Future of Retail — The CFO Issue

issue 04

The foundation of all well operated supply chains is having one single credible and accurate demand forecast that takes into account fl uctuations in demand, seasonality, promotions and even weather.

likelihood that massive additional cost will be introduced to the business, as well as duplication and ineffi cient use of inventory, with expensive distribution networks travelling the same routes, and worst of all dissatisfaction from the customer. In addition, poor availability, out of season stocks, or

ineffi cient utilisation of store space with the assortment, are all black holes into which a company’s profi ts fall. The result of these issues pushes up capital employed; increased costs through excessive stock holding in the wrong store or channel; and high wastage or markdown in one channel compared to lost sales through lack of inventory in another.

ONE VERSION OF THE TRUTH FOR LESS INVENTORY AND MORE SALES A streamlined supply chain can change all this, impacting all areas of the business and giving the CFO their opportunity to turn around the performance of a business. Indeed, the foundation of all well operated supply

chains is having one single credible and accurate demand forecast that takes into account fl uctuations in demand, seasonality, promotions and even weather. The CFO and other business stakeholders can then

work from the same fi gures, the same truth breaking down silos. With the introduction of intelligent supply chain planning solutions, that forecast can then be utilised to direct the fl ow of merchandise through the entire supply chain from suppliers through to multi-level distribution centres into stores and shelves. The inventory can then be shared between channels

and managed in a holistic way throughout the supply chain. Customer-demand forecasting at store and channel

level is also the only way to drive micro merchandising to make sure that retailers can service customers with their local needs whether through stores or online channels. Ultimately, it enables CFOs to reduce costs by

minimising stock holding, freeing up working capital and improving sales by ensuring the right product is on the right shelf at the right time.

MANAGING RISKS WITH WHAT-IF SCENARIOS If supply chain optimisation solutions can take care of the operational supply chain, how can the CFO plan for the future and achieve continued improvement? The answer is to use the same solutions to model any changes to the supply chain, range and assortment. It is not effi cient to use modelling technology that does not replicate the operation; this is only likely to duplicate efforts and lead to errors that can be costly and frustrating. Smart, state-of-the-art technology can enable users

to model changes to their own supply network, service levels, new items, and promotions, through to new warehouses or distribution channels using the same forecast. For example, going through the multiple scenarios to understand the impact of building a new distribution centre or whether to source products off- shore rather than on-shore can speed up the decision- making process. This additional power can really enable the CFO to view potential impact to the business and make decisions based on knowledge not guesswork. The supply chain is a huge bank for the CFO to fi nance

the business, as it can have a direct impact on the bottom line profi ts. When retailers collaborate with providers who offer innovative tech solutions and understand the retail supply chain, they will be able to unlock the true potential and see the substantial benefi ts of having a successful supply chain quickly and with minimum disruption.

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