March 24, 2006, 12:00 AM

Keeping the river of products and information flowing to stores

Internet Retailer

Supply chains are like rivers: They deliver a constantly changing flow of products into a retailer’s distribution centers, warehouses and stores. But they also serve as a flow of information about the specifications, financing and movement of those products-a level of information that, thanks to the web, is becoming more accurate, timely and useful in getting the right products to the right stores as well as web site and catalog warehouses at the right time to meet customer demand.

“That’s the Holy Grail,” says Paula Rosenblum, director of retail research at research and consulting firm Aberdeen Group Inc. “The industry leaders are doing it, and now that multi-channel retailing is making money for folks, and not being just a loss-leader, I expect to see more supply chains supporting multi-channel activity.”Coordinating for store pick-upOne great example of an effective supply chain supporting a high level of multi-channel customer service, she adds, is apparel retailer The Talbots Inc., whose back-end supply chain integration supports a service that lets shoppers on see if a product is available at a Talbots store, then click a button to have the item reserved for store pick-up. Talbots takes the service a step further by contacting the online customer by phone and e-mail to let her know when the product will be available for pick-up.The same system is also used in stores to check companywide inventory on behalf of in-store shoppers, who can then opt to have a product shipped to their home, office or to a store for pick-up. “That’s the quintessential world of multi-channel retailing combined with customer centricity,” Rosenblum says. “Everyone is talking about customer centricity, but few are doing something about it. But this is an example of leveraging the multi-channel environment to give the consumer choice while also maintaining a sense of customer intimacy. That’s huge.”But to compete with such a high level of service, she adds, retailers must operate with a coordinated supply chain that provides real-time access to inventory status. “You better know what your inventory is, so you need a coordinated supply chain with real-time, cross-channel visibility,” she says.Fortunately for retailers, the universe of supply chain applications is growing and being made more integrated and functional through web-based systems, experts say. Whether in packaged suites or point solutions, companies are using more web-technology-based interfaces to access and share data among multiple applications. Retailers and their suppliers also use the web to share information about sales and production forecasts, but also to share and verify what can be extremely long and detailed purchase orders and invoices.Multi-channel retailers are also learning to leverage web-based systems in improved business processes. For example, in early attempts to assure timely shipments to stores, web and catalog customers, many retailers dedicated distribution centers nearest stores or individual customers. But this can lead to inefficiency in the last leg of the supply chain, because the customer’s desired product may not always be in stock in the nearest distribution center, Rosenblum says. “Companies managing multiple distribution echelons frequently hold the wrong amount of inventory in the wrong locations,” Aberdeen says in a study it released in April, “New Ways to Master Order Fulfillment: Why Distribution Savvy Companies are Moving to Distributed Order Management.”But by using new web-technology-enabled systems, including web services to integrate the systems that manage customer orders, warehousing and supply chain communications with suppliers, retailers can match up customer orders with real-time information about the location of the desired inventory to realize the fastest and most efficient means of getting products into customers’ hands, Aberdeen says.Global based data systemTo support such system integration and effective supply chain processes, retailers and manufacturers continue to move toward a global Internet-based system of synchronized product data through the Global Data Synchronization Network. That will assure that not only can retailers and suppliers find one another’s information on the web, but that the information they share will be consistently accurate in back-end systems even as products are updated and new products are introduced. And as retailers and their suppliers move toward using RFID networks to streamline and expedite the flow of shipment information throughout the supply chain, using synchronized data will assure the information speeding through RFID systems is consistently accurate. The overall goal, of course, is that supply chains work effectively to get the right products to customers when customers are still interested and willing to pay full price.


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