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Retail Supply Chain Everything You Should Know

Retail supply chains around the world are under intense pressure due to global disruptions. However, what is the retail supply chain?

This article will discuss what a retail supply chain is. We will also tackle retail supply chain management and its importance. Additionally, we will give you an example of a retail supply chain and how to improve your retail supply chain management amidst the challenges. 

Once you finish reading this article, you will have a deeper understanding of the retail supply chain. Thus, this will allow you to implement the knowledge you learn from here in your company or profession. 

The Meaningof Retail Supply Chain

Many people have an idea of what a retail supply chain is due to the word “retail”. When we say retail, it is the sale of goods and services to consumers. Therefore, if we combine it with the supply chain, we know that it is inclined with how a product moves. 

The retail supply chain is the flow of processes that involves the production and distribution of the products of a company. There are various discrete elements of a supply chain which include procurement, order management, inventory management, warehousing, carrier partnerships, and more. 

To simplify the retail supply chain, many companies refer to it as the logistics processes that enable the product to reach the end customers. It encompasses everything from acquiring the raw materials you need to make the product to delivering that product to your customers. 

Whatis Retail Supply Chain Management?

Retail supply chain management ensures that the logistics operations of a business are optimized throughout the supply chain, from obtaining raw materials to delivering them to customers in the product cycle. 

Additionally, it refers to the way managers handle the inbound and outbound logistics of goods. Supply chain managers optimize supply-side processes to cut costs, deliver products faster, and gain a competitive advantage in the market against other businesses. 

Through retail supply chain management, you can streamline the processes to maximize both speed and efficiency. You need to deliver the products to your customer quickly to satisfy them. However, you do not want to pay too much just to do that. Thus, optimizing your processes is the key to being cost-efficient in managing them. 

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The Importanceof Retail Supply Chain Management

Many people overlook the importance of retail supply chain management and undervalue its impact on business operations. However, retailers cannot do it anymore nowadays. 

According to a report by the National Retail Federation (NRF), almost 65% of consumers look up free-shipping thresholds before adding items to their online shopping carts. 

Additionally, 39% of the consumers surveyed expect two-day shipping to be free of charge. If you do not offer this, consumers will try finding other online shops. Also, 29% of consumers opt not to buy anymore if they know that two-day shipping is not free. 

Many retailers are falling short of meeting the customer’s expectations. Those businesses that can provide the best shipping experience will see a big impact on their costs and can gain some advantage against other competitors. 

For you to stand out in the retail industry, your fulfillment process and ability to deliver the products can set you apart from the others in the competition. 

An example of a Retail Supply Chainfrom the founder of Procurement Tactics:

“In my period as Procurement Manager for Ahold Delhaize, I learned that there is a strong link between the performance of buyers and the supply chain. The better the two departments work together, the better the result for the company! The lessons I learned this year in helping many companies in improving their procurement and supply chain teams & processes, confirmed this. In my opinion, both departments should work closely together to achieve targets. To work together as closely as possible,  I had a weekly meeting with my supply chain manager every week to discuss subjects like:

  • Supplier performance last week
  • Outlook next week
  • Which products are not available to deliver and why?
  • Outlook coming 3 months

As a procurement manager, I pushed the supply chain team to always be in the lead of supplier escalation in case our standards were not met. If suppliers were not able to deliver products, I first let the Supply chain Manager contact them. I, as a negotiator, wanted to be an escalation possibility.

Examples of what I did with my Supply Chain manager together are: 

  • Visiting suppliers
  • Quarterly review with large suppliers
  • Set targets for next year and communicate those to suppliers
  • Made promotion outlook

Challengesin The Retail Supply Chain

1. Worldwide Shortages

Worldwide shortages disrupted every element of the supply chain due to the pandemic, the ongoing war between Ukraine and Russia, and other trade disputes. 

Shortages are now getting worse and everyone is affected, not just retailers. Thus, making it hard to get the necessary supplies and inventory.

2. Shipping Congestion

Retailers are facing shipping congestion in major ports due to what is happening in the world today. The long delays are increasing shipping times and creating longer wait times to unload the cargo at the ports despite handling fewer cargoes. 

The active container shipping supply has also decreased due to the shipping congestion. Thus, it removed about 16% of global container ship sailing capacity compared to the last two years.

3. Economic Sanctions

Economic sanctions had strained the speed of supply chains. Many countries continue to issue sanctions against Russia. Russia retaliates by also issuing sanctions against them. Therefore, there have been many changes in terms of trade among countries. 

The sanctions between nations are not slowing down and are expected to continue further. Thus, affecting many business operations in the coming months and years. 

How to ImproveThe Retail Supply Chain Management

1. Implementing Retail Systems

Implementing a good supply chain system can oversee the entire production process, from obtaining raw goods to manufacturing and sending them to customers. You will have a high chance of a successful supply chain by integrating retail systems. 

Additionally, you will get real-time visibility into all areas of your business. You can also avoid overselling stock and spend less time reconciling your inventory.

2. Enhance the accuracy of forecasting

Demand forecasting can help know what products consumers will buy and projects your future revenue. It will also help you make decisions about your product offerings and inventory, decreasing stockouts and maintaining your cash flow.

3. Applying reverse logistics

Processes like recycling or returns require reverse logistics. Reverse logistics helps you to regain value from your products or dispose of them. Due to the fact that returns harm your profitability, and most customers say that they will not shop with businesses with poor returns, reverse logistics is a significant process to get it right. 

Frequentlyasked questions

+ What is a retail supply chain?

It is a logistics process that allows the products to reach the customers. 

+ What is retail supply chain management?

It is the process that ensures the management of outbound and inbound logistics of goods.

+ Why is it important?

It is important due to the increasing demand and expectations of customers that companies need to address. 

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