Making Order Out of Chaos in Today’s Multi-Source Retail Supply Chain.

Origin/Destination Services, Retail, Supply Chain
June 19, 2013

How do you tightly manage thousands of SKUs from vendors around the world?

Keeping Chaos at Bay

When Edward Lorenz established the concept of chaos theory in the 1960s, he wasn’t thinking of retail supply chains in 2013. And yet, the sheer complexity and number of variables that comprise the modern retail supply chain make it a perfect model of how quickly a few unexpected events quickly lead to chaos.

supply chain management

Consider a central tenet of chaos theory, the butterfly effect, where a butterfly flapping its wings in one place causes a storm elsewhere. Now, I’m not convinced the butterflies can really alter weather patterns. But I do know that in any given supply chain, the smallest failure can result in a cascading series of impacts.

Building, Renovating and Optimizing Your Retail Supply Chain

This is particularly true when it comes to today’s complex, multi-source retail supply chains, made up of unique combinations of hundreds and even thousands of branded and private label SKUs sourced all over the globe.

Not surprisingly, the potential for small failures to stir up big storms rises exponentially with the number of sources and locations. That’s why it’s critical to build or renovate a supply chain that can take whatever weather comes its way. Ultimately, supply chain execution directly impacts your ability to deliver on your promise to your customers.

At the very least, ensuring effective execution means having a strong, flexible supply chain that offers end-to-end visibility and gets products to market faster so you can focus on your customers and your business. It also means being able to overcome the two major challenges facing retailers today.

Top Two Retail Supply Chain Challenges

Retailers face two major challenges when it comes to managing today’s uber-complex supply chains:

  1. Building a cost-effective supply chain: that can handle the tightly scheduled production and movement of goods and scores of complex business relationships with suppliers, logistics providers and other supply chain stakeholders
  2. Complying with regulations: governing the movement of goods across international borders.

Five Ways Savvy Retailers Overcome Supply Chain Challenges

These aren’t minor challenges. However, retailers who can overcome them stand to gain a definitive edge. Here are some of the steps savvy retailers are taking to solve them. They:

  1. Evaluate: transforming supply chains begins with an analysis of where branded and private-label products originate and assembling a supply chain to move goods from source to store and/or fulfillment center with maximum efficiency.
  2. Optimize: they optimize supply chain routes and transportation modes to accommodate different products and sources based on the international locations of suppliers, fulfillment centers, distribution centers and stores.
  3. Leverage technology: for example, to get visibility across the supply chain to ensure product meets ship dates and need-by dates.
  4. Know the regulatory terrain: Today’s importers must learn how to comply with the rules and practices of the destination country.
  5. Partner smart: many team up with strategic supply chain providers that understand the art and science of supply chain management, solving today’s challenges with an eye to enhancing tomorrow’s shareholder value.

Do you have a complex retail supply chain? Are you sourcing hundreds of products from multiple vendors? How do you keep small events from turning into chaotic problems? Share your thoughts.

To learn more, download a PDF of a question-and-answer session done with Chain Store Age magazine about the challenges of managing multi-source retail supply chains.

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