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  JANUARY 2014
 

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GT Nexus

Caught Off Guard this Holiday Season
Tamara Saucier, GT Nexus


Retailers were ready this year. After all of the talk about online sales, omni-channel retail, and same day delivery, retailers were ready to re-write the holiday shopping season playbook by running leaner in-store while being faster and more responsive on the supply chain side, retaining fewer staff in-store and less inventory on shelves, and keeping more workers in warehouses and DC's. All of the pipework was in place for the online shopping rush. The shopping faucets were turned on early, starting well before Thanksgiving. Time to deliver the goods...

In the end, the National Retail Federation estimates that online purchases this holiday season accounted for 14% of sales - a 15% increase from last year, according to Forrester Research. But somewhere there was a clear disconnect. Shipments were missed. Gifts didn't arrive. Ironically, one retail analyst commented that the unanticipated volume of online holiday buying this year may have been the biggest problem for retailers. A Forrester Research analyst stated that in general, 15% of online shoppers who order items by retailers' specified cutoff dates don't get their packages by Christmas Eve.1

For consumers this adds up to extreme frustration and dissatisfaction. For retailers, this calls out an inability to effectively meet consumer demand. Given what's at stake for retailers not only in the holiday season, but with their core annual assortment in the struggle to capture customers, there's a clear priority for 2014: Improving supply chain and logistics execution.

Retailers added more fulfillment centers and infrastructure this holiday season to handle surging online orders. Amazon brought in an additional 70,000 seasonal workers for its U.S. warehouses; this still wasn't enough. What's missing is the ability to see into the production and delivery of goods - end to end - to know exactly where all inventory and components are at all times. When retailers begin operating their supply chains as networks, where everyone is plugged in and can collaborate on a single set of information, they can start the journey towards meeting today's consumer demand. Once a retailer has a dashboard view of the entire network, they can begin to layer in big data and analytics to help make better and smarter decisions that are more in-line with true demand. They can start knowing the true cost of making decisions. This opens the door to a new world where systems of various parties interact and engage using real-time data. Decisions can be made based on optimal outputs - the primary goal being to deliver goods on-time at the lowest possible cost.

 

Considering the results of this holiday season, supply chain and logistics execution is clearly an area ripe for improvement. In addition to issues handling online orders, retailers were stuck holding inventory. The day after Christmas a wave of sales emerged with clothing and electronics marked down up to 70%. The answer isn't running leaner in-store or adding more staff to pick and pack. It's a bigger problem requiring a bigger solution. The scope through which retailers view their production and delivery of goods is still blurry. The inability to see all inventory and parties in the production lifecycle is crippling. The advantage of leveraging all of the data that exists on trading partners, buying trends, and forecasts is underutilized. Operating the supply chain as a network that can deliver end to end visibility and optimize the latest data and analytics to improve operational efficiency should be the first priority for retailers this year.


[1] http://online.wsj.com/news/articles/SB10001424052702304753504579280194287430208


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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