Supply chains growing more crucial as ecommerce picks up
Perhaps the worst thing any retail merchant can encounter is not having enough product to satisfy consumer demand. This essentially means the company did everything right, from promoting goods to offering a compelling shopper experience, but because the brand didn't have enough stock of a particular item, it ends up losing out on a sale.
Unfortunately, this is becoming more of a reality for ecommerce retailers. Online shopping has picked up considerably over the past decade and mobile devices have further accelerated this trend. According to the Retail Industry Leaders Association (RILA), web sales have climbed more than 15 percent to $35.3 billion and will continue to grow 10 percent annually.
The rise in sales means retail brands will be shifting more inventory and they will need to diversify their supply chain to keep up. Using a variety of sources to ship goods to products will help them ensure they are never out of stock and unable to meet the needs of their customers, the organization asserts.
"Consumer expectations are changing, and as a result, retail business models are changing," RILA executive vice president of retail operations Casey Chroust said. "Traditionally, retailers have used separate operational models to move goods and fulfill orders. Now those models need to be merged so that companies can continue to deliver the products consumers want across any channel without losing efficiency or adding cost."
However, multichannel operations will also present retailers with myriad challenges. Variations in shipment sizes, order filling processes and delivery methods, as well as inconsistent stock-keeping units, are expected to be the leading obstacles, with less than 18 percent of retailers offering the same SKUs across all channels.
"The real challenge for today's multichannel retailer is to become channel agnostic and fulfill demand effectively regardless of order type or origin," stated Brian Gibson, professor of supply chain management at Auburn University. "As sales volume grows in nontraditional channels, achievement of technology integration, operational flexibility and process visibility will separate the leaders from the pack."
Digital media has already changed the way many merchants do business, with a number of brands making heavy investments in retail software and other technology to further enhance their online efforts.
