Making merchandising and supply chain integration a reality

Merchandising and supply chain integration

The potential advantages of transforming the retail supply chain are numerous—accelerated speed to market, reduced need for markdowns, more (and more profitable) sales—but for years, there was one problem: For a variety of reasons, it couldn’t be done.

Insufficient data stood in the way. Even for the information retailers did have, technology hadn’t yet advanced enough to gather it into a holistic view. Beyond that, organizational silos and internal incentives had often been constructed in ways that limited retailers’ capacity to communicate and cooperate.

Now, a few companies are taking advantage of some of the opportunities opened by the new digital tools, but many have been unable to make full merchandising-supply chain integration a reality. Many retailers continue to use their old delivery models most of the time, making flow and inventory stocking decisions in isolation, then forwarding them to logistics and distribution to determine the execution.

But agile innovation, a compressed drawing-board-to-shelf cycle, multichannel ordering, a reliance on external sourcing for experiential shopping offerings, and ever-changing customer demands are pushing their legacy supply systems and processes to the breaking point. Eventually, these pressures could prompt retailers to accept the challenge of merchandising-supply chain integration.

Digitizing the retail supply chain network

Transforming a complex, entrenched supply chain that may have served a company well for decades is a serious undertaking. Full integration involves building capabilities in four areas:

Integrated planning is the future of predictive merchandising analytics

Integrated planning enables you to see and proactively operate across the network, to collaborate at the appropriate time with your suppliers and customers, and to use all the data and analytics in the ecosystem to identify the most appropriate channel to meet and exceed your customers’ needs. This could translate to:

• Enhanced customer experience
• Optimized and efficient product flow
• Smarter inventory management
• Improved capital performance

And this phase is only the beginning. The digital supply chain continues to learn from every order, which means that over time, your entire supply chain—not just individual links in the chain—can continue to see improvement and continue to provide insights across the entire organization’s value chain.

Move your retail supply chain forward

Developing a more integrated way of working across the enterprise entails a significant amount of cultural change. This shift requires executive support, a long-term vision, and, often, plans vetted by industry experts. As you begin your journey to an integrated supply chain, consider the following:

• Make sure all digital supply chain projects have representation from all functional areas and at the leadership level to build executable solutions for the integrated capabilities of the future.
• Understand that the journey to a digital supply chain involves significant structural changes.
• Establish a digital network planning steering group from all parts of the organization to guide the organizational design and development.
• Encourage cross-functional interconnectedness to blend skill sets within the workforce to ultimately help build new behaviors, break silos, and rapidly innovate and accelerate new solutions.
• Clearly picture not only the future integrated supply chain, but also understand the present; having a baseline of current KPIs is a critical part of development.

After careful assessment of the strategic options and their impact on the culture and organization, it’s time to be decisive. A significant roadblock to most journeys is taking the first step. Pick an area of your supply chain and get started…today!

Endnotes

¹ Jeff Schwartz et al., “What is the future of work?”, 2019, https://www2.deloitte.com/content/dam/Deloitte/nl/Documents/humancapital/deloitte-nl-hc-what-is-the-future-of-work.pdf.
Jeff Schwartz et al., “The future of work: The augmented workforce”, 2017, https://www2.deloitte.com/us/en/insights/focus/human-capital-trends/2017/future-workforce-changing-nature-of-work.html.
Deloitte Consulting, “The workplace of the future is flexible and connected–but managers are still failing to set a good example”, July 12, 2018, https://www2.deloitte.com/ch/en/pages/press-releases/articles/the-workplace-of-the-future-press-release.html.