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Joseph Roy

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  • Posted on: 10/11/2016

    Supply chain management: Lessons not learned

    The retail supply chain is outdated and focuses on costs and efficiency. The retail "consumer chain" focuses on revenue and attracting new customers (speed in development, information and supply). Many retailers have seasonal or one-time purchase strategies and ongoing replenishment strategies. A consumer chain mindset links supply to both daily consumer demand and to changes in merchandise strategies resulting from lack of demand especially during promotional time periods. Anyone can respond to changes in demand -- only those focused on growing revenue and adding new customers will design store supply strategies that support weekly changes to the merchandise plan with merchandise delivered to all stores in the same week. Focus on replenishment items and develop your seasonal (one-time buys) merchandise exit strategies before the first item is shipped to a store. If you do, your company will begin to see higher in-stock rates and lower inventories. In fact, in-stock rates rose to 99.1 percent while inventories decreased by millions of dollars. We did this 18 years ago and I don't see any significant changes soon -- corporate culture has little tolerance for risk, and most organizations rely heavily on forecasts to manage inventory. Retailers need strong operations people to challenge existing supply chain mindsets.
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