Black Friday Blues? Welcome to the world of roller-coaster retail.
Black Friday, November 28th 2014, still dominated conversation at the Retail Week Supply Chain Summit. Even though it was months after the event, the topic’s prominence is indicative of a ‘new normal’: roller-coaster retail. While five years ago Black Friday wasn’t even ‘a thing’ this side of the Atlantic, today it isn’t just that single phenomenon that is testing retailers. There’s also Cyber Monday – and other calendar-related and promotion-specific events – that bring new peaks and troughs that put huge pressure on retailers’ supply chains with sales growing to such an extent that delivering sufficient stock to outlets on time is a challenge of itself.
This ‘new normal’ has the potential to trap retailers between the proverbial hammer and the anvil; failure to meet heightened customer expectations can cause serious reputational damage. At the same time working under pressure to meet customer expectations at any cost can put profits at risk; a well contrived promotion will register a loss if picking, shelving or transport operations fail due to insufficient capacity leading to extra process costs, poor availability and lost sales.
So what is the answer? Firstly, businesses can benefit from running their channel operations more effectively. That may well mean operating a single stock pool and being readier to shift stock from one retail outlet to another. Stock is stock and a sale is a sale. It may be easier said than done but, with a good supply chain, it is eminently doable.
Secondly, it helps to run a unified operation. You can’t have internal departments competing against one another, defending their own patch, inventories and goals. A properly organised S&OP process can help create shared goals and joint processes that promote collaboration. A single forecast on which an overarching sales strategy can be based, inventory and capacity planned and financial goals set.
The final thing the emergence of roller-coaster retailing forces businesses to do is to make use of the growing ocean of data that most retailers have available to them. Retailers need to be able to turn the vast data pool into a powerful resource that provides better forecasting, dynamic snapshots of a business in real-time and instantaneous illustrations of the impact of supply chain decisions.
Having the capability to seamlessly link demand and stock planning to supply chain capacity enables the building of a stock allocation plan that can actually be fulfilled at reasonable cost. Furthermore, with a sufficiently agile system, different demand scenarios can be run to check whether the stock allocation and supply chain plan can support sales – even in the most extreme circumstances such as a new fad boosting demand by 20% at Christmas. It’s time to make sure you’re strapped in. It’s going to be some ride!