Findings of Retail Supply Chain Research (2012) - Part 1 of 4

Retail landscape is constantly changing. Players win or lose based on how well they manage their critical supply chain links.

 The analysis of the acquired information in the context of global supply chain management scenario and challenges has been used towards the key findings presented in this section. The findings of the study show the capabilities of supply chain management. We break down the results from our study into: (1) Current capabilities of the retailers in terms of managing supply chain, (2) Retailers' supply chain challenges and immediate cause of concern, (3) Supply chain areas where retailers look to invest, and (4) Changing supply chain challenges over last 3 years to next 3 years.

Today I am going to post the part one of the research, which is the - Current capabilities of the retailers

A.    Current Supply Chain Capabilities of the Retailers

TABLE VI
Important Current Supply chain capabilities

Retail Sector	Percentage
Warehouse Management Distribution Management Demand Forecasting	48% 32% 28%

Table VI depicts top important current supply chain capabilities which the companies feel are managing it well. 48% of the companies mentioned that they have strong Warehouse management systems in place. Currently we find retailers are adopting automated materials handling in a big way. Highly automated storage and pallet building system would take much of the human element out of the equation. Through dense storage, companies are able to accommodate a high number of SKUs in a reduced footprint.

Distribution Management is another area we found retailers are doing well. Some of the retailers are doing well by using centralized distribution system and others like Macy's, Kmart and T.J. Maxx are implementing DC Bypass technique. DC Bypass, which acts as "floating warehouse", replaces "push" distribution- with “pull” distribution, in which a retailer pulls out of its supply chain only those products its inventory information indicates that customers are buying.

Retailers have made significant investments in optimization technologies, particularly around price and labor, and demand forecasts come hand-in-hand with those capabilities. However, Retailers have trouble incorporating this information into the way they conduct business [17].

Companies which already have these capabilities may not think of making any investment for next 2-3 years but these factors become immediate cause of concerns for others.