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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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GUEST COMMENT: How fit is your supply chain?

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GUEST COMMENT: How fit is your supply chain?
GUEST COMMENT: How fit is your supply chain?

by Craig Sears-Black

Whether retailers realise it or not, they’re in a race with every other competing retailer to the finishing line of multichannel customer satisfaction. As retailers across the country are seeing their online channels outperforming the high street, it’s important for there to be more visibility and access to inventory so that whatever, wherever and whenever the customer wants to buy, they can.

Marks and Spencer, so often the barometer of high street performance, noted that its Christmas period saw online sales rise by more than 20 per cent, while overall like-for-like sales on general merchandise fell by 1.8 per cent. This is a clear signal of the importance of alternative channels, but how can companies manage this change?

It’s what the customer wants

The benefits from effective multichannel management are far greater for the retailer than they are for the customer. However, the value of customer loyalty and making sales is the name of the game in today’s climate – the question is, ‘how easily and profitably can they be completed’?

From the customer’s perspective, they are looking for fast delivery and a range of convenient shopping choices – including shipment to their nearest store. This ability for them to get what they want, when and where they want it engenders the kind of loyalty that can boost a retailer’s bottom line in the short and long term.

A model for customer loyalty known as the Customer Effort Score – developed by Harvard Business School – shows that the less effort a customer has to put forth to achieve what they want, the greater the chances that they’ll repeat purchase. THIS is the significance of the race to multichannel customer satisfaction – and retailers need fitness in their supply chain to achieve it.

What does multichannel mean?

Unfortunately for retailers, the definition of multichannel will continue to be dictated by the customer. Traditionally, multiple channels may have been a high street presence and a catalogue. Today this is dramatically expanded to include websites, mobile portals and social media; proliferation of new channels is accelerating with no end in sight.

However, aside from developing the customer interface, adding new channels is not a significant challenge for a supply chain with a good level of fitness. With the right systems and processes in place, retailers will be agile enough to add new channels without disrupting existing systems, but with the confidence that the new channel can be fulfilled successfully for the customer and profitably for the business.

How to shape up

The key to achieving fitness is starting with a single view of the whole end-to-end supply chain. This means integrated visibility from warehouse management systems, order management systems and ERP systems. The importance is the outcome: visibility and management of all parts of the supply chain through a straightforward, unified process.

Greater visibility creates the opportunity for improving processes and results throughout a multichannel business. These benefits come in many different forms.

Operations managers can spot buying trends and plan their replenishment strategy accordingly to deal with these patterns. At the same time online managers can offer new services such as ‘ship from store’ and ‘express collect from store’ based on knowledge of stock available to sell in each stock holding location.

This increased visibility of stock requirement and movement throughout the supply chain also enables supply chain managers to reduce their stock holding and consequently end-of-season surpluses and the markdowns associated with them.

Markdowns can also be avoided by moving stock to the most profitable channels. Visibility of demand in real-time means that stock held in one channel can be easily moved to others to fulfil orders when they come in. Increasing revenues and profit margins are great benefits from this approach but it also clears warehousing space for alternative uses, be that preparing new stock lines for launches or even leasing out warehouse space to a third party.

Save the sale

Ultimately retailers are looking to sell more at higher margins and customers are looking for a hassle-free purchase that suits them. These two requirements come together within a multi-channel approach and the future of retail lies in linking interest with sales. For example, 80.8% of smartphone users research products on them, 41.4% actually purchase, according to Econsultancy research.

Taking advantage of this trend is only possible with fit, agile systems and processes. The opportunity is clear, the challenge for retailers this year is to shape up and get fit in their supply chains to capitalise, before their competitors do.

Craig Sears-Black is UK managing director of Manhattan Associates

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