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GT Nexus

7 Ways to Redefine Your Supply Chain to Achieve Operational Excellence
Tamara Saucier, GT Nexus


Today's retail industry places value on sustainable business growth and brand equity. Success is measured in income, margins and competitive differentiation - how you separate yourself from the rest. In years past, retailers built their supply chain strategies around delivering the right assortment of low cost goods in the most efficient manner to the store to achieve these success metrics. However, the fast rise of technology placed into the hands of consumers has turned supply chain strategies upside down. The consumers' demands for assortment options at low cost and in their preferred delivery mode has forced retailers to redefine supply chain goals. The term supply chain operational excellence has a significantly different meaning today than it did just two years ago.

Everything today is driven by the consumer. Customer satisfaction, goodwill and reputation are top priorities. Striking the right balance of quality, price, access and experience is the ultimate task for retailers. Supply chain strategy is at the heart of this challenge.

It's All About Execution

The retail supply chain will always be about execution, but there is a large disparity in how retailers are going after efficiencies and effectiveness - and how fast they can deliver operational enhancements into the business. It's always easy to plan, but in operations, things never go exactly as expected. Execution in the global supply chain is difficult and full of hurdles yet this is where "the rubber meets the road" or, more accurately, where the supply meets the demand. Service levels must be consistent to ensure repeat business. It is essential to meet service levels while maintaining the right cost controls - but how?

 
 

7 Steps toward Operational Excellence

What can you do to improve operation excellence in your supply chain? Here are seven initiatives to consider in order to make your supply chain more efficient, resilient and competitive:

  1. Prioritize execution: Planning and execution are interdependent and cyclical in nature. Often, the next seasonal plan is highly dependent upon the execution realities and metrics of the existing season. It's important to know and understand the key supply chain metrics that drive a real time performance assessment. An operational focus on KPIs will improve the next plan. The further out retailers plan, the harder the execution. Enable supply chain operational tactics and measurements that enable iterative improvements. Focus on efficiency and effectiveness.
  2. Focus on the exceptions: Set the strategy, execute accordingly and focus attention and resources on the exceptions. Time is money and misspent time and resources can add to unnecessary overhead. Misplaced attention can also lead to missed opportunities in effectiveness. Catch variances and exceptions earlier.
  3. Orchestrate trade with the entire extended enterprise: Understand the trends, levers and effective practices to help influence relationships with the company's value chain. If the entire supply chain is outside the company, why focus on the inside? The extended enterprise is now part and parcel of the "enterprise as a whole." Focus on what's between the partners. Simplify and smooth out the processes from beginning to end.
  4. Go 'back to the source": This growing trend involves getting more intelligent at the origin, with an increased emphasis on managing things right at the start and catching exceptions along the way. Complexity has escalated and visibility further back into the value chain will be required to meet service levels expected by channel agnostic consumers. Cultivate closer relationships with critical partners and leverage them for expertise, insight, and the true value of the relationship. Understand product provenance. Provide a value added service by giving your shopper a clear view back to the factory floor to provide reassurance for quality, availability and ethical sourcing practices. Provide RFID at source for critical information capture.
  5. Collaborate, collaborate, and collaborate... the right way: Collaborative applications and models were supposed to transform our operations. Clearly some gains have been made but they were incremental and not sustainable. Across all functions, poor collaboration and communication are among the largest inhibitors to productivity. One-to-one collaboration is not sustainable. Communication in the supply chain has to evolve from an "e-mail" approach to a "social media" model - one update touches the entire network and everyone sees the latest update.
  6. Align global freight contracts and sourcing for optimal spend management: Provide opportunities for freight audit and pay to be synchronized with transportation execution.
  7. Anticipate and manage risk: Research from Accenture cited in a recent World Economic Forum report states that supply chain disruptions can have a 7% impact on a company's share value.1 This speaks to operational fragility and many companies are formalizing risk mitigation and creating Plan B supply chains.

As PWC points out in a recent paper, the new efficiency is not about doing the old work better. It's about doing new work, approaching problems differently and re-engineering huge pieces of the value chain to get to a fundamentally different cost structure.2


[1] http://www.accenture.com/SiteCollectionDocuments/PDF/Accenture-Building-Resilience-Supply-Chains.pdf
[2] http://www.pwc.com/us/en/retail-consumer/publications/retailing-2020.jhtml


Tamara Saucier is VP Industry Solutions for Retail at GT Nexus. She provides domain expertise to their global retail, footwear and apparel industry practice. Tamara works closely with customers, partners, and industry organizations on defining and prioritizing GT Nexus's industry go-to-market strategy and solution concepts. She has 10 years of direct experience in international operations in the apparel and home furnishings sectors. For the last 18 years she has worked extensively in the U.S. and Europe with leading apparel and footwear manufacturers and global retailers on their Product Development, Sourcing, and Supply Chain initiatives. Tamara holds a BS in Textile Technology.

 
 
 
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