Supply Chain Capacity Management

The changes in the retail market drives changes in the supply chain capacity management planning and forecasting as a result of the omni channel purchasing practices.  These purchasing practices are changing the way that inventory must be managed and perhaps more importantly consumers are now continuously changing the manner in which the inventory is consumed.  In addition to the consumption of inventory changes the distribution of this inventory across the geographic locations is also changing.  These are key factors that are challenging retailers in their supply chain capacity management to meet the discontinuous change in the retail market.  

Retailers must change their supply chain capacity management strategy to increase the flexibility and also expand the capabilities to meet the market demands for the ability of consumers to purchase any product at any time and then most importantly to deliver the product to meet the consumer needs in an efficient and timely manner.  This is a much more difficult challenge because it seems that the goal is continuously changing from a supply chain capacity perspective.  The changes to the retail market resulting from the consumer expanded omni channel demands have disrupted the retail market along with the extended supply chain supporting the retail market.  There is no question in my mind that one of the greatest struggles for retailers is to revise their capacity management strategy to meet the changing demands of the consumer.  

It used to be easy for the large national and regional retailers because they could simply expand their growth by expanding the number of stores.  This provided a relatively stable set of requirements for the supply chain capacity management where retailers would distribute product to the stores based on product mix and regional sales.  Now with the expansion of consumer omni channel shopping and purchasing the retailer's store model has been blown up.  You see this with the sales figures by channel along with the impact on the real estate market and malls that are seeing reduced foot traffic and sales.  Consumers have embraced the technology that allows them to shop and purchase on their own schedule and this has changed the retail supply chain requirements along with how capacity is managed across the chain.

Supply chain capacity management must be highly flexible and fluid in order to sense and respond to the consumer demands.  The market is much too volatile now for retailers to wait for the changes, they must change their capacity management strategy to allow inventory to quickly move across channels and delivery points to react to the demand volatility.  In addition to the increased flexibility of the consumption abilities retailers and the supply chain must also recognize and change their capacity demand planning and forecasting strategy and practices to help to flex capacity capabilities to meet the demands.

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?