The Agile Retail Supply Chain

Most small retail business employ two supply chain models– one is direct into store delivery and the other is delivery to one site and dispatch to multiple sites.

This traditional model is demonstrated in the side panel and shows that the end to end process is controlled by Retail from the ordering of stock through to the arrival of the stock instore or at a Shop through to the sale of the product or the eventual return.

While there is an element of control for the merchandise buyers in this supply chain, there may not be efficiencies as the merchandise buying staff have skills in buying stock, not necessarily in dispatch and logistics. As a retail business moves forward into getting the most out of their point of sale (POS) system there is also a need to free up staff time to manage this system, review reports and to inform suppliers downstream if a product is over achieving to ensure future deliveries to satisfy customer demand.

Within the logistics team of a business there is usually knowledge, skills and experience in dispatch and this experience could help the small business to develop some efficiency within the supply chain, especially at the pick, pack and dispatch stage of the value chain.

Thomas Choi and Tom Linton reviewed supply chains in their 2011 HBR article entitled ‘Don’t Let Your Supply Chain Control Your Business’. The main emphasis of the article was not on the picking, packing and dispatching of products but on the need for businesses to work with suppliers (especially low-tier suppliers) to have more market information to help aid innovation to grow new sales opportunities.

In many retail shops today we are spending the bulk of the available time within the merchandise buying team either ordering stock or dispatching stock to Shops in order to satisfy customer demand. This is a normal aspect of a rapid growth cycle These means that you are increasingly spending less time speaking to the suppliers about market conditions, what is and isn’t selling and working with them to develop new items for the business or to increase different lines to drive growth. The POS system can provide all of this information as long as the team has the time to interrogate the data and interpret this for management and the suppliers. During rapid growth the goal is just to get stock on the shelf, not necessarily on getting the business ready for the next stage of growth. Once the business gains maturity then this next stage of supply chain management becomes imperative.

Martin Christopher in 2000 wrote ‘The Agile Supply Chain’. The key premise of this paper is that organisations should be interrogating their data from the POS systems to inform up stream suppliers about the activity that is occurring down stream. An example is that when we bring in a new product, such as helicopters, that if we see via the POS within days that the sales will exceed our current expectations that we can share this information to get the supplier to re-order and deliver just in time prior to the stock selling out. Another example is sharing street directory sales with a supplier after a recent change to publication frequency to show the effect of stalled sales down stream.

This concept allows retailers to develop an agile approach to stock ordering and delivery to create lean just in time strategies while also working with suppliers to inform them of demand for their product.

With maturity in a business there is a natural transition from reactionary buying and supply chain management into agility and working with suppliers in order to sustain continued growth. A model for this enhancement to the supply chain is in the next panel.