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Retail Supply Chain Management: How to Increase Your Revenue Without Raising Your Prices

Business development
Anzhelika Danielkievich
| 13 min read
retail supply chain management
retail supply chain management

Have you heard about the self-preservation instinct? It’s often accompanied by stressful, negative feelings. Such feelings are a sign of danger and help humanity survive in hazardous situations. This is why people remember bad experiences for longer than positive ones. The same works for business. According to Microsoft, poor delivery experience increases the risk of losing more than 50% of their clients.

In the retail world, such figures cannot be ignored. Your retail supply chain should perform well to generate steady income. From the customer demand analysis to the order fulfillment process — every network stage matters. But how to ensure effective management of your retail supply chain? This is what we will talk about.

What Is Supply Chain Management and Why Is It Important?

As a retailer, you know how hard it is to manage all your back-office operations. Neglecting this aspect leads to lower profit, fewer clients, worse reputation on the market. For effective management, you have to see the interdependencies of the network elements. The retail supply chain, for example, affects customer satisfaction. Similarly, the value chain enables competition. Let’s discuss these two.

Retail Supply Chain vs. Retail Value Chain

Knowing definitions is not enough. But to start working on a problem, name it. Retail supply chain and retail value chain do not mean the same. The value chain model describes the process of bringing value to the market. It starts when a company receives raw materials and transforms them via production. The final stage of the value chain takes place when a client receives a finished product that has a particular function and significance. The more effective your value chain is, the stronger competitive advantage you get.

Meantime, the retail supply chain describes the steps it takes to supply products to clients. In the supply chain model, we focus not on the final value but on the means of delivering a product and its value. The more effort you put into improving your retail supply chain, the higher customer satisfaction you get in the end.

Everything You Need to Know About Supply Chain Management

Both retail supply chain and retail value chain benefit from effective management. Supply chain management tools allow retailers to take control of the order fulfillment process. Retail supply chain management is realized via a set of synchronized actions and decisions. The latter unify the work of the supply chain team: suppliers, distributors, manufacturers, retailers, transporters, and clients.

supply chain in retail

The two main functions of supply chain management are to optimize and to maximize. That is, effective management of retail business optimizes your costs and maximizes quality and speed. Combining these two functions is a challenging task. As National Retail Federation reports, 75% of retail clients expect free delivery if their online orders’ cost is lower than $50. Retailers rely on the magic of effective management to keep their clients satisfied with service and keep themselves satisfied with profits.

How can you understand that your supply chain management works well? Think about this question from the two perspectives. If your clients are happy with the product quality, quantity, service timeframe, then you are moving in the right direction. If you are satisfied with the workflow, cost-efficiency, and profitability of your business — you are also bound to succeed. In case you doubt some of these aspects — check out the section below.

Three Signs It’s Time to Renovate Your Retail Chain Management Strategy

Today, the retail industry is moving towards the omnichannel model. This new trend requires retailers to deliver their services impeccably and quickly. The goal of omnichannel commerce is to ensure an excellent customer experience. No matter in what way clients interact with your business. Be it visiting a brick-and-mortar shop or using a laptop to make an online order — your retail supply chain system should be synchronized and flexible. Here are some signs indicating that your supply chain management needs improvement:

1. Not enough distribution centers

In your retail management effort, focus on two metrics — cost-efficiency and customer satisfaction. On the one hand, retailers should meet client needs and cover online orders for a large area. That is, supply chain leaders should have multiple distribution centers. On the other hand, they should keep their businesses profitable and maximize sales. If you cannot expand your network of distribution centers (DCs), optimize the existing one. Renovating your retail chain management strategy can be an effective way out.

2. The gap between online and offline

Today, the boundaries between offline and online are blurring. Many consumers require retailers to deliver services that combine both online and offline experiences. For instance, people prefer to make orders online but save money on delivery opting for in-store pickup. Under such circumstances, ineffective cross-channel coordination may mean lost business opportunities. It poses additional pressure on retailers, leading to the need to boost supply chain management strategy.

3. Capacity issues

Traditional approaches may not work for innovative solutions. Peak-season rises in demand are only one side of the coin. The illusion of “on-shelf availability” of online goods is the other. In the online retail business, there is no sense of the physical quantity of goods. One mistake in supply chain management may result in significant financial risks. To eliminate threats, you have to keep your management strategy up-to-date.

If some of these signs reflect your situation, it’s the right time to improve your retail supply chain management. One of the quickest and most affordable ways to do so is to start with supply chain management software. But before rushing into digitizing your business, let’s take a look at its powers and pitfalls.

The Importance of Supply Chain Management Software

The research shows that by 2027, the market share of retail supply chain management software will cross the point of $37 billion.

Why do we see an increasingly high demand? Supply chain management software is a one-time investment that will be paying you off throughout your business journey. This software provides retailers with real-time analytical and management tools to ensure effective information and product flow. Software for retail supply chain management is designed to speed up supplier sourcing, boost production planning, and make transportation planning more efficient.

In the traditional management model, the processes like order processing, sourcing, managing supply are run by different departments. It takes a long time to synchronize the work at every stage. Supply chain issues in one department may cause confusion in other departments, affecting the quality of the overall management. With supply chain management software, you incorporate all essential functions into one solution and ensure end-to-end visibility of your retail supply process.

Software for retail supply chain management helps you cover the following management aspects:

  • Inventory management: you manage the inventory levels and control the quality and quantity of raw materials and stock.
  • Sourcing management: you get the space for interaction with your partners, establishing strong vendor relationships.
  • Warehouse management: you analyze and adjust the storage and labor capacity.
  • Customer demand analysis: you perform demand planning and analyze demand signals to avoid process bottlenecks.
  • Logistics management: you optimize transportation costs and expand your online business.
  • Risk management: you apply integrated business planning to minimize risks and prevent financial losses.

There are two kinds of retail supply chain software. On-premise software is developed to be installed on a local server and run manually by a team. Software as a service (SaaS) is another type offering a more sophisticated approach. It is a more flexible and practical solution as fixes and updates are added to your system automatically. Opting for a SaaS solution, retailers pay not for the solution itself but for the opportunity to use it.

So what to choose? You can opt for an off-the-shelf solution or build a custom one. The best choice depends on your business priorities and the scope of functions you would like to integrate. There are numerous off-the-shelf retail solutions listed on Google. Some are free, others require you to pay for a chosen plan. The problem is, both are targeted at a wide range of users, meaning that the aspect of personalization is lost.

Ready-made software does not consider your business values and priorities. The machine, for instance, cannot know that one’s supply partner requires them to use a specific reporting method. It cannot forecast that one has limited warehouse capacity and wants to balance it with responsive logistics. As a result, users pay for a generic solution that brings little value to their business. Or do not pay, if they choose a free option. In this case, however, they fall into the trap of either limited functionality or an abundance of ads.

Benefits of Custom Supply Chain Management Software

Custom e-commerce software solutions bring many advantages to the retail industry. In fact, all these benefits are interconnected. A positive change of one aspect will also positively affect the changes in another. That is, by investing in a custom retail chain management system, you help your business grow versatilely.

Personalization

There is no one-size-fits-all solution, and the approach of “shipping and forgetting” is no longer relevant. With performant retail management software, retailers have the opportunity to reallocate products across the channels, depending on the real-time updates in the system. As a result, they offer customers a more complex service, enabling different purchasing behaviors and personalizing experiences.

Long-term value

Each retail supply chain is different, having its own weak and strong sides. With a custom software solution, you automate the strong aspects of your retail supply chain and take control of the weak. It allows you to lessen the operation pressure and deeply involve your partners in the work, bringing long-term value to your business.

Customer loyalty

The custom software is adjusted to the needs of your target audience. Consumer demand, locations, and goods types will be taken into account before building the product. Suppose that you deliver goods to the audience whose location changes regularly. Your buyers do not know for sure where they will be in a few hours. They would appreciate the opportunity to track their orders and reroute them if needed. Another segment of clients may prefer speed over flexibility, which will also be considered before building software.

Agility

Retailers use custom software to track the availability of their channels. Seeing the whole picture, your employees will plan routes more efficiently. Adjusting your plans and daily decisions in real-time will help you stay agile. A unified view of your supply chain will protect your business from losses and allow for dynamic growth.

Space for a strong partnership

Reputable businesses look for partners who share their work ethics and values. Investing in custom supply chain management software, you show your dedication and professional approach. Retail supply management software will allow for transparent cooperation and contract management. All parties involved in the supply process will access and master data, cultivating a strong and reliable partnership.

supply chain management software

Challenges in Retail Supply Chain Management

But do not hurry up in your decision to renovate the retail management strategy. Consider pitfalls and be rational in your choice. Here are some of the common challenges to be aware of:

Maintaining balance

Do not forget to balance your business goals, client expectations, and competitors’ next steps. Before introducing some changes, analyze how they will affect each of the mentioned parties and choose the most optimal strategy.

Leveraging end-to-end costs

Make a quantitative comparison of the scenarios you are targeting. While choosing the type of software, think about the effects it will make on your supply chain costs. Before aiming at business expansion and offering your clients more, make sure that you are ready to cover more. Our team offers advisory services for digital, and we will gladly help you build the product that will meet your business needs.

Finding reliable partners

Firstly, choosing an outsourcing partnership, you don’t have to spend money on workspace, equipment, and software to ensure comfortable work conditions. You pay only for the work your outsourcing partner performs.

Secondly, you can be flexible while choosing. Depending on your business needs, you can choose a partner with year-long experience in your particular area. Forbytes specializes in eCommerce software development and provides its clients with relevant and up-to-date retail solutions.

Thirdly, apart from the solution itself, you get a complex service. It involves several stages, from consulting and advisory to maintenance and support. In this way, you secure your investment and obtain guarantees for the service.

Final Thought

In a world where new retail businesses are opening daily, the stakes are too high. Elements in the supply chains that seem to have little impact on the whole network influence your business tremendously. As a supply chain leader, try to stay flexible and adjust your business to modern clients’ needs. With custom supply management software, you will meet buyer expectations and maintain your competitive advantage. Let’s get in touch if you aim to renovate your business and keep ahead of the competition.

 

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