Carlos Castelan shares a retail blog on changes in supply chain network strategies and expectations in retail.
What is our supply chain network strategy?
This is a big question evaluated by many retailers this year, with a sharpened focus on efficiency and flexibility, amidst the digital sales boom sparked by the pandemic.
The question of a fulfillment network strategy involves numerous nuances – from customer promise times to site costs and inventory allocation – making it overwhelming to know where to begin.
Customers, more than ever, demand convenience on their terms, resulting in network complexity due to the variety of ordering methods and heightened expectations of service levels.
As digital order volumes continue to grow – albeit at a lesser pace than during the pandemic – a key takeaway for many supply chain executives over the last few years is the value of flexibility to respond to market changes or customer demands.
Supply chain flexibility to enable faster speeds, rather than merely looking at the lowest cost to serve customers today, is an important principle for retailers setting a fulfillment network strategy. This approach also minimizes investment risk as markets shift and customer expectations change.
With that in mind, it is imperative to establish a “North Star” for customer promise times, serving as a guide to answer questions related to the fulfillment network.
To establish this guiding principle around the fulfillment network strategy, important questions to consider include:
What will our customer’s expectations of service speed be over the coming years?
Where do we think the market/competitors will go in the next five years?
Are we missing out on sales (increased conversion) if we don’t offer faster service speeds for digital orders?
In relation to the last question, a frequently cited Jeff Bezos-ism when envisioning the next 10 years is not to predict what will change, but rather, what will not.
Key points include:
- Store-based fulfillment strategy
- Customer expectations
Read the full article, Fast and Furious: The Next Generation of Retail Fulfillment Networks, on TheNavioGroup.com.