I have a confession. I absolutely love this age of consumer centricity, but not for the reasons you might think. Sure, I do enjoy the obvious personal benefits like the speedy fulfillment, competitive pricing and the sheer variety of stuff to buy, but as a supply chain professional, the real nirvana is the myriad of challenges it presents to retailers, manufacturers and wholesale distributors and the fun of trying to solve them.
Take, for example, this article I came across in the Wall Street Journal by Erica Phillips. The article focuses on the dramatic rise in the leasing of warehouse space due to the growth in electronic commerce and the need for retailers to get closer to their end customer.
Within the article is a great quote from CBRE’s chief economist in the Americas where he comments:
“The good economy and the change in distribution logistics has led to an increased demand,” said Jeffrey Havsy, CBRE’s chief economist in the Americas. “Now it’s more about having the right products near the customer, and that means more points of distribution rather than a single point of distribution.”
What really caught my eye in the quote was the commentary about the “right products.” That is the real trick isn’t it? Getting closer to the customer is clearly important in this age of high service level expectations, but if you are closer to the customer with the wrong mix of products, you have not solved anything at all.
From a supply chain perspective, this presents some interesting questions:
- Are you capturing the right information to accurately determine what and how much of each product to position in which location?
The more nodes in your supply chain, the greater the chance of getting things wrong. In today’s world, understanding where your consumer wanted your product is as important as where he or she ultimately got it. For example, if a consumer originally sought an item in a store but received it from a distribution center, where should you really be restocking the item?
- Can my store effectively be used as a fulfillment location?
I have seen a lot of commentary about the use of the store as a means to get closer to the customer, but is it really that simple? Challenges such as limited space, the training of associates in the tasks of packing and shipping, and shorting a product from a shelf have to be considered within the context of an entire customer experience strategy.
- How can you maintain scale?
The more nodes within the supply chain also equates to smaller, more frequent moves between locations. Supply chains have traditionally been built around driving scale but the need for consumer agility presents a challenge to that paradigm. Creating that balance can mean the difference between profitability and loss.
These questions only scratch the surface of what supply chain practitioners face in today’s consumer-centric age, but hopefully if you are like me, the excitement of asking those questions as well as looking for solutions are their own reward.