Automate the Retail Supply Chain: The Big Picture

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Automate the Retail Supply Chain: The Big Picture

By Jeff Rauscher, Director of Solutions Design, Redwood Software, Inc. - 09/10/2014
According to a recent e-Marketer study, the global B2C e-commerce market will reach more than $1.5 trillion dollars in 2014, and will exceed $2 trillion by 2018. While this surge in online retail has been a boon for the global economy, many retailers have struggled to meet the demand spurred by today’s connected consumer. E-commerce giants such as Amazon and eBay have created a culture and expectation of instant gratification by offering next-day (and in some cases same-day) delivery to keep customers satisfied.

This situation puts increased pressure on the global retail supply chain to become more agile and responsive — with no service disruptions. However, many retailers still rely on legacy IT systems and manual processes to manage their back-end order fulfillment and distribution, leaving them vulnerable to bottlenecks and human error. 

Using process automation, retailers can reduce supply chain complexities and eliminate the risk of error while increasing efficiency and speed. It's a powerful way to change how managers evaluate their own roles and build a more connected, streamlined supply chain. Start with three steps to sharpen your perspective and improve your results. 

Take ownership
Complex retail supply chains are flooded with stakeholders who have what sometimes appear to be conflicting goals and objectives. From business and IT professionals to customer service and manufacturing reps, the criteria of specific silos often determine how information is digested and the speed with which it's shared. Task-based stakeholders may feel a sense of ownership for the part they play in the chain, but the bigger picture may remain somewhat cloudy. That's not good for business.

To truly take ownership of the supply chain, all participants must measure what they do, but they should also be able to measure how this coheres with the entire enterprise. Shift the focus by evaluating unique factors within each silo and then determining what these factors actually have in common. Look at dependencies between task steps. This is often where you can make dramatic improvements quickly.

Connect once-siloed tasks with a common denominator. Automation supports this process by adding overall visibility and eliminating manual work at junctures between siloed processes. That makes the big picture more visible to everyone.

Speak the same language
Establishing a universal code of measurement is the first step on the road to establishing a common logic or language to manage your supply chain. Think about what is relevant to your end customer, such as quality, timeliness, or volume. Set those standards across every part of the supply chain so that everyone sees continuity in the overall process. 

Next, create process steps so they follow a clear format that is tied to this unit of measure in real time. After this sequence of events has been established, create a series of transparent, automated processes across each individual stage. By keeping this transparency and clearly monitoring how it progresses in the face of external and internal factors, you can make additional improvements along the way — regardless of the unique qualities of any operational silo.

Synchronize IT
With a common language and connected ownership established across your enterprise, it's time to automate processes that support the dynamic flow of inventory. Global businesses -- including apparel makers and retailers -- have many back-end systems that must be synchronized for this to work. Synchronization with partners and suppliers outside of your core business itself may also be required. If you depend on legacy technologies or operate from opposite ends of the world, this also must be considered. Automating these systems in tandem ensures that standards-based procedures work accurately and quickly throughout your value chain, with a minimum of painstaking individual effort. 

Automation in action
Automation, when applied with a holistic perspective across the supply chain, can make a dramatic difference in how you manage for process excellence at the core of your business.

Here's an example. Bol.com, the leading online retailer in the Netherlands, has more than 4 million customers and offers more than 7 million consumer products. The company sought to expand its overall business, broadening its offerings while increasing overall revenue. In February 2011, the company launched bol.com Plaza, a new portal that gives customers access to products from other retailers directly through its website.

While the launch of bol.com Plaza opened up new opportunities for the company, there were a variety of challenges that they needed to address to meet growing customer demand, including:
  • Efficiently managing a dynamic inventory from an ecosystem of more than 6,000 different suppliers
  • Quickly accommodating a steady influx of new suppliers
  • Accurately managing downstream logistics and order fulfillment
  • Always guaranteeing next day delivery
  • Consistently providing customers with easy order-tracking and
  • Accurately forecasting future inventory need
Establish a unified supply chain
To keep the customer service experience fast and accurate, retailers must have constant access to accurate information such as product availability, pricing and delivery times for all of the goods that they offer.  One of the key challenges that bol.com initially faced was in how they would gather information from their supply chain partners as quickly and as smoothly as possible.  Because their partners operate across the globe, data would come into bol.com’s systems at all hours of the day and night.

The company applied automation to this challenge and now coordinates its vast partner supply chain processes down to each individual order. With a solid automation platform, bol.com is certain that the right supplier information is extracted and sent in the correct format to the online catalogue—without the need for constant human effort monitoring every step. The system automatically validates that orders are received and checked in line with stock and delivery times. From this point, the same automation seamlessly pushes orders to logistics for fulfillment.

Reap the benefits
Bol.com has grown rapidly in the past two years, steadily increasing its number of customers, partners, and products. With process automation in place to support its supply chain, bol.com can now accurately process a high frequency of new suppliers and product data continually. As a result, bol.com guarantees next-day delivery if an item is ordered before 11PM.

This is just one example of how effective automation maximizes the potential of the global supply chain. There are many others. By adopting a single automation platform that coordinates activities from ordering to fulfillment, supply chain executives maintain control and enforce efficiency without having to manage a retail demand chain with so many isolated manual steps. By keeping repeatable processes automated, companies can guarantee great service to customers and fast, high-quality information for internal stakeholders, too.

Companies that can break down the operational and technological barriers that exist within their supply chains to focus on fulfilling customer demand have the opportunity to reap huge rewards. By building automated processes that can adapt to constantly changing supplies and demands dynamically, organizations can cut process times by at least 50 percent while eliminating the potential for human error. With automated visibility into exactly what happens throughout the enterprise, supply chain professionals can escape the limitations of business silos. It's the best way to get everyone to see the big picture for success.


Jeff Rauscher, director of solutions design for Redwood Software, has more than 31 years of diversified MIS/IT experience working with a wide variety of software platforms including SAP, HP, IBM, and many others.

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