Things you need to know about the supply chain and retailers

As we have said before on this blog, a supply chain is a process that involves all the activities related to creating a product. It starts in the suppliers and moves until the final consumer. In this sense, it also takes care of quality control, timing, inventory and every matter related to the logistics of the product.

All industries need to use the supply chain concept to keep their inventories, warehouses, shipping and transportations services working effectively. This way, they can reduce time, costs, unproductive steps and any type of mistakes.

In this sense, the retail industry is not an exception to the rule and it needs to have a well-managed supply chain in order to work properly. Nevertheless, many people tend to believe that because this type of industry operates with simple transactions such as selling goods in small quantities and directly to the customer. However, it also needs to keep a close relationship with inventory control and product suppliers, while taking care of its salesmen and facilities (such as department stores, markets, malls, independent shops, and malls).

Defining Retail

Retail consists of selling goods in small quantities from one single place, straight to the final consumer so it can immediately use it. In other words, it is a commercial transaction between a retailer and a consumer, that takes place in an accessible location such as a mall, department store, market, etc. and which final goal is to provide the final user with something it wants to meet its needs.

Unlike wholesalers or suppliers, retailers sell their products to consumers, and not to other businesses. Also, retailers depend on the proper movement of things along the supply chain to properly work.

Retail Supply Chain Management

The retail industry moves really fast compared to other industries. Depending on the company, it can move large amounts of products in a short period of time and change its stock at least four times per year, depending on the season. Thanks to this, it becomes vital for it to efficiently manage its supply chain.

In this sense, Retail Supply Management becomes a vital concept, since it is necessary for companies to succeed at what they do. A good way to define this concept would be to understand it as the process that is in charge of verifying the product’s quality, the level of the inventory, the needed time to move a good from the wholesaler to the retailer’s facilities, and all the costs related to these concepts.

In other words, retail supply chain management is the process in charge of managing the way products behave along the supply chain, starting at the point where they are acquired by the retailer and finishing when the final consumer buys them. It is important for companies to monitor this process closely since it is responsible for moving large amounts of goods in very short periods of time.

Importance of Retail Supply Chain Management

Supply chain management in the retail business is quite important since it is directly related to the success of an organization. Companies that lose control over the way they operate have more probabilities to fail and go bankrupt over those that know exactly how their logistics work and can actually modify them in order to become more effective.

Hangers_retailers_supply chain_logistics
Image courtesy of Andrew_Writer at Flickr.com

When the retail supply chain is managed, maintained and monitored closely, it can offer some visible benefits to organizations. Such as:

Cost Cutting: Knowing how your supply chain works helps you cut back your company’s expenses. When you are a retailer and you are selling goods by unities, every penny counts. Therefore, if you are able to establish and nice and neat supply chain, you will definitely cut back some expenses.

Saving: This term includes many concepts. Managing and effective supply chain as a retailer will help you save lots of energy, time, money, effort and sometimes bad experiences.

Customer Satisfaction: Having what your customers need when they need it is key to success for retailers. Given the fact that retailers need to keep constantly changing their inventory in order to meet their clients’ needs, having a nice and well-managed supply chain will definitely help them keep their customers satisfied since they will be able to satisfy their needs in a reasonable period of time.

Profitability: As it was said in the items above, having a nicely managed supply chain will help you and your company save some money. This immediately can be translated into higher profits, since the expenses related to the commercial process are lower.

Inventory Flow: Retailers need to be aware of the way the market moves. Usually, it moves really fast, changing trends and styles every couple months. Here, retail supply chain management becomes crucial, since it is the one that is going to help you handle your inventory and the way goods flow through it.

Related: The importance of the Supply Chain Manager by David Kiger

* Featured Image courtesy of Kevin Dooley at Flickr.com

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