Supply Chain Gaps

Inventory balance is an evolving science, and at times a game of luck. For retailers, decisions on inventory purchases, often made months before items actually hit the shelves, necessitate considering consumer confidence levels and projected spending. Unfortunately, today’s demand forecasting activity continues to be built around a store-centric demand model, without the acknowledgement of multichannel retail. The, “State of Cross-Channel Retail Supply Chain Execution,” benchmark report, conducted by Aberdeen Group Retail and Banking, revealed that in response to global demand volatility and increasing consumer desire for cross-channel shopping, retailers are looking to increase forecast accuracy, supply chain responsiveness, and flexibility within their supply chain.

Real Time Data for Better Supply Chain Management

Out of the 65 multichannel and store retailers surveyed, 50 percent indicated that they have no access to real time inventory and order data. As a result, they order too much and the extra inventory is carried on the books as an asset, added to the net profit, and therefore taxable. Or, like the recent mishap experienced by electronics retailer, Best Buy, they are unable to fill orders because some products run out of stock, requiring steep discounts later.

To better handle supply chains, 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. Retailers looking to deliver on their promise to meet demand must also understand the technology consumers are using to learn about and purchase products outside of the store. According to the study, 69 percent of retailers say they don’t have programs in place that would enable them to see their suppliers’ inventory levels. Retailers are faced with the reality that they need to find a better way to forecast demand for inventory, while 55 percent of multichannel retailers and 41percent of store retailers say they are also trying to get a more accurate read on store and product-level inventories.

This article has been adapted from a piece on