Findings of Retail Supply Chain Research (2012) - Part 3 of 4

Supply Chain Investment Strategies of the Retailers

TABLE IX

Issues most influencing long range scm planning

Retail Sector	Percentage
Green supply chain Supplier Sustainability International growth supply chain flexibility emerging markets Localized Assortment	37% 27% 23% 22% 22%

Retailers are realigning and going for modernization of their business. This includes, among other things, going green, the assortments align with local needs, expand their range of own brands, to strengthen the commitment to services and to open new sales channels and to develop, for example, with multi-channel concepts and the supply in the wholesale business. Table IX lists top issues influencing retailers’ next 2-3 years of SCM planning.

Green supply chain initiatives are the most talked about among these. Some of the initiatives, industry is talking about are- reducing energy consumption, improve fleet efficiency, and making available variety of reusable bags. Tesco has an ambitious target of being a zero-carbon business by 2050 and in the process look to actively control utility costs [20].

Supplier sustainability is a business issue affecting an organisation’s long-term profitability and has replaced monetary cost, value, and speed as the dominant topic of discussion among purchasing and supply professionals. Retailers have come up with (a) a Supplier Code of Conduct which sets sustainability guidelines for suppliers; (b) supplier self-assessment questionnaires allow them to measure their activities; and (c) supplier audits are used for large or high-risk suppliers, based on spend, country, cluster/category type, security of supply and specific business risks.

At least 23% of the retailers, we have studied, mentioned that their growth trajectory is driven more by international growth. This is going to create pressure on inventory management, fulfilment capabilities, and alternate sources of Supply and may lead to adoption of different operating strategies for end-to-end supply chain distribution and fulfilment capabilities.

Retailers look to emerging markets for their growth and Supplier chain flexibility in such markets are one of the influencing factors for long term SCM planning. Environment in emerging markets are different than those in developed countries. It becomes important for retailers to look at the supply chain infrastructure provided in emerging markets. Retailers are mainly looking at 3 factors (a) Speed: How could they get products from factory and suppliers to their retail stores; (b) Cost: How to do at the right cost; (c) Accurate info flow through the supply chain.

Retailers are focusing its business activities on the individual needs of the customers. Retailers need to support coordinated decision-making through every phase of the assortment planning process, down to macro floor space allocation for creating effective localized assortments.

We found that the economic instability is another main concern of the retail organization to manage its success in the next 2-3 years. Furthermore, the instability of the fuel prices and the challenges of multi-national competitors are the issues that affect the long term supply chain planning.

TABLE X

Elements of SCM for competitive advantage

Retail Sector	Percentage
Omni Channel retailing Real time monitoring of Supply Chain Lean Supply Chain	43% 23% 22%

Table X depicts supply chain future priorities of the retailers. Retailers think these factors to be their competitive advantage over its peers.

Retailers are feeling the need to co-ordinate across traditional and non-traditional channels—websites, physical stores, kiosks, direct mail and catalogs, call centers, social media, mobile devices, gaming consoles, televisions, advertising, home delivery, blogs and more, this has led to Omni Channel retailing (OCR) concept. OCR concentrates on a seamless approach to the consumer experience through all available shopping channels.

Real time monitoring of Supply Chain is another element where retailers look to invest. Retailers look to have real time data based on what customers actually buy, so that they can quickly and accurately supply stores with the right products at the right time. Retailers are moving to a just-in-time (JIT) approach to store management by only holding the stock that it needs.

Retailers will continue to streamline cost structure, enabling them to make strategic investments in initiatives that will jump start growth and run its business around the principles of lean thinking. It also includes coordination and collaboration with channel partners, who can be suppliers, intermediaries, third-party service providers and customers. In essence, supply chain management integrates supply and demand management within and across companies. Implementing lean SCM requires a radical evolutionary step in network process and design, requiring integration of supply chain functions within the enterprise.