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IRUK Top500 The Customer Report: 2018

IRUK Top500 The Customer Report: 2018

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Single Version of the Truth

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Single Version of the Truth
Single Version of the Truth

Getting a single view of the supply chain is an issue for most retailers, but what happens when you also add in production, franchisees, wholesale and ecommerce? Emma Herrod investigates.



Commerce has generated many innovations in the retail world but it has also seen many systems and processes thrown into the legacy  bin. Communications (or a lack of it) across systems and the need for speed mean industry suppliers have to continually update solutions to keep up with retailer and customer requirements.



While retailers grapple with the twin tasks of getting single orders to customers and delivering goods to shops, brands with wholesale businesses also run separate systems to get their best stock to the right stores. Selling direct to the consumer further complicates the supply chain in terms of stock visibility, manufacturing and speed to market, plus allocation of stock across retail, wholesale and ecommerce businesses. Life is more complex for brands that also

run their own retail estate, explains Peter Akbar, Solution Director Fashion at SAP. Some businesses will have started out as wholesalers with little retail, while others will have put more emphasis on retail and not so much on the wholesale side; both will have ended up with two separate supply chain systems that don’t talk to each other. Growth through acquisition and alliances are a further factor.



Companies are increasing their brand value and customer-centricity by using best practices and big data in a cross channel vertical environment to ensure they have product where their ever-demanding customers want it and when. For retailers, having their own-label product is a valuable asset and will differentiate them from global marketplaces such as Amazon .



However, continuing to keep inventories in disintegrated silos can lead to issues with stock and distribution decisions: where to place stock in terms of retail, wholesale or ecommerce channel. It can also mean delays in bringing new styles to market, which is of particular concern to luxury brands in an age when they are feeling the effects of fast fashion on their business. It also makes moving into new markets and channels, such as the expansion of franchise outlets now happening across the Middle East and Asia, cumbersome and time consuming.



Franchise and wholesale have different business models to retail; they also add another level of complexity as a firm has to manage price and cost across the whole supply chain, explains Sarah Taylor, Senior Director Retail at Oracle. She says brands “have to manage and balance demand for each channel to market”. Going direct to the consumer is an opportunity, especially for some of our strong UK brands such as young fashion designers.



“It gives them the opportunity to develop those brands and differentiate their product offering,” says Taylor. The rise of ecommerce as a direct-toconsumer selling channel further exacerbates supply chain issues. But by having one single view of the complete supply chain, brands can see the true retail demand from POS, retail solution through to the wholesale solution without any time lag or batch processing. “By bringing it all together, brands can make the best decisions,” says Akbar. “If there is big demand in a certain area because of advertising they can allocate more stock to that area or move some from wholesale to retail. With planning tools they can also allocate more profitably.”



VISIBLE TO ALL

Brands need to have visibility internally as well as giving customers a view of stock levels and location, believes Taylor. The goal is to have visibility across the entire supply chain with operational processes across all areas and then to enable consumers to go online see if the product they want is available an be given the information they need to decide whether to have it delivered or to collect it.



They may be purchasing it directly from the brand’s ecommerce site, from the brand’s own store, a franchised store or from a separate retailer. Having a single view of the end-to-end supply chain is one thing, but that data is only as good as the insight that can be drawn from it. So this single version of the truth needs to be analysed to gain maximum benefit; simulations can be run, along with profitability analyses, to give an optimal view of where to move stock and who should get what.



Utilising big data means that there’s no need for so much buffer in the supply chain, explains Akbar. “Information will be your basis of competitive advantage,” IBM CEO Ginni Rometty told retailers at January’s NRF Big Show. She said that information will change everything, including how retailers manage supply chains, and forecast that it – along with cloud and cognitive computing – will be the foundation on which retailers will build their success this year.



Running a single supply chain also means that manufacturing decisions can be made later. For buyers, the old adage used to be buy and forget, but with today’s increased speed to market and knowledge of where the demand is they can delay manufacturing decisions, such as which slogans to print on what colour t-shirts. With a move towards supplier partnerships, these too can be plugged into the supply chain to further speed up processes, alleviate data issues and increase collaboration.



Simplifying the supply chain has huge implications for operating margins. Fashion retailers, for example, can be more flexible about how and when to use particular fabrics. These can be bought in bulk at the start of the seaso leaving buyers and retailers to be more adaptable about the finished garments and tailoring it to the market and demand. This is something that Next Retail already does to great effect.



Demand forecasting brings the what and when of manufacturing processes into product planning, explains Taylor, and if you take away the need for batch processing, Akbar says retailers can do a supply run “incredibly quickly”.



SPEEDING UP THE ANALYSIS

Three fashion brands that have been working on gaining a single view of their respective supply chains are Adidas , Luxottica and Tommy Hilfiger. They have been collaborating with SAP on a big data-enabled solution that will give them a unified view of stock. Akbar explains that by using the power of its in-memory computing platform HANA, large data volumes can be quickly analysed for a fast and accurate overview of products across the entire supply chain, saving both time and money. “We could only do this with HANA because of the in-memory computing,” he says.



The collaboration aims to enable the brands to manage their vertical, omnichannel business processes across one big data system to improve efficiency, speed up time to market and enhance inventory control; the ultimate goal is to enable them to grow globally. “Our innovation with SAP is intended to create a new single platform for speed and growth across our multiple businesses and distribution channels,” says Ludo Onnink, COO, Tommy Hilfiger. “We look forward to using these best practices to run faster than ever before.”



Luxottica is focused on improving its retail, wholesale and manufacturing businesses. “The future looks very bright for our operations,” says Dario Scagliotti, Group CIO, Luxottica. While at Adidas, Group CIO Jan Brecht comments that the partnership “will enable us to bring our global wholesale and retail businesses closer together”. Away from the fashion arena, other brands have been embarking on technology changes to align channels, explains Taylor. She cites Morrisons, which since acquiring Safeway has been working on integrating its supply chain.



This encompasses growing the product, bringing it into a factory environment, manufacturing, processing, warehousing and putting products onto retail shelves for consumers. By having the end-to-end integration in place, brands can further enhance their stores, explains Taylor, explaining how Waitrose serves John Lewis customers.



“It opens up fulfilment from stores,” she says, enabling everything to happen at the right time. There’s full flexibility: rather than leaving the customer with an out of stock message, it means that the product is available when they want to buy it. If it’s not, they will know whether and when it will be back in stock, and be given information about possible alternatives.

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Featured In
InternetRetailing Magazine – March 2014, Volume 8, Issue 3

InternetRetailing Magazine – March 2014, Volume 8, Issue 3

Featured In
InternetRetailing Magazine – March 2014, Volume 8, Issue 3

InternetRetailing Magazine – March 2014, Volume 8, Issue 3

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