Mastering your retail supply chain

Consumer goods suppliers are pressured now more than ever to master their supply chains to compete in today’s demanding and competitive retail landscape.

To stay ahead, they must make accurate forecasts and predictions to ensure products are available when and where consumers need them, while also meeting heightened retailer demands if they want to retain and unlock valuable shelf space. 

What’s more, operating in today’s fast-moving omnichannel landscape adds greater complexity, with D2C and retail orders coming in from anywhere at any time.

It is up to suppliers today to respond quickly, accurately, and efficiently to compete effectively. Why? So retailers know they can rely on them, paving the way for greater opportunities while saving big and profiting more.

Key takeaways:

• Retail supply chain management is the process that involves moving products from their origin to the consumer.
• Many challenges can interrupt supply chain management and cost time and money.
• The solution to many of these challenges is an integration of real-time data and analytics to master operations and optimize all retail partnerships.

What is a retail supply chain?

The retail supply chain is a flow of processes involved with product distribution from the original supplier to the final consumer. This process begins with production, where a company designs a tangible item to be sold on the market — from fast-moving CPGs to durable goods. 

After production, a company's finished products are typically sent from a warehouse to retailer (e.g, Kroger) or distributor (e.g., UNFI) distribution centers (DCs), before being directed to individual stores – where they sit on shelves for purchase or store warehouses for online order fulfillment. Once a consumer makes a purchase, the cycle is complete.

Procurement by retailers who buy and sell a supplier's products is what gives life to the supply chain, enabling its flow. However, since retail buyers usually oversee hundreds of suppliers per category, suppliers are responsible for managing their inventory effectively, ensuring a reliable flow of goods. 

The retail supply chain also entails transportation logistics, which is responsible for transporting goods from point A to point B.

Procurement by retailers who buy and sell a supplier's products is what gives life to the supply chain, enabling its flow. However, since retail buyers usually oversee hundreds of suppliers per category, suppliers are responsible for managing their inventory effectively, ensuring a reliable flow of goods. 

What is retail supply chain management?

Supply chain management involves handling all of the infrastructure needed to move products efficiently. You need teams to understand how much of each product all of retailers and individual stores need, along with which carriers to work with, while ensuring items arrive on time – measured by crucial success metrics like OTIF (on-time in-full).

Therefore, suppliers need visibility into real-time retail measurements like inventory levels and sales velocity to spot where goods are flying off shelves, requiring replenishment; or where they’re potentially overstocked, leading to expiration and waste.

All of this information is critical to the efficient function of the supply chain. Making uninformed calls can cost thousands of dollars in losses at minimum. These losses can occur for many reasons: you may not have in-demand items on shelves and can permanently lose sales to competitors, or maybe your inventory is at risk of spoilage because you're overstocked, allocating products to areas that don’t need them. 

An efficient and informed supply chain management system is key to keeping a consumer goods organization operating at the top level.  

Suppliers need visibility into real-time retail measurements like inventory levels, and velocity, to spot where goods are flying off shelves, requiring replenishment; or where they’re potentially overstocked, leading to expiration and waste.

The importance of retail supply chain management

Retail supply management is more than just making sure products get from point A to point B. This system crucially keeps retailers operating at peak efficiency, driving accurate demand forecasting, and maintaining product availability across channels.

Think about it: a brand with inefficient supply chain management will see fewer of its products on shelves, which can poorly affect retailer partnerships and lead to lost shelf space over more agile competitors. 

What’s more, a supply chain that lacks resilience won’t be able to withstand inevitable market shifts, like demand surges, or global disruptions, which can lead to compounding issues that become overwhelming to address.

Optimizing retail supply chain management enables proactive forecasting and faster response times, leading to cost savings, increased profitability, and subsequent unlocked business opportunities, helping businesses increase top-line revenue and sustainably scale.

Proper supply chain management can:

• Manage inventory effectively
• Reduce inventory costs
• Improve profits
• Eliminate out-of-stocks incidence
• Build trust with retailers, unlocking greater business opportunities
• Help brands build trust with their consumers
• Aid retailers in building trust with consumers
• Reduce food and material waste

A supply chain that lacks resilience won’t be able to withstand inevitable market shifts, like demand surges, or global disruptions, which can lead to compounding issues that become overwhelming to address.

Challenges of retail supply chain management

Retail supply chain management has its fair share of challenges, and suppliers are sometimes up against what feels like impossible odds. Often, issues that arise are out of your hands. Here are some of the most common challenges:

• Global shortages – You can’t help it if the materials necessary for the products are in high demand and low supply. Global shortages are a very real challenge as the world struggles to catch up with the rise of purchases around the world. These shortages can disrupt supply chain plans and leave suppliers unable to respond.

• Shipping delays – Shipping delays are an ever-present risk with the rise of globalization. These disruptions can happen suddenly, stemming from various factors such as timing issues, port bottlenecks, or labor strikes, which can ripple through entire supply chains.
  
  Shipping delays lead to an increase in costs to effectively move goods, which places every business involved under timing and financial strain. To make matters worse, these sometimes unavoidable delays can lead to unhappy customers and a loss of trust in a brand.

• Demand fluctuations –  Market demands are always shifting. What is hot and trending one moment can become tired and ousted in the next. With effective real-time visibility, retailers and suppliers can be prepared for these shifts. And good thing, since the inability to predict and respond to demand fluctuations can cost millions in overstocked or understocked goods. 

• Pandemics change everything – The global COVID-19 pandemic created a new paradigm for supply chain management. Confined to their homes, household shopping (especially online) surged. This shift caused widespread global shortages, directly impacting inventory management practices, and omnichannel demands increased, forcing suppliers to adapt to new fulfillment models and heightened consumer expectations.

• Challenges wrangling data – Aggregating the data inputs you need to make decisions is time-consuming and often manual. On the other hand, automating those processes in-house can drive up costs in supply chain management. Custom-built systems to manage retail data from retailers and distributors can cost up to $100k per data source, and maintenance costs can exceed $500k/year. This means you’ll have fewer resources focused on your core business activities. Third-party automation and analytics solutions can drastically improve operational efficiency.

Internally-built systems to manage retail data from retailers and distributors can cost up to $100k per data source, and maintenance costs can exceed $500k/year. On top of that, these systems require specialized staff to manage and update them.

Strategies for improving retail supply chain management

Despite the challenges of market shifts, shortages, weather, and health events, there are several approaches you can take to stay ahead of the curve and maintain control over your supply chain.

Just because the world is unpredictable doesn’t mean you can’t be prepared. Adapting and shifting based on real-time visibility is key to successful retail supply chain management. 

• Have a demand-driven approach – Meeting demand is your top priority as a supplier. For nationwide and even global suppliers, it can be challenging to achieve consistency without the accurate, up-to-date data necessary to understand retailer and consumer needs. A demand-driven approach ensures you are always aligned with the market.

• Automate EDI – Automating Electronic Data Interchange (EDI) enables the flow of data records between businesses, creating seamless connections between retailers, suppliers, and logistics partners. By automating EDI, suppliers gain better visibility into the entire supply chain. This allows for instant updates, such as when a shipment leaves the warehouse, and results in hyper-efficient, responsive system that reduces errors, speeds up transactions, and enhances communication across all teams.

• Partner with a 3PL – Third-party logistics (3PL) teams handle transportation tasks that can make up the bulk of a supply chain team’s time. The right 3PL partners can handle transportation, warehousing, fulfillment, customs brokerage, consolidation and deconsolidation, and more. These partnerships save supplier operations tons of time and energy. You may opt to work specialized 3PLs who can deliver excellence in your industry.

• Leverage sales and inventory data – Every supplier should have a flow of retail data intelligence that can deliver real-time sales and inventory insights. Knowing what’s on shelves, what’s in distribution centers (DCs), what’s on order, and what’s forecasted is vital information that helps companies make continuously informed decisions to save costs and increase profits.
  
  Sales data applications are also essential. They help suppliers spot changes in sales patterns, allocate inventory accordingly, target marketing campaigns and strategies, and unlock new opportunities with proven metrics. 
  
  Integrating real-time data for decision-making lead to more accurate forecasts, reduced out-of-stock incidence, optimized pricing and marketing strategies, and much more, driving increased operational efficiency and revenue growth.

• Enable agile analytics – Automating data collection and harmonization saves significant time and reduces the cost of manual data processing. With automation in place, data analytics teams can focus more on strategic analysis and less on manual tasks. When it comes to the supply chain, this means faster, more informed decisions based on accurate, real-time data. Data analytics give suppliers an edge in retail supply chain management, enabling better demand forecasting, operational efficiency, and inventory optimization.

• Make way for AI –With a foundation of clean, structured data, AI enables suppliers to optimize massive amounts of information, streamlining processes and generating insights that were previously out of reach. Imagine asking questions like, "What was the impact of our latest promotion on inventory across distribution centers?" not just figuratively, in querying data, but literally, leveraging your choice of large language model (LLM). Too, AI can aggregate external data such as weather patterns, syndicated competitive data reports, and consumer behavior trends, in analytics models to provide a comprehensive view of the supply chain, and trigger alerts when necessary. AI-enabled machine learning allows suppliers to predict disruptions, adjust strategies in real-time, and make data-driven decisions with unprecedented precision.

With automation in place, data analytics teams can focus more on strategic analysis and less on manual tasks.

Supply chain management helps suppliers stand out

As a supplier at the top of the supply chain, you play a critical role in ensuring the smooth and efficient flow of products. By integrating retail data, maintaining real-time visibility into inventory, and mastering data analytics, you can significantly improve your supply chain management and unlock valuable business opportunities.

Proper retail supply chain management helps you keep customers loyal, minimize losses, and increase profits. In this case, the data-informed supplier is king!

Streamline your supply chain with end-to-end EDI integration

Crisp EDI enables seamless communication and information flow between suppliers, trading partners, third-party logistics providers, and back-office applications. 

Electronic data interchange ensures each partner in the retail supply chain is informed in real-time, working with the same data. It minimizes confusion, misorders, miscommunication, and misalignment of goals. 

Here are just a few benefits of utilizing Crisp for EDI:

• Automate – Automation is key to remaining competitive in today’s market. Keeping records and intellifence flowing digitally saves time, money, and energy.

• Source and integrate – Ingesting, harmonizing, and consolidating your data into a single source of truth ensures that every partner is on the same page, improving communication and reducing operational inefficiencies.

• Manage orders in one place – With Crisp EDI, each one of your partners understands which orders need to be filled, have been filled, and where they are along the supply chain, with forecast data handy as well.

• Seamlessly connect with back-office – Automated systems enable real-time connections with back-office operations, keeping your entire team in sync.

The future of the retail supply chain and analytics

With the future in mind, suppliers should pay close attention to trends that can affect the retail industry.

As we saw with COVID-19 at the start of the decade, sudden changes can have a huge impact on stages along the supply chain. Staying up-to-date and monitoring potential challenges will allow you to remain resilient, and able to adapt and shift as necessary. 

This will keep your business competitive and ensure confidence by retail partners in your ability to deliver on commitments.

A few potential future events to watch for are:

• The advent of big-box omnichannel – As more consumers move to make purchases online by leading retailers, you’ll see an increase in products held in warehouses for shipping. You’ll also receive an influx of digital sales data. This will affect your strategies and approach, especially if you see the shift as a chance to maximize sales opportunities.

• Sustainability and waste reduction demands – Consumers are increasingly prioritizing environmentally friendly companies, like B Corps. Reducing food and material waste will be a key component to meeting these expectations and qualifying for certification recognition. Sustainability practices will also help meet heightened retailer demands that align with their global net-zero initiatives.

• The push to become more data-driven – The retail landscape is now primarily data-driven, and retailers provide point-of-sale (POS) data to suppliers with the intention of helping them optimize performance. Because of this access to clean, accurate, real-time data, suppliers can respond to ever-changing information as it comes in. This means accurate inventory metrics, demand forecasting, and more.

As more consumers move to make purchases online by leading retailers, you’ll see an increase in products held in warehouses for shipping. You’ll also receive an influx of digital sales data. This will affect your strategies and approach, especially if you see the shift as a chance to maximize sales opportunities.

Partner with Crisp for a smarter, more efficient supply chain

Crisp connects CPGs to real-time POS and inventory data from 40+ retailers and distributors, delivering store-level actionable insights and analytics through BI tools, cloud platforms, interactive dashboards, and more. Nearly 6,000 CPGs rely on Crisp’s retail data platform for actionable sales and supply chain insights to grow sales and streamline operations. Crisp’s mission is to reduce waste across the supply chain while giving brands and retailers the daily data and insights they need to grow their businesses and optimize their end-to-end supply chains.

Book a demo to discuss your data-driven supply chain goals today.