Tackling Disruptive Forces through Industry Collaboration
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Every day, brands and retailers face rising pressure to innovate and bridge the gap between consumer expectations and omnichannel supply chain realities. Today's consumers don't distinguish between the online and offline retail realms, and they want retailers and suppliers to keep pace by designing their brand experiences to match.
The lines between channels have blurred and disrupted the retail paradigm. To proactively tackle the disruption, industry trading partners must come together to collaborate. Although collaboration has always been a best practice, it is quickly becoming an essential element of succeeding in today's changing marketplace. Industry collaboration — specifically around standards — provides three key opportunities for manufacturers and retailers to lead innovation by clarifying data management processes, creating more flexible fulfillment options and ensuring inventory visibility to increase consumer satisfaction. Let's first take a look at how standards work to create more collaborative trading partner relationships, and then how these relationships can yield important results in those three areas.
How do standards work?
Leading retail organizations leverage the common language of GS1 Standards — including various types of barcodes and Electronic Product Code (EPC®)-enabled radio frequency identification (RFID) technology — to minimize cost, maximize flexibility and optimize supply chain operations. The cornerstone of the GS1 System of Standards is the Global Trade Item Number® (or GTIN®). A GTIN uniquely identifies a trade item and can be serialized and encoded into a barcode or an EPC-enabled RFID tag to track individual items as they move through the supply chain. Used in conjunction with case and pallet identification, standards provide real-time inventory accuracy across the entire supply chain network.
Industry collaboration based on standards helps trading partners agree on scalable, repeatable processes — leading to improvement in item-level inventory visibility and the actionable intelligence needed to deliver on the unified commerce consumer promise. Operating proprietary systems that do not leverage interoperable standards can mean inconsistent data exchanges between trading partners. These inconsistencies can result in incorrect and out-of-date product information that leads to a frustrating consumer experience, causing lasting effects on loyalty and sales. In fact, research has shown that these product information data inaccuracies do not mix well with a consumer's low tolerance for mistakes. According to recent eMarketer research, 86 percent of consumers are unlikely to buy products from a brand after an experience with inaccurate product information.
Clarifying data management processes
With more product research being done via mobile device than ever before, the retail community should view data quality governance and product information management as an opportunity to anticipate consumer needs and provide them with robust product information to enhance their decision-making processes.
To fully excel at providing shoppers with more consumable and extended data, brands and retailers need to transition from inefficient, time-consuming and often manual data management processes, and update traditional operations to better anticipate the needs of omnichannel consumers. Even by collaborating to simply clarify industry terms and definitions for a variety of product attributes can open up a world of greater efficiency. For example, what is meant by "collar" to one company may be specified differently by another. Defining a single path forward together can eliminate the need for duplicate work by partner organizations and streamline the product information's path to the consumer.
Creating more flexible fulfillment
With the rapid increase in e-commerce sales influencing a multitude of supply chain decisions over the next few years, manufacturers and retailers are teaming up to determine the best way to modernize fulfillment, making it more flexible and agile to meet today's consumer needs. Retail fulfillment processes have become akin to a square peg trying to fit into a round hole. Omnichannel fulfillment is fundamentally different than yesterday's e-commerce or shop-in-store scenarios. It has become clear that traditional models must evolve into a system that delivers a speedier, more customized approach.
Retailers no longer think only about "floor-ready" or "e-commerce-ready" merchandise separately, they think about both together. In turn, manufacturers must rethink product presentation — new packaging should maintain the integrity of the product and the presentation should be comparable to what consumers expect to see in-store versus online. By adopting a standards-based approach, manufacturers achieve maximum supply chain efficiency while supporting the flexible fulfillment requests of retailers.
Ensuring inventory visibility
Many retailers have recently publicized their efforts to make their supply chains more "nimble" in order to truly call themselves consumer-centric. How are they achieving this agility? Many have found the implementation of item-level RFID has brought an unprecedented level of inventory visibility that is essential and foundational to their omnichannel strategies.
RFID has also brought manufacturer-retailer collaboration to the forefront in ways that have never been explored before in retail. Many retailers are specifically requesting that items be RFID tagged at the point of manufacture, not at the distribution center. Source-tagging enables all trading partners to gain inventory visibility to the movement and sharing of data through their many disparate systems — a critical enabler of making products available for the consumer regardless of their path-to-purchase. With true inventory visibility, a retailer can find a manufacturer's products more quickly, enabling faster order fulfillment, and thus, reducing the incidence of markdowns. Higher margin sales are made possible with the visibility of item-level RFID and the ability to guarantee a product is available for the consumer. RFID also allows for retailers to communicate better with manufacturers, facilitating faster reordering and better demand planning and forecasting.
Ultimately, the retail supply chain is being tested daily by the heightened need for companies to meet a growing set of consumer demands. What makes effective collaboration between stakeholders possible is a common language of standards that allows industry stakeholders to be able to anticipate and better serve the needs of consumers. To further improve the consumer experience, now is the time for retail companies to look inward at supply chain practices that can be enhanced, and outwardly engage with the industry to exceed expectations.
Michelle Covey is vice president of apparel and general merchandise at GS1 US and leads the GS1 US Apparel and General Merchandise Initiative.