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Latest Issue: May/June 17

Technology’s role in managing the evolution of customer centric supply chains

Having an effective supply chain has always been key to retail success. Whether you call it micro-merchandising or the customer-centric supply chain, the challenge has traditionally been to quickly identify trends or activity in a store that is outperforming the norm, and rapidly roll this out to all stores with similar attributes and customer behaviours. Indeed, much of the ‘flair’ that separated well- from poorly performing retail operators was down to the ability of some key individuals to spot trends, clusters and patterns that drove better understanding of customer behaviour, and act upon these insights to deliver to customers’ demands.

This macro-level insight is, however, no longer good enough. Today, retailers need to be able to understand not only how items are performing across the entire retail estate as well as within individual stores and spot trends and patterns accordingly; they also need to be able to marry this micro-level performance to geographic and demographic information to reflect the demand from a particular store’s customers. And, they need to be able to forecast how those same items will be performing in weeks and months to come.

This is the capability that is required to truly deliver today’s customer-centric supply chain. But it demands a level of detail simply too difficult for humans to manage. Software solutions are designed to raise the average performance level by helping the poor or below average operators benefit from the expertise of the higher performers and placing this supporting technology in the hands of those key individuals who would act as district or regional manager. But the needs of today’s customer-centric supply chain have outpaced even the majority of these solutions.

Most technology works on averages or at higher levels than the item/store level because they do not have the power and capability to get down to this level of detail. This is no longer good enough. The ability to be able to process and understand the lowest level of detail is essential if we are going to create a micro-merchandised retail company with the appropriate items, displays and stock in each store that reflects the very local customer demand. To take this at its simplest form, Scotland and the south-west coast of England have very different climates and weather patterns. The same items will either not sell at all or certainly sell at different rates and different weeks in the two geographies. The relevance and importance of demand is very different in those respective regions, so why should we expect to be successful if we do not take those factors into account when forecasting, planning and executing in our supply chain?

The latest technology solutions should be able to forecast at the item/store level – and enable retailers to use that forecast to plan the space and layout of the store, plan and execute inventory and supply chain operations as well as collaborate with suppliers throughout the entire retail organisation. Creating the one forecast and using it throughout the business in this way will add to performance by reducing inventory, improving availability and presenting the store and merchandise in the most beneficial way to customers and therefore maximise sales.

In today’s customer-centric supply chain, retail is detail. Store-level planogramming backed up by store-level inventory and supply chain planning is the new level of granularity required for retail success and long-term customer loyalty.

by Andrew Baltherwick, chairman, Relex Solutions