As consumer buying habits and demands become ever more complex, inventory management is key to ensuring companies can quickly respond to any fluctuations in customer demand and maintain the flow of product availability.
Inventory management has been a key to success for retailers like Macy’s, Nordstrom and Kohl’s, whose buying strategies ensure goods are delivered where and when a customer wants them. But the same can’t be said for other retailers who are struggling to get it right.
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Technology is key to aiding the process, according to industry advisor Andrea Weiss, founder and CEO of retail consulting group The O Alliance. She asserts: “Companies now showing signs of life and progress have invested in more agile and responsive supply chains, which digitise workflows, shorten lead times and provide complete transparency.”
However, the retail picture looks a lot different than ten years ago, and this means companies need to adjust the way they operate. The advent of newer, faster technology has created new opportunities – and challenges – for global commerce. The ‘new normal’ calls for every company to serve consumers (B2B or B2C) via e-commerce channels, requires them to provide faster shipping along with full visibility, and necessitates a diverse portfolio of products, leading to an increased number of SKUs. The process change is a tricky undertaking to institute and manage.
Transforming supply chains
In order to keep up with the changing times, companies need to transform their supply chains. The starting point is increased and effective collaboration with all trading parties across the end-to-end supply chain in order to ensure timely and high-quality product is rolling off the lines.
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By GlobalDataOn the other end, the delivery of finished goods in the fastest way possible is equally critical. However, many companies still rely on manual methods of communication with their supply partners, leading to slower response rates and unexpected disruptions. Additionally, complexity becomes increasingly difficult during the process, when outdated technology and processes result in errors, delays, lost time, and additional costs.
“An investment in a digital supply chain as part of the transformation process provides the agility that is saving these retailers huge amounts of time. They now can respond more quickly to consumer patterns and use insight platforms to help make intelligent decisions even before a purchase enters the supply chain,” says Weiss. “These retail winners are seeing significant improvement in both sales and profit margins, as demonstrated by sales and stock performance. They have taken their supply chain transformations very seriously and are getting repaid for it, with some outperforming the S&P by 16.5%.”
A consolidated platform
The right digital supply chain execution platform needs to have the functionality to manage multiple areas of the supply chain. At a minimum, to control your inventory flow at optimum levels you need a consolidated supply chain execution platform with these capabilities:
- Work in Progress (WIP) tracking enables all of the downstream parties to gain visibility into the production milestones at the factory level so you can slow down, stop, or speed up production based on the demand forecast. With this shared visibility, QA team, logistics providers and others can be at-the-ready.
- Material Order Visibility ensures the components and raw materials are pre-positioned at the factory and production can begin as planned. Likewise, it is critical to know when the materials will be at the production facility before issuing purchase orders.
- PO Collaboration facilitates collaboration between the brand and supplier to fully track orders and identify any potential production issues. The technology platform integrates with the ERP system to pull and push data between the two platforms. At times, integration with a PDM/PLM is also established to populate product data. A robust platform manages various types of POs, too.
- With Shipment Prep capabilities, the supplier can create an Advance Ship Notice, Bill of Lading or other shipping documents in the platform when the shipment is ready. Errors and delays are reduced by transferring the data from the PO onto these documents.
- Vendor Shipment Booking provides a platform for vendors and factories to create a shipment booking request from a purchase order. The system then further integrates with the logistics service providers to complete a booking request and receive confirmation back to close the loop. By enabling factories with a digital solution that integrates the purchase order data and connects them with the LSP directly through a centralised cloud platform, companies can achieve improved compliance and speed-to-market.
Achieving full visibility
With a digital solution like this, and integration to other systems, retailers now have full visibility into their PO and production management, factory-level shipment preparation, and shipment processes. The quantifiable results from one retailer’s supply chain execution software implementation include:
- The reduction of administrative resources required to change or cancel purchase orders, track acknowledgments, and document each transaction reduces the PO process from three people in three weeks, to one person in 2-3 days.
- Internal users at the company can see shipping events in real time, eliminating the need for inquiries with their third-party logistics team.
- Customer fill rates have increased by 20% and order accuracy has raised customer satisfaction levels, which are immeasurable in this competitive economy. Customer service can also provide up-to-date information about orders.
- The collaborative digital approach eliminates errors caused by the previous manual relay of purchase order information, greatly improving the consistency and accuracy of information shared by vendors and merchandisers.
- Visibility into the production schedule provides dashboard views and alerts into exceptions and delays, reducing the manual effort to look at each order status.
- Availability of milestone data triggers other events, such as quality inspections and shipment bookings, cutting delays in third-party scheduling by 70%.
With all of these elements in a single, collaborative platform, companies can quickly respond to any fluctuations in customer demand and maintain the flow of product availability. By establishing collaboration with suppliers across multiple tiers of the supply chain, global organisations gain improved visibility into supplier operations and avoid many of the concerns resulting from poor governance. This results in cost savings that will increase as operations become streamlined.
About the author: Gary Barraco, director of global product marketing for Amber Road, is responsible for developing strategic product marketing direction and presenting the Amber Road brand and solutions worldwide.
