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Retailers should pay more attention to supply chains in 2012, a report urges
Half of retailers don’t have access to accurate inventory and order data, Aberdeen says.
In the wake of mishaps that left some online customers without their holiday orders earlier this month, a new report from Aberdeen Group urges retailers to get a better handle on their supply chains. In general, the report says retailers need to improve the responsiveness of the links in their supply chains and increase their ability to see how chains operate in order to avoid both out-of-stock and overstocked items.
Half of the 65 multichannel and store retailers that responded to the November survey from Aberdeen say they have no access to real-time inventory and order data, which Aberdeen says makes those retailers vulnerable to shifts in demand. The report says 30% of retailers have an average stock-out rate of more than 7%, which means lost revenue for retailers. A stock-out rate is the ratio between the total value of out-of-stock items and total revenue.
69% of retailers say they don’t have programs in place that would enable them to see their suppliers’ inventory levels. “It is essential to establish visibility for all internal and external extended supply chain stakeholders,” the report says. “It is critical to align retailer and supplier metrics so that both groups have the same standards for success.”
Retailers also say finding a better way to forecast demand for inventory is a top priority. 55% of multichannel retailers and 41% of store retailers say they are trying to get a more accurate read on store and product-level inventories.
Hiccups in demand forecasts and the supply chain apparently caused problems ahead of Christmas for at least two major online retailers. Just three days before Christmas, electronics retailer Best Buy told customers that it was not able to fill some BestBuy.com orders because it ran out of some products it offered at steep discounts the weekend following Thanksgiving. Similarly, in a Dec. 21 e-mail to affected customers, upscale department store Barneys New York canceled some online orders, citing a technical issue in its order management system as having caused the retailer lengthy delays in responding to order requests. “Rest assured we are working around the clock to repair these errors and ensure that they do not occur again, but nonetheless you order was canceled as we no longer have the inventory to fulfill it,” the e-mail said.
Best Buy Co. is No. 11 in Internet Retailer’s Top 500 Guide. Barneys New York Inc. is No. 222.