Building a Better Supply Chain With Business Intelligence

6/16/2015
Once the supply chain was a self-contained business function – the vocation of warehouse management and supply chain analysts. However, with the advent of omnichannel retailing, the supply chain impacts everyone in the organization and the collective organization's ability to deliver. The supply chain is now everyone's business and one of the most important factors contributing to the success or failure of retailers today.

There are so many points in the supply chain where things can go wrong, and there have been numerous well publicized instances of companies missing their numbers due to supply chain issues. To this end, it's no surprise companies are placing a greater emphasis on supply chain operations, creating a new C-level post for supply chain operations. Because of the many challenges and intricacies in this critical area, retailers are doubling down in business intelligence for improved supply chain visibility for greater efficiency, cost savings and on time delivery. As well, BI is becoming a "must-have" key competency for all retailers to address the demands of customer experience – which is at the heart of omnichannel retailing.

Rigorous retailing realities
The manufacturing and consumption of products on a global scale has dramatically increased supply chain complexity and contingencies. Apparel retailers in particular have also struggled with skyrocketing raw material costs. To address this, retailers have expanded their time horizons to lock in prices on raw materials further ahead than ever before. They're also diversifying their supplier base to mitigate risk in an effort to eliminate dependencies, take advantage of lower labor rates in certain geographies, and lessen the impact of inevitable weather issues, natural disasters, and socio-political unrest.

Moreover, the advent of fast fashion has introduced enormous pressures to wring costs and time out of the supply chain; today it's now not unusual for a retailer to design, manufacture, and send a garment to market in a mere 15 days – consistent with the need to keep customers satisfied with ever-changing offerings that reflect the most current trends and are priced to move.

Assortment planning and allocation requirements necessitate even greater reliance on visibility within the supply chain. When the goal is to create profitable assortments and bring them to market quickly to meet short consumer buying cycles shaped by seasonality and fast-changing fashion trends, every day an item is not on the store floor -- whether due to a lack of demand insight, sourcing or transportation issues -- is a lost sale that can represent a significant hit to the bottom line.

To meet today's omnichannel inventory fulfillment demands such as shop online, pick up in store, retailers must ensure inventory is positioned in the right locations across the supply chain to support multichannel selling. These new options for consumers are further complicating the already complicated job of putting inventory in the right places and also tightening time constraints.

Gone are the days when retailers planned for a volume production of goods ordered one year in advance. With the proliferation of omnichannel orders, the fulfillment window has shortened considerably and the data from those diverse channels must be compiled, analyzed and shared so that the organization can act as needed.

What's more, to remain profitable in today's "buy anywhere, source from anywhere" omnichannel model, retailers need to fully understand the cost of product fulfillment: moving inventory is expensive. The reality is that while the customer may want certain options, the retailer must be able to offer these options in a way that's economically feasible.

Business intelligence to the rescue
In response to these business realities, retailers must be able to track and trace product in the supply chain so that they can manage the flow and react to challenges and opportunities. But accomplishing this is challenging for many reasons – there are multiple players, multiple data sources and a myriad of potential issues that can arise.

As a result, tracking and analyzing the variety and velocity of data manually is too cumbersome, too complex and too slow. BI provides the means to understand the intricacies of demand and inventory tracking. By providing insight on where goods are throughout the supply chain, retailers – together with their suppliers – can now make intelligent decisions that are of benefit to both the retailer and customers, and ensure the right merchandise can be delivered on time, to the right locations and in the right quantities.

BI gives retailers the ability to ask questions about their business and get actionable answers, and the fundamental question that BI always stands ready to answer is this: how can I understand the breadth and complexity of the business so I can react intelligently using more fact-based decision making? Today, data is buried in so many places it's difficult to get the data together and even harder to compile a coherent picture for analysis. As such, BI is the great equalizer of information in the retail enterprise. By amalgamating a wide variety of source data systems, it offers retailers the only comprehensive view of business operations.

In many ways, BI is akin to the role of an air traffic controller – your retail organization has many planes in
the air moving at different speeds, along different vectors, and in and among different locations. It's important to have data on every plane in the air so you can orchestrate their movements for overall safe, smooth friendly skies.

As well, BI provides a yardstick that enables the company to gauge performance so everyone is on the same page. If you can measure, you can then modify parameters to meet and exceed new goals. BI measures and distributes that measurement to the organization.
With greater visibility through BI, retailers can now intelligently plan where to put people, inventory and overall investments to improve supply chain operations, assess performance, and then act to optimize this performance to mitigate supply chain disruption and meet today's omnichannel retail demands.


Jeff Buck is vice president, Retail Analytics, at Epicor Retail. In 2001, Buck co-founded QuantiSense to provide retailers with business intelligence solutions in a rapid, cost effective manner; the company was acquired by Epicor Software in October 2014. Prior this, Buck founded dotVantage, a company focused on creating analytical applications to enable e-commerce companies and technology providers to understand customer behavior on the web.

Editor's Note: In May, Epicor Software announced the spinoff of Epicor Retail as a separate company. As of press time, the name of the new entity had not been publicly disclosed.


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