For retailers, each year brings new products, promotions, ways of doing business, and of course, new challenges. Today, retail change is being driven by the connected, “always-on” consumer who expects instant information, a multitude of choices, and flexible, real-time purchase and delivery options. In order to remain competitive, retailers must adapt and center their organizations around consumer-centric processes and organizational alignment. A focus on supply chain efficiencies through the years has helped some retailers keep pace. They have adopted a level of sophistication that allows for better demand forecasting, enabling new efficiencies in planning, promotion, pricing, inventory management, and yes, transportation.
Transportation challenges, in particular, can impact retailers’ abilities to be differentiated and competitive as they seek the right balance between transportation optimization, shelf space and inventory in their quest to reach operational excellence. As such, the need for retailers to focus on profitably optimizing their transportation network has never been greater.
“While globalization, increasing input costs and higher customer expectations remain the usual suspects when it comes to day-to-day challenges, the latest retail trends are adding pressure in a very competitive market,” said Fabrizio Brasca, vice president, global logistics, JDA Software. “Forward-thinking retailers must evolve their sourcing and transportation strategies to be prepared for changing market dynamics. As such, evaluating their transportation planning systems to optimize the movement of goods across the distribution channel is a must in 2012.”
To successfully leverage transportation as a competitive differentiator, JDA® Software Group, Inc. (NASDAQ: JDAS), The Supply Chain Company ®, offers key strategies that retailers must consider to address emerging trends impacting their efficient logistics operations:
- Multi-Channel Retailing. Not long ago, a retailer’s transportation focus was on loading trucks and shipping into distribution centers and stores. The recent increase in parcel activity due to direct consumer fulfillment is changing the modal mix for retailers, resulting in a whole new set of transportation challenges. With the influx of online ordering and mixes of fulfillment strategies, retailers must be prepared to accommodate these broadened requirements. Adopting an integrated, holistic approach to transportation processes and systems will help better position retailers to consider added volume as part of their standard supply chain policies. As a result, they will have the ability to allocate their modal strategy more evenly across the network to keep service levels high and meet consumer demand for on-time shipments.
- Shelf-Connected Supply Chain. To compete and thrive in a consumer-driven environment, retailers and consumer goods manufacturers must collaborate differently than they have in the past. They must quickly and profitably respond to the choices that consumers make at the shelf and across all buying channels. This has prompted the emergence of the shelf-connected supply chain. Key to the shelf-connected supply chain is the practice of intelligent and localized assortments to provide customers with the choices they want. However, this can only be achieved with an increased focus on operational and fulfillment excellence, necessitating the right transportation network to support it. The bottom line is that the accelerated adoption of these hyper-accurate shelf-sensing systems leaves no room for error, and increases the expectations and pressure on manufacturers to fine-tune their logistics systems so that they can deliver on-time and in-full.
- Pop-Up Retail. Popularized by the seasonal Halloween costume and holiday toy locations, pop-up retail stores have risen in popularity. This has given big-box retailers much to consider when it comes to appealing to seasonal niche markets and creating unique shopping environments that engage customers and increase brand relevance. Yet these seemingly simple-to-operate pop-up stores can have far reaching implications on the dynamics at work within their transportation network. With many pop-up stores, space is limited, making carefully timed shipments critical in ensuring a regular pipeline of product is headed to the store. For the many mobile pop-ups that literally disappear at the end of each day, only a small amount of stock can be stored. These conditions change the transportation network dynamic through smaller and more frequent shipments, which have the potential to increase network costs. For this reason, it is critical that retailers look at their network holistically and focus on network optimization strategies to mitigate the complexity and cost.