Over the last nine months, a research team from Auburn University’s Supply Chain Management (SCM) program undertook a study of the retail supply chain. Co-sponsored by Fortna, RILA and the Auburn University College of Business, the project provided insights into the major supply chain challenges facing the retail industry and the capabilities that must be developed by retailers to attain supply chain excellence.
By all accounts, 2009 presents a number of unique challenges for retail supply chain executives. Gone, for now, are the traditional growth related concerns of distribution facility expansion, transportation capacity constraints and labor turnover. Instead, economic issues are at the forefront. Balancing cost and service during the downturn is an ongoing battle for supply chain executives.
While the retailers are pushing forward with significant reductions in inventory quantity and variety on the cost cutting side, customer expectations of availability and selection remain important. One executive summed up this challenge, saying: “The real focus is to lower our net inventory without compromising the in-stock experience for the customer.” Improvements in demand forecasting, inventory segmentation and seasonal transitions were identified as must have capabilities by the research participants.
The analysis of best-in-class retail supply chains revealed four primary themes. Leading retailers have developed the ability to leverage strong distribution networks, create flexible capacity, tear down functional silos and effectively develop their SCM team. Details regarding these four capabilities and related strategies are discussed in the final report. Though no single retailer could claim excellence in all four areas, the best-in-class retailers are exceptional in multiple aspects.
Full details of the study findings will be released in the final report. It will be available late summer via the RILA website and www.retail-scm.com. For additional research study information, contact Brian Gibson, professor of SCM at Auburn University, at (334) 844-2460.