4 Ways to Address Multichannel Supply Chain Challenges

Jan 12, 2012 3:17 AM  By

Since demand has been so volatile in the past couple of years, merchants are having a tough time determining accurate inventory levels in their retail supply chains and channels. It’s either been too high or too low. Correctly forecasting inventory levels has become a struggle for many multichannel merchants.

For those merchants looking for some much needed assistance in this department, this new study by the Aberdeen Group – titled “State of Cross-Channel Retail Supply Chain Execution” – offers some tips to address those multichannel supply chain challenges. Here’s four we think are of great value.

Balance multichannel and store-based logistics operations needs. Currently, 38% of merchants support shipping and fulfillment for online and call center orders using a direct-to-consumer/store delivery model. Merchandise availability (69%) and order efficiency (64%) are the top two strategies of the best-in-class when it comes to integrating disparate channels. Merchants should review and upgrade their inbound and outbound processes, distribution center models, direct-to-store or consumer, and cross-docking processes. Then they can potentially reduce cost per unit or order handled, increase same-day shipping rate, reduce labor cost to sales, and improve overall fulfillment rates.

Integrate multichannel demand forecasts with supply chain execution. Merchants should adopt unit-level demand forecasting unified for all business units and channels. This date should be aligned with promotions management, assortment mix, and inventory allocation processes. This will ensure shelf-level replenishment and in-stock focus. According to the study, 61% of merchants lack this capability.

Create visibility toward unit level inventory with suppliers. Nearly 70% of merchants surveyed are not using enterprise-wide visibility tools to determine upstream and downstream unit-level availability. Merchants should focus on multi-user, multi-warehouse inventory flow processes and enablers – particularly important in the area of inbound product flow.

Align supply chain execution metrics. It is critical to align merchant and supplier metrics so that both groups are using the same standards to gauge success. The most important metrics should be lead times and inventory service levels.

Jim Tierney (jim.tierney@penton.com) is a senior writer for Multichannel Merchant. You can connect with him on Twitter (TierneyMCM) and LinkedIn, or call him at 203-358-4265.