A whitepaper released by the Retail Industry Leaders Association (RILA) and the Auburn University Supply Chain Management Program identifies the strategies that leading retailers are utilizing to succeed amid difficult economic conditions.
According to the report: Though revenues are stagnant in many retail organizations, costs are viewed as controllable. In particular, the expenses falling under the control of SCM [supply chain management] executives are receiving strong attention from the top of the organization. SCM executives now find themselves in the spotlight and must perform their brand of magic to save the show.
Sponsored by Fortna, the report entitled ‘The State of the Retail Supply Chain,’ reveals that leading retailers are expanding the role of supply chain management (SCM) within their organizations to better manage inventory, control costs and maintain first-rate customer service.
‘In this challenging economic climate the critical role of supply chain management is underscored,’ said Casey Chroust, executive vice president of retail operations. ‘Retailers have responded with strategic investment and process improvements that focus squarely on delivering the products customers want and the value and service that they deserve.’
According to the report 90% of respondents have invested the same or more in supply chain process improvement; 70% in management development; 60% in technology and 60% in workforce training. These gains emphasize the desire to improve supply chain efficiency.
Additionally, to offset declined consumer spending, 80% of supply chain management executives report focusing their efforts on reducing inventory with close to 70% reporting that they are placing smaller initial orders.
According to the report, the tools required to successfully build superior supply chain management separate the best-in-class retailer from the laggard retailer. ’ ‘Supply chain management has proven to be a competitive differentiator for leading retailers,’ said report author Brian Gibson, Professor of SCM, Auburn University. ‘Especially in these challenging economic times, supply chain executives are leveraging their internal capabilities to meet organizational cost reduction goals while maintaining excellent customer service.’
Four major themes emerged as leading practices within retail supply chain management. Best-in-class retailers 1) leverage strong distribution networks that are capable of supporting high volumes, 2) create flexible capacity to adjust supply chain infrastructure and support unanticipated fluctuation in demand, 3) align inside and outside the organization to break down silos and manage processes more holistically, and 4) continually develop the internal talent pool to enhance the quality of the workforce.
These best-in-class capabilities will continue to be important to the future of the retail supply chain as retailers continue to adapt with the changing wants, needs and desires of consumers.
The Retail Industry Leaders Association (RILA) is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and operate more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.
Auburn University began teaching supply chain topics including transportation, logistics, and operations management more than 30 years ago. In 2007, the SCM Program was created via the merger of the logistics and operations management majors. Today, there are more than 120 students in the industry-focused undergraduate SCM major. (RILA)