Tactics > looking ahead to 2011


Future-proofing the supply chain


The operational challenges of meeting the increasing demands of multichannel and cross- channel retail


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f the multichannel retail sector has one defining characteristic it is the frantic pace of both growth and change, which has typified the last decade and shows no sign of abating. Whilst many retailers have wholeheartedly


embraced the opportunities this has presented, others, including high-street institutions such as Gap, have been more cautious, only recently allowing UK customers to use their websites for more than just window shopping. At the sharp end of the vanguard, the biggest retailers are pioneering new sales and fulfilment mechanisms, from which new supply chain dynamics are emerging. In between these two ends of the scale are


retailers at varying stages of maturity. On this basis, one retailer’s future is another’s present and may already be in the past for others, with valuable lessons to be learned from the successes, failures and experiences of those responsible for managing the ecommerce supply chain over the last 10 years. Regardless of what a specific company’s


future might look like, the consensus seems to be that there will be further integration between channels and that, in order to cater for the differing needs, expectations and habits of different consumer groups, cross-channel, as distinct from multichannel, retailing will play a big part in the years to come. The other key trend for the future is the increase in cross- border trading as UK retailers seek to exploit international markets.


Supply chain challenges With the emergence of new technology, trends


and shopping channels, there is an increasing number of factors at play in the consumer’s decision to buy. Price, range, availability, and quality


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are, and ever will be, the major factors for most, with easy access to price-comparison information, social media and user reviews/ recommendations making this all the more competitive. Increasingly, consumers also demand a range of delivery options, from free “click and collect” to timed and premium home delivery services. The retailer must therefore establish optimal supply chains to get product to the consumer’s chosen delivery point efficiently and securely, whether that is at home, in-store or at a third- party collection point.


Catalogue e-business www.catalog-biz.com


By Peter Fuller Forget “the future” for now; few retailers


given a blank piece of paper on which to design their current supply chains from scratch would do as they are currently doing. In the majority of cases, retailers’ existing


supply chains have evolved to serve store replenishment and online orders as entirely separate channels. As the boundaries between these channels begin to dissolve, this is leading to significant supply chain inefficiencies, for example, where products for store replenishment and to fulfil click and collect orders are being delivered on separate vehicles to the same store.


Few retailers have the luxury of a blank piece


of paper and must decide how best to adapt their existing supply chains in order to resolve current conflicts and also to build in flexibility for the future.


Built to scale Acceptance of online and mobile shopping


becoming more widespread amongst even the most conservative consumer groups is driving the rapid development of more user-friendly, functionally rich and interactive web front-ends. Retailers must therefore ensure that their back- end distribution systems have the flexibility to keep pace with these developments. Failure to factor in emerging technologies can lead to costly and time-consuming upgrades and permanently lost opportunities. Integration solutions that do not take into account the unique nature of an ecommerce transaction will soon fall over when scenarios such as back-ordering or credit-card transaction failure occur. Retailers need absolute confidence that the integration between warehouse operations and the online store ensures that the correct quantity of stock is always displayed. With the ever-increasing recycling of stock (pick- despatch-return), stock figures need to be kept constantly aligned between back-end and website so that retailers can balance the maximising of stock available for sale, whilst keeping costly inventory levels in check. Above all, IT solutions for ecommerce


must be scalable. As the proposition grows, the integration solution must adapt with it, allowing increased volume of transactions and a seamless linking into ERP solutions such as SAP. If you get this critical integration wrong, the back-office cost of operating your ecommerce operation will be far higher than


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