How to build a better supply chain with Business Intelligence
A long time ago, the supply chain was a self-contained business function; which involved the warehouse management and supply chain analysts. Although with the advent of omnichannel retailing, the supply chain affects everyone in the organisation and the collective organisation’s ability to deliver. Now, the supply chain is everyone’s business and one of the most important factors contributing to the success or failure or retailers these days.
There are a lot of points in the supply chain where things can go wrong, and there have been numerous well publicised instances of companies which miss their numbers because of issues with supply chain.
It is not a big surprise that companies are placing a bigger emphasis on supply chain operation, developing a new C-level post for supply chain operations. Due to the various challenges and intricacies in this crucial area, retailers are doubling down in business intelligence for improved supply chain visibility for greater efficiency, cost savings and on time delivery. Also, BI is becoming essential for all retailers to address the demands of customer experience, which is at the centre of omnichannel retailing.
The manufacturing and consumption of products on a global scale has increased supply chain complexity and contingencies. Particularly, apparel retailers have struggled with skyrocketing raw material costs. To deal with this, retailers have expanded their time horizons to lock in prices on raw materials further ahead than ever before. They’re also diversifying their supplier base to mitigate risk in an effort to eliminate dependencies, take advantage of lower labour rates in certain geographies, and lessen the impact of inevitable weather issues, natural disasters, and socio-political unrest.
Moreover, the advent of fast fashion has introduced enormous pressure to wring costs and time out of the supply chain; today it’s now not unusual for a retailer to design, manufacture, and send a garment to market in just 15 days – consistent with the need to keep customers satisfied with ever-changing offerings that reflect the most current trends and are priced to move.
Assortment planning and allocation requirements necessitate even greater reliance on visibility within the supply chain. When the goal is to create profitable assortments and bring them to market quickly to meet short consumer buying cycles shaped by seasonality and fast-changing fashion trends, every day an item is not on the store floor – whether due to a lack of demand insight, sourcing or transportation issues – is a lost sale that can represent a significant hit to the bottom line.
To meet today’s omnichannel inventory fulfilment demands like shop online, pick up in store, retailers must ensure inventory is positioned in the right locations across the supply chain to support multichannel selling. These new options for consumers are further complicating the already complicated job of putting inventory in the right places and also tightening time consultants.
The days are gone when retailers planned for a volume production of goods ordered one year in advance. With the proliferation of omnichannel orders, the fulfilment window had shortened considerably and the data from those diverse channels must be compiled, analysed and shared so that the organisation can act as needed.
What is more, to remain profitable in today’s “buy anywhere, source from anywhere” omnichannel model, retailers need to fully understand the cost of product fulfilment: moving inventory is expensive. The reality is that while the customer may want certain options, the retailer must be able to offer these options in a way that’s economically feasible.
In response to these business realities, retailers have to track and trace products in the supply chain so that they can manage the flow and react to challenges and opportunities. However, accomplishing this is challenging for many reasons – there are multiple players, multiple data sources and a myriad of potential issues that can arise.
As a result, tracking and analysing the variety and velocity of data manually is too cumbersome, too complex and too slow. BI provides the means to understand the intricacies of demand and inventory tracking. By providing insight on where goods are throughout the supply chain, retailers – together with their suppliers – can now make intelligent decisions that are of benefit to both the retailer and customers, and make sure that the right merchandise can be delivered on time, to the right locations and in the right quantities.
BI gives retailers the ability to ask questions about their business and get actionable answers, and the fundamental question that BI always stands ready to answer is this: how can I understand the breadth and complexity of the business so I can react intelligently using more fact-based decision making? Today, data is buried in so many places it’s difficult to get the data together and even harder to compile a coherent picture for analysis. As such, BI is the great equaliser of information in the retail enterprise. By amalgamating a wide variety of source data systems, it offers retailers the only comprehensive view of business operations.
In many ways, BI is akin to the role of an air traffic controller – your retail organisation has many planes in the air moving at different speeds, along different vectors, and in and among different locations. It is important to have data on every plane in the air so you can orchestrate their movements for overall safe, smooth friendly skies.
As well, BI provides a yardstick that enables the company to gauge performance so everyone is on the same page. If you can measure, you can then modify parameters to meet and exceed new goals. BI measures and distributes that measurement to the organisation.
With greater visibility through BI, retailers can now intelligently plan where to put people, inventory and overall investments to improve supply chain operations, assess performance, and then act to optimise this performance to mitigate supply chain disruption and meet today’s omnichannel retail demands.