A silo mentality that persists inside many retail organizations creates all sorts of managerial and operational challenges, but none more so that in the supply chain. Very few retailers consider space management part of their supply chain replenishment process and that’s a big problem, according to Mikko Kärkkäinen Group CEO of RELEX Solutions.
“This is because space is not generally the responsibility of the supply chain director. This is a typical silo-driven mentality and, in modern retailing, it exposes businesses to higher risks,” according to Kärkkäinen. “Getting supply chain managers, store supervisors and planners to collaborate in optimizing space to meet local demand both tailors the offering to each store’s market and helps ensure there’s enough stock for merchandising and promotions, that there’s room for incoming inventory and that, when it arrives, there’s space to put it on shelves. Integrating space, assortment, forecasting, and replenishment disciplines enables retailers to respond effectively to shoppers in each individual store and maximizes sales.”
Kärkkäinen’s observations are based on the new annual State of the Retail Supply Chain report, researched by Martec International and commissioned by RELEX Solutions, a provider of retail and supply chain solutions. The report is one of the most comprehensive of its kind and the findings are based on participation from 80 retailers with sales in excess of $100 Billion Euros.
In addition to uncovering overarching supply chain and space management challenges, others insights highlight areas of the greatest opportunity. For example, supply chain optimization in fresh food, the subject of a Relex ebook called, "A Fresh Take on Fresh Food Forecasting and Replenishment,” sheds light of forecasting areas such as; managing seasonal issues, forecasting promotional demand and weather-based demand forecasting.
The Fresh Take ebook and supply chain report may be European focused, but they findings apply globally as retailers look to improve the productivity of physical selling space in an omnichannel world.
“In the turbulent and unpredictable market, with e-tail’s growing presence, and with consumer expectations constantly growing, running a fully integrated supply chain is vital,” Kärkkäinen said. “Good communication and joined-up operations lead to better decisions and in turn to lower inventory levels, better availability, less waste and more sales. Yet siloing, where one hand doesn’t know what the other hand is doing, remains far too common and produces the opposite results.”