematic areas are, and steps can then be taken to address each area, whether that be in fulfillment, a lack of flexibility with suppliers or any number of other issues.
One example of the benefits of modeling a company's processes can be illustrated in the case of a large retailer with executives who couldn't understand why the company's supply chain wasn't operating efficiently, and why the company was hemorrhaging money as a result.
In modeling the system, an immediate red flag was raised in the area of item data. It turned out that the company was spending weeks getting data on products that had already arrived in the warehouse. Characteristics such as pricing information, promotional data and where in the store to place a product should always accompany the product as it proceeds through the supply chain.
In this case, the item data was significantly delayed, meaning the product sat in the warehouse until the necessary information arrived. The executives then began working with a solution provider to analyze the models and implement a product information management system that now serves as a global repository for all of this data, ensuring that as soon as products arrive they can be moved to the front of the store.
As in the example above, once problems are identified through modeling the supply chain, retailers must embrace technology to increase their levels of efficiency.
What retailers are finding is that embracing software solutions tailored for the retail industry is particularly beneficial because the solutions address challenges specific to their needs.
Solutions tailored for the retail industry include forecasting software used as far in advance as a year prior to the holidays to determine what products may fly off the shelves. Also included is middleware that enables retailers to better integrate with trading partners, better manage store inventory and store performance, track shipments with wireless radio frequency identification (RFID) technology, support multiple sales and fulfillment channels, and streamline store operations procedures.
Combined, these solutions help retail organizations streamline their supply chains and ensure that when the holiday shopping season comes around they will be operating at peak efficiency. And with shelves stocked just right and product information readily available, retailers can have the perfect balance of this year's gotta-have products to meet customer demand.
At the end of the day, while retailers can't always predict the next big craze, they can prepare their supply chain to react intuitively to the craze and deliver the right amount of products on time, with minimal cost. This reduces holiday stress for the retailers, who can then pass along savings and deliver the requested products in real-time, thus eliminating one element of holiday stress for the shoppers.
About the Author: Pamela Klym is segment manager for the Retail Industry, IBM Software Group. In this role, she is primarily responsible for aligning IBM Software Group's retail strategies with current trends impacting the industry, as well as working closely with retailers to help them achieve a competitive advantage through technology.