Supply Chain Management key to january sales success, by Infosys
Written by Prateek Sinha (pictured, right), Associate Partner at consultant Infosys
With Christmas now a distant memory, retailers across the UK will be taking stock of how they have performed during the annual madness that is the January Sales. With indicators of an economic recovery seemingly everywhere, this year’s reckoning will be more important than most and any decline on last year pondered over in great detail.
As many retailers are aware, having a successful sales period involves much more than simply cutting prices and hoping for profitable growth; customer experience is vital and involves ensuring that the supply chain is working as effectively as possible to deliver on exacting customer demand and expectations.
There is some evidence however, that many retailers are not yet able to get supply chain management right every time. In fact, a recent Infosys study found that UK high street retailers are missing out on sales opportunities due to not sufficiently planning their supply chains. Nearly three quarters (71 per cent) of British shoppers have regularly faced in-store stock shortages, causing them to shop elsewhere or delay their purchase. So, what can retailers do to avoid such mishaps during one of the busiest shopping periods of the year?
Optimise the in-store experience
The first thing is to offer the best possible customer experience in-store. Beyond having a well-designed store staffed by well-trained employees, this also largely comes down to how closely a retailer works with its trading partners and suppliers.
Close cooperation allows retailers to build an ‘ideal store’ environment (one where the store is designed to fit customer requirements exactly) which increases basket size and display conversion rates – crucial for the sales period. Once the sales are over moreover, these relationships are essential for launching the next season’s range of goods as they can help reduce the time it takes to introduce new products while eliminating ‘out of stocks’ to improve the customer experience.
The ability to do this effectively comes down to transaction and stock data being effectively shared across the supply chain, especially between the retailer and the consumer goods brand. This ensures that sales stock gets delivered at the right pace to meet demand while helping to guarantee that no unsold stock remains at the end of the sales period.
Our study however, suggests that for many retailers this level of communication with trading partners is not happening. In fact, only 16 per cent of retailers share customer data on a daily basis, suggesting that the majority will face difficulties in meeting customer demand during the sales period. It is a fair bet that the organisations that boast the best sales by the end of the month will be those that communicate well across the supply chain.
Multi-Channel Demand Management
Crucially, getting the customer experience right means getting a view of the demand across all channels. In this respect, the greatest opportunity for retailers lies in joining up the transactional data they get from in-store, online and mobile. The ability to unify this sales information and use it to provide a single view of each customer is hugely beneficial as retailers look to shift a lot of stock. This is because such a view enables them to offer customer-relevant bundles, ancillary products, accessories, and deliver useful marketing information, such as showing customers ‘what others like you’ bought.
The best retailers will also look outside of the organisation to gain a wider understanding of customer buying behaviours and psychologies during the January Sales. Social media, for example, gives retailers the opportunity to understand customers both in terms of individual behaviour and how they behave as part of wider social communities. This includes vital information such as what shoppers browse, social interests, locations, sentiments, searches and reviews. By connecting this to transactional information, retailers can understand the customer like never before and use this understanding to target them much more effectively.
A new reality for retailers
The way in which people communicate with their favoured retailers is changing dramatically, driven by advances in mobile and online technology. Organisations need to adapt to this new reality and use it to their advantage to drive success not just around the January Sales period, but throughout the year. This means collecting the right supply chain data and implementing a joined-up multi-channel experience that is based on openness and co-operation with all trade partners. While this requires a change of mind-set and ways of working it will enable a much more effective and efficient retail organisation, one more than capable of making the most of the January retail opportunity.
Biden establishes Supply Chain Disruptions Task Force
The US government is to establish a new body with the express purpose of addressing imbalances and other supply chain concerns highlighted in a review of the sector, ordered by President Joe Biden shortly after his inauguration.
The Supply Chain Disruptions Task Force will “focus on areas where a mismatch between supply and demand has been evident,” the White House said. The division will be headed up by the Secretaries of Commerce, Transportation, and Agriculture, and will focus on housing construction, transportation, agriculture and food, and semiconductors - a drastic shortage of which has hit some of the US economy’s biggest industries in consumer technology and vehicle manufacturing.
“The Task Force will bring the full capacity of the federal government to address near-term supply/demand mismatches. It will convene stakeholders to diagnose problems and surface solutions - large and small, public or private - that could help alleviate bottlenecks and supply constraints,” the White House said.
In late February, President Biden ordered a 100 day review of the supply chain across the key areas of medicine, raw materials and agriculture, the findings of which were released this week. While the COVID-19 health crisis had a deleterious effect on the nation’s supply chain, the published assessment of findings says the root cause runs much deeper. The review concludes that “decades of underinvestment”, alongside public policy choices that favour quarterly results and short-term solutions, have left the system “fragile”.
In response, the administration aims to address four key issues head on, strengthening its position in health and medicine, sustainable and alternative energy, critical mineral mining and processing, and computer chips.
Support domestic production of critical medicines
- A syndicate of public and private entities will jointly work towards manufacturing and onshoring of essential medical suppliers, beginning with a list of 50-100 “critical drugs” defined by the Food and Drug Administration.
- The consortium will be led by the Department of Health and Human Services, which will commit an initial $60m towards the development of a “novel platform technologies to increase domestic manufacturing capacity for API”.
- The aim is to increase domestic production and reduce the reliance upon global supply chains, particularly with regards to medications in short supply.
Secure an end-to-end domestic supply chain for advanced batteries
- The Department of Energy will publish a ‘National Blueprint for Lithium Batteries’, beginning a 10 year plan to "develop a domestic lithium battery supply chain that combats the climate crisis by creating good-paying clean energy jobs across America”.
- The effort will leverage billions in funding “to finance key strategic areas of development and fill deficits in the domestic supply chain capacity”.
Invest in sustainable domestic and international production and processing of critical minerals
- An interdepartmental group will be established by the Department of Interior to identify sites where critical minerals can be produced and processed within US borders. It will collaborate with businesses, states, tribal nations and stockholders to “expand sustainable, responsible critical minerals production and processing in the United States”.
- The group will also identify where regulations may need to be updated to ensure new mining and processing “meets strong standards”.
Partner with industry, allies, and partners to address semiconductor shortages
- The Department of Commerce will increase its partnership with industry to support further investment in R&D and production of semiconductor chips. The White House says its aim will be to “facilitate information flow between semiconductor producers and suppliers and end-users”, improving transparency and data sharing.
- Enhanced relationships with foreign allies, including Japan and South Korea will also be strengthened with the express proposed of increasing chip output, promoting further investment in the sector and “to promote fair semiconductor chip allocations”.