Change or become obsolete. Those are the only two choices facing retailers as the result of rapid and extensive technological advances affecting everything from the supply chain to shopper purchasing behavior.
"That's a scary reality," said Bashar Nejdawi, president of Ingram Micro Mobility's North America business. "Technological innovations and a hyper-connected world have significantly influenced consumer behaviors and expectations, thus impacting retailers' opportunities," he told FierceRetailIT.
While retailers need to use technology to manage the products, operations and people in their companies, they also need to use systems to keep tabs on their suppliers.
Recent events such as the automotive air bag recall and shortages of components needed to make new technology products (like the Apple Watch) illustrate the need for visibility into every part of the supply chain, as well as into the retailer's inventory. "Proper supply chain management can also help companies more easily understand the size of the issue and how it will impact sales," Nejdawi said.
Buyers, suppliers, unions and other stakeholders need to champion programs to maintain supply chain accountability and ensure their sourcing programs are responsible, he said. But finding answers to these questions requires an honest and open dialogue between retailers, stakeholders, supply chain partners and logistics providers to show a willingness to ask the tough questions and ensure accountability is maintained.
"Supply chains are becoming highly sophisticated and vital to companies, but the interlinked global nature makes them more vulnerable to risk. As supply chain management becomes even more important to companies' success, supply chain risk events are having an even more profound effect on companies, and can be more costly," he said.
Ultimately this affects the changing needs and expectations of consumers. "Today's consumers are shopping online more, and they expect competitive pricing, in-stock merchandise, and fast delivery—all at the same time. From a supply chain perspective, it can be challenging to meet each need. But the retailers who fail to meet consumers' expectations are at risk of losing loyal customers," Nejdawi said.
Another issue facing retail supply chains is managing inventory. Because retailers must manage hundreds of thousands of locations and carry thousands of items at each location, out of stock, inventory shrinkage and out of date issues are common among retailers, he said. For instance, it's estimated that retail out of stock can cost retailers up to 4 percent of their total annual sales, according to a study conducted for three trade groups: the Grocery Manufacturers Association, Food Marketing Institute and National Association of Chain Drug Stores.
"As a result, it's becoming more common for retailers to rely on their supply chain partners to become the system of record for inventory. In this case, retailers will send their data to the third party logistics provider or link their point-of-sale system with the provider to offer an up-to-date, holistic view of what's immediately available on store shelves."
This helps to satisfy consumers' desire for immediate access to information, but it also presents a new challenge as it requires retailers to be able to deliver an intuitive experience in stores and online. "Otherwise, they will lose customers' loyalty," Nejdawi said.
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