Followers of Gartner's yearly Supply Chain Top 25 list may have noticed signs of progress over the last few years toward a responsive, demand-driven supply chain. As a student of the supply chain, I watch to see who makes the list and what market advances it highlights for suppliers and retailers. Last week though I got to experience the progress firsthand.
Here’s my personal supply chain story, which reveals some important best practices for retailers.
An Omnichannel Supply Chain in Action
Gartner's list identifies 25 companies that “best exemplify the demand-driven ideal for today's supply chain” and shares their best practices. There are some remarkable advances being made by supply chain leaders — whether or not they are on the 25 list — and sharing best practices is a good way to improve across the industry. And while all boats rise with a rising tide, the seas are much more turbulent these days in our omnichannel world. Supply chains need to align or get caught in a new perfect storm.
Consider this scenario:
You're walking through the mall and see the perfect pair of shoes. You know, the ones you noticed on the fashion website and then on your Facebook page (because Facebook always knows what you are thinking). There they are in the store window on sale, so you pop in. You ask for your size in black to go with a new suit you just bought. CATASTROPHE! They only have them in blue in your size. You try them on. They fit like a dream and look great on, so now you really really want them. They are no longer just an idea, they are your must have shoes but they are the wrong color.
A decade ago a consumer who faced this out-of-stock situation at their retailer might be told to wait until the next shipment arrived, or a check might be done and a suggestion made to visit another store location. More recently, the consumer might have gone online, found the shoes and perhaps purchased them from a different retailer. Consumers expect more these days and retailers have to step up to a seamless customer experience in order to keep the sale and maintain a delighted customer.
In this case the customer got exactly what she wanted and the retailer did too. Here’s the second half of how this scenario played out:
The sales person immediately says she can check for the shoe availability online. Yes, they have them and will ship no delivery charge to your home. They arrive within the week — right size, right color, same wonderful sale price! And yes they look fabulous with your new suit.
Since I am a true supply chain geek, I wondered what went on behind the scenes in this scenario. Turns out the retailer in this story — Macy’s — has been investing over the past years in technology and approaches to optimize for omnichannel. They are outstanding in this endeavor and have been recognized by analyst and industry organizations alike for what they do and how they do it.
The 30 Second Definitive History of Retail Supply Chain Excellence
The retail industry was one of the first to embrace electronic data interchange (EDI) to automate and gain efficiencies in the supply chain. To this day EDI and its progeny continue as the backbone of the business networks that bring product from suppliers through to the point of sale — from ordering, packaging and shipping to payments and returns.
Macy’s received an excellence in supply chain collaboration award from VICS (Voluntary Interindustry Commerce Solutions Association) several years back for a MyMacy’s logistics initiative to reduce complexity, cost and time required to process vendor routings. More recently, a Gartner survey reported Macy’s major supply chain focus as well as overall industry priorities had shifted from reducing costs to initiatives for customer satisfaction and growth. And last year it received the Customer Engagement Award for Digital Technology at the National Retail Federation’s Annual Conference.
Underlying this journey for Macy’s and other leading retailers are the technologies that enable labor and cost savings, cycle time reductions, streamlined inventory management, improved cash flows and better decision making. That same technology is now being applied to drive end to end supply chain visibility. Much of supply chain execution these days is prefaced on visibility to track to consumer behaviors in planning cycles, and then to adapt inventory and fulfillment tactics to match demand at any channel.
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