Supply Chain Convergence Of Demands

The demands of the retailer for product inventory supply and location are beginning to converge with the demands of the customers.  The challenge for the retail extended supply chain is the convergence of demands and expectations from these two distinct customers, retailer and consumer.  These changes require a dramatic increase in flexibility of the functionality along with increased collaboration across the extended supply chain network in order to meet the flexibility demands.  Retailers can no longer view their extended supply chain as a silo that is used simply to supply product as needed.  The extended supply chain can be a competitive advantage for retailers if they increase the collaboration across their supply chain extended partners, consumers and the retailer.

The replenishment demand cycles and requirements have been shifting now for quite some time and with the increase in the omni channel shopping and sales volumes these cycles have converged across the product supply and delivery for both the retail stores and direct to consumer deliveries.  The replenishment to stores and the consumer purchase fulfillment are now very similar and this is further converging to eliminate all differences. What this means is that much of the retail shipments, whether to the retail store or the consumer have the same properties and the same fulfillment cycles.  

These delivery and fulfillment cycles will drive retailer planning and forecasting functions to converge the demand planning for stores and direct to consumer sales and replenish to locations that most efficiently meet these demands.  The Amazon supply chain network provides a good example of these supply fulfillment demands as Amazon has built a network of distribution centers across the country to support the rigorous delivery demands to consumers across the country.  

Omni channel retailers now must get creative in their real estate network to meet these new rigorous fulfillment demands as they converge.  This means that retailers must re-evaluate the store layout and usage to be able to support direct to consumer fulfillment along with in person shopping and purchasing.  I envision this change to drive an expansion of inventory storage at the store and a contraction of show room shopping space.  I also envision an expansion of resources in the store to support the demands of inventory management and control along with consumer order fulfillment direct from the store.  The retail store provides a perfect location to support the converging demands of the retail omni channel marketplace and most importantly since the foot traffic in the stores is deminishing as the eCommerce sales increase this strategy provides a perfect opportunity to repurpose and utilize the real estate to efficiently meet the converging 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?