Monday, October 12, 2015

The Supply Chain

English: An illustration of a company's supply...
English: An illustration of a company's supply chain Deutsch: Darstellung der Lieferkette eines Unternehmens (Photo credit: Wikipedia)

In today's retail environment, it is more critical than ever that your supply chain functions properly to insure that your stores have the proper mix of merchandise available both in the store and available for delivery to your customer.

However, even in the best of companies problems can occur in the supply chain whether there is one store or many. It is vital that the supply chain functions properly but problems do occur.

Here are some examples of supply chain failures that I have observed recently:

  1. Over the last few years a major chain has created a new format of stores that are smaller than their tradition store. However, the people who were in charge of the program have moved on  leaving the small stores to be treated the same as large stores which means they are getting the same amount of merchandise as the large stores despite their lack of space both for merchandise and back stock. 
  2. Stores in one company are once a week receiving a large amount of seasonal product after the season has ended but not a random selection of items but a large amount of one item. In some cases the stores receive a seven or eight year supply of product. 
  3. In another store I scanned product to see how many weeks of a slow selling product a store has on stock and their inventory system calculated that there was a 4300 WEEK supply of the product on the shelf. No that is not a typo, the store was sent an 82 year supply of a product that will expire in less than a year. 
  4. Stores that are over stock on merchandise for a certain season but have many empty shelves in their everyday aisles. 
While these are some extreme examples you could probably find these type of problems at almost any retail business. What is most distressing is the amount of money that this is costing stores and affecting their customer service. 

Here are some places to look when you evaluate the performance of your supply chain: 
  • How are the sales matching the amount of product being ordered. Are the buyers ramping up on seasonal merchandise while ignoring the important basic items that your customers are going to be looking for? In addition are the buyers purchasing the right mix of merchandise on a consistent basis? Even the best buyers have hits and misses when it comes to purchasing merchandise but if there is too many misses and not enough hits then there is a problem. 
  • Are you receiving the product from your suppliers in a timely matter and if problems do occur how well do your suppliers take care of the problem or do they pass the buck? 
  • Is the warehouse whether run by the company or by a 3PL logistics company dumping product into stores that should not be receiving it in order to make their operation look better? How well does the product being shipped out match with sales history and with the up coming promotions that are being run? 
  • If your operations has multiple styles of stores does your supply chain calculate properly the proper amount of type and amount of merchandise that should be shipped to each store depending on their sales and size? 
  • Are the stores that receive to much merchandise or the wrong products for their format taking care of the product in a timely matter either by shipping it to a store that needs the product or finding room in their own store to merchandise it or is it sitting on some backroom shelf until it becomes a clearance item? 
These are just a few examples of things that should be looked at to solve supply chain issues. In today's connected marketplace customers are expecting more than ever to find the product they are looking for quickly and easily or they will go somewhere else so it is vitally important to insure your supply chain is function properly and the stores are being stocked with the right products. 

How well is your supply chain functioning? 

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