The challenges of moving retail operations abroad
Written by Denise Oakley, GXS
Many retailers are accelerating their expansion ambitions, looking to capture new sales growth away from home in territories that are demonstrating rapid growth. The opportunities far outweigh the threats, but there are significant challenges in managing a global or multi-country enterprise.
1. Global supply chains have to be agile and robust
A global supply chain needs to be agile enough to react and serve multiple markets, depending on business needs, but it must also be robust enough to withstand changing local demands.
Under increasing pressure to buy globally but think locally, many retailers are needing to balance global aspirations with an increasing demand from consumers to reduce product-level mileage in the supply chain.
This has been particularly prevalent in FMCG, where growing consumer demand for an ethical approach from their suppliers is reshaping the way supermarkets and clothing retailers in particular manage their suppliers across the supply chain.
At the same time, consumers expect to see an ever-increasing range of goods to choose from, driving demand for supply chain development that includes near sourcing.
Supply chains need to be more dynamic and move away from the traditional push and pull model, and are responsive to customers in terms not just of products, but of sourcing, manufacturing, transport, animal and environmental welfare, and treatment of employees.
2. Traditional IT systems can’t always manage the complex, extended supply chain
No retailer can grow faster than its overall supply chain infrastructure so knowing the effective range or limitations of the supply chain is key to expanding.
In much the same way that IT has enabled companies to source goods on a global scale cost effectively, those same supply chains can now manage the complexities of distributing not just westwards but also distribute goods to stores around the world, working entirely domestically within foreign countries in an extended way or allowing a truly global, if complex, push and pull retail operation using a network of hub and spoke fulfilment.
Making everything speak the same language in a supply chain that is both flexible and reactive is vital to creating a healthy supply environment that works on a global basis, perhaps spanning multiple time zones or numerous legislative trading areas.
Traditional Enterprise Resource Planning cannot always handle the demands of a non-linear, global supply chain that is multi-faceted and operating in a complex environment of multiple suppliers. In some sectors where just-in-time is necessary, this becomes even more challenging.
3. Connectivity for visibility and agility is critical
Creating a supply chain that is ‘connected’ through web-based solutions helps create increased visibility and agility across all business sectors but can still be a disparate or silo system without the right level of process integration.
Cloud will be a critical tool for supply chain management in the future, offering true visibility over the end-to-end process. While some experts argue at how much real-time data you really need over the supply chain, the true power of the Cloud is only just started to be realised in distribution but has huge potential in making a number of silo systems talk to each other.
4. Supply chain harmonisation is important so suppliers can take part
Extending your business processes beyond the ‘walls’ of your own system can add a significant burden on for those suppliers who are not already equipped to deal with it. Harmonising this process has already become very important, but could prove business critical in the future, along with making sense of the data when you get it.
Some companies have spent time mapping out their supply chains, looking at everything from physical process to supplier interaction in order to locate weaknesses and target strengths to leverage, not only to squeeze out cost efficiencies but also to prepare for supply chain disruptions.
5. While you might expect most or all companies to have done this, in truth most haven’t
Klaus Schwab, Founder and Executive Chairman, World Economic Forum recently summed it up, “Across every sector of society, decision makers are struggling with the complexity and velocity of change in an increasingly interdependent world. We need to explore and develop new conceptual models which address global challenges. The more complex the system, the greater the risk of systemic breakdown, but also the greater the potential for opportunity.”