Retail warehouses are an endangered species, says the new Virtually Vertical: The Supply Chain Model for the Collaboration Era report from retail consultants Kurt Salmon Associates. David Cole, chairman of Kurt Salmon Associates, previewed the report to attendees at the general session of the Retail Systems 2002 conference in Chicago Wednesday. “Retail warehouses will disappear as we know them,” Cole said. “They will be replaced by flow-through centers, never-out-of-stock centers or direct-to-store shipments.”
The change will take place as the result of closer collaboration between retailers and suppliers, much of which will take place on the web. That collaboration will reduce the time it takes for a product to move from order status at the manufacturer to the store from 72 days today to 45 days, Cole said. “60% of merchandise will flow straight to the store without intermediate stocking,” he said.
Cole’s comments came at the start of the Management Futures Summit: Executing for Supply Chain Excellence and Profitability. The panel discussion featured Mark Hansen, chairman and CEO of Fleming Cos. Inc., Tom van der Lann, senior vice president of international customer management for Unilever N.V., and Tom Cole, chairman and CEO of Federated Logistics. All agreed that the keys to successful supply chain collaboration are developing trust among the participants, involving merchants in a retail organization and not just supply chain managers, leveraging existing technology and developing international standards. “E-collaboration will be driven by absolute trust throughout the chain,” van der Laan said.
Hansen urged attendees to make the technology investment necessary to effect collaboration. “Technology investments have been at the upper end of the return scale relative to other investments,” he said.
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