“Brexit” the Brick-and-Mortar-Only Supply Chain Strategy [Free Checklist  to Take Back your Profit Margins]

July 5, 2016 Peter Edlund

Recently Great Britain voted to leave the EU. The very next morning, Wall Street tumbled 500+ points after the opening bell. The "Brexit effect"  influences more than just Great Britain and the EU. There's a change in the air that's starting to reshape the way you run your supply chain. 

Proponents of “Brexit” viewed the decision as the necessary one step back toward a more promising two steps forward. Opponents speak to the beginning of the decline of a united Europe with repercussions to be felt worldwide.

Either way you look at it, change is in the air. Last week it was felt in Europe. If you work in the retail space, you’ve felt it for some time now.

"Brexiting" The Brick-and-Mortar-Only Strategy

Tried and true supply chain processes of the brick-and-mortar era are suddenly less efficient in keeping up with today’s consumer demands. Some in the industry see the market shift to online retailing and omni-channel marketing as a beginning of the decline in retail storefronts, while others have a more opportunistic view.

Either way, omni-channel and vendor drop shipments have many in retail considering an “exit” from the brick-and-mortar-only supply chain strategy. Listen to Dr. Paul Dittmann of the Global Supply Chain Institute at the University of Tennessee discuss the evolution of the supply chain

For instance, while not a pure play comparison, Amazon is now significantly more valuable than Walmart despite the fact that Walmart has triple the revenue.
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With an estimated product selection of 300 million+ products (compared to 6 million products on Walmart.com, according to a 2015 estimate) it is clear that Amazon has mastered the art of online shopping, and more importantly, the logistical handling of drop shipments.
 
As a result, consumers have become increasingly drawn to the ability to stay at home, shop, and have their product(s) arrive at the front door - leaving traditional brick and mortar retailers scrambling to establish virtual stores on the internet to stay relevant. As the pure play dot com players and hybrid brick and mortar/dot com providers drive for more product on to the web, the number of Consumer Product Goods (CPG) companies that have to support drop shipments is growing.

 

WHAT RETAILERS NEED TO COMPETE:

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□ Real-Time Supply Chain, Inventory & Merchandising Data

Brick and mortar retailers are struggling to retool as many of these traditional systems were not designed for the real-time nature of web retailing. (If you’re a DiCentral client, you can use DiMetrics to be alerted when there are bottlenecks and violations of established guidelines.)

□ A ‘Limitless Aisle’

In the past, retailers were limited on the number of products they could offer. In the virtual world, there are no limitations and capital is not tied up in physical product. As a result, expanding product assortment in the online world is used a competitive tool.

 Consistency Across Channels to Maintain Image and Quality

Working with suppliers that can conform to a compliance standard is mandatory. Compliance may entail shipping rules, responsiveness to fulfillment, packaging, and labeling.

 Transaction Visibility and Dashboards

The ability to escalate problems and bottlenecks quickly is critical, as the entire nature of the system is designed to be real-time.

If you are not using DiCentral to manage your order and fulfillment process, make sure your company’s visibility tools can enable you to:

□ View which suppliers are having issues and problems meeting compliance guidelines and thresholds;

□ List which products are in demand and which are not;

□ View product flows and potential bottlenecks, such as order amounts, the number of outstanding unfulfilled suppliers, and how many orders have not been shipped on time.

□ View open orders vs. completed orders

□ Monitor compliance amongst suppliers

 Item Management

Tools to store and synchronize product attribute information received from suppliers

 Supplier On-boarding tools 

Tools to enable, test and integrate EDI transaction flow to suppliers

WHAT SUPPLIERS NEED TO COMPETE:

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□ Product Attribute Information 

On-line retailers need product information such as pictures, colors, sizes, weights and other specifications. Creating and maintaining these product tables as well as synchronizing them with retailers is now a mandatory responsibility.

□ Inventory Visibility 

To minimize out of stock events, ecommerce retailers demand frequent inventory updates. Your fulfillment systems and process must support frequent synchronization of your inventory with your customers’ ecommerce platform.

□ Support Real-Time EDI Transactions

This includes purchase orders, purchase order acknowledgements, advance shipment notices, and invoices, which are now the necessary subset of documents needed to support on-line retailers. Make sure you have an ERP adapter to integration these transaction flows from your customers into your ERP system. 

□ Support for Shipping Labels and Branded Packing Slips

(Dictated by the retailer) may also now be a requirement.

□ New Logistics Strategy 

In order to support the online needs of customers a new set of processes, procedures, and relationships need to be established. Delivering a product might have historically been a truck-load compared to USPS, FedEx or UPS in the drop-ship world. Make sure your company can support web services integration with the major small parcel carrier that you and your customer can review in real time.

□ Order Visibility

The frequency of ecommerce orders will increase the demands of your fulfillment systems and process. The ability to monitor and adjust order flow is critical to the success of any ecommerce fulfillment process.  If you are not using DiCentral to manage the entire order and fulfillment process, make sure your company’s visibility tools can enable you to:

□View open and closed orders

□View customer specific performance metrics such as on-time

delivery and timeliness of inventory updates.   

□Track customer transactional volume by document type within a specified timeframe

□Identify trends that are based on order variances within a specified timeframe

□ Compliance Management System

These systems ensure that you are in compliance with the unique rules of each retailer regardless of whether they are a brick and mortar or a dot com site. If you’re a DiCentral client, you can use DiMetrics to be alerted when there are bottlenecks and violations of established guidelines.

If you are not using DiCentral, make sure your company’s visibility tools can enable you to receive preemptive alerts when unfilled activities approach a violation threshold.

To develop a strategy for technology-enabled collaboration, download the study below

 

EDI Study





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