Whilst expanding into international markets is an exciting prospect for any business, even well established companies such as Harrods should not underestimate the vital role that technology can play in facilitating effective management of the extended supply chain to support business growth. Harrods is a global brand name with a reputation built on service excellence. With international expansion on the horizon following its recent change of ownership, maintaining that reputation is as much dependent on the strength of its supply chain as the quality of goods it sells and the in-store service levels for which it is renowned. An organisation’s supply chain operates within an increasingly complex and dynamic world but can become a key source of competitive advantage as well as enabler for business growth if managed correctly. In a retail context, this is especially important with the advent of multi-channel retailing where companies need to deliver a “buy anywhere, fulfil anywhere, return anywhere” service.
One of the first considerations for a retailer looking to expand is the way in which the business manages its warehouse operations. Warehousing across an enterprise traditionally consists of a multitude of dispersed distribution centres (DCs) organised into functional silos, often focused on particular product categories, dedicated to a given region or serving a specific channel. Each DC relies on individual database systems, heavily limiting information sharing. As the geographic scope of a company grows so too does the number of DCs. Conventional decentralised solutions prevent companies from having a ‘global view’ of their supply chain. This makes it almost impossible to be fully aware of all transactions, orders and activities happening throughout a supply chain. The biggest obstacle for most companies is their inability to bridge these separate supply chain silos. Generally, companies tend to separate order management, product development, procurement and manufacturing from the final delivery process which makes it harder to have a single view of all inventory items in the supply chain and their status. All of these areas need to be synchronised for an organisation to run smoothly, to keep track of exactly where capital is tied up and to facilitate success in new geographical markets.
Lack of visibility can create inaccurate stock replenishment and retailers cannot see which products are inbound, outbound and where the stock is stored. Not only is this highly costly as inventory sits unused in warehouses but if there is no foresight into which products are the best-selling items, there is a higher chance they will sell out leaving customers empty handed. Consequently, it is vital that reliable, nimble and functional IT systems are put in place from the outset to ensure existing managers, or new owners, maintain visibility of orders to fulfil them accurately and to keep the same high standard of service across all channels.
Web-based ‘extended enterprise management’ software can remove visibility issues and facilitate accurate, real-time data sharing between all supply chain partners, no matter how widespread the network becomes. Such software allows all purchase orders (POs), in-bound products, warehouse stock and deliveries to be viewed and updated online, without a cost burden to suppliers since all they need is an Internet connection. Installing supply chain best practice through modern IT systems also increases employee productivity as all data is automatically updated. Forecasting and order management tools can be used to ensure that enough of the fastest selling products are re-ordered and routed to wherever demand is being detected and registered, thereby enabling the balancing, prioritising and streamlining of stock levels across the business. Bringing vital information to supply chain partners’ fingertips via sophisticated supply chain intelligence tools means the whole enterprise network can make smarter and faster decisions with regards to warehouse and distribution management. All of this is paramount, particularly as a supply chain elongates as a result of business expansion be it through organic growth or following the acquisition of another business.
Kiabi, one of France’s leading value-clothing fashion retailers, needed to transform its supply chain infrastructure to support rapid business growth. With 188 stores in France, 42 in Spain, six in Italy and plans to expand into China and Russia, Kiabi’s proprietary supply chain systems had reached their limit in terms of optimisation potential, flexibility and throughput capacity which was exceeding 100 million items per year. Kiabi also needed its supply chain technology to support an expanded store network following its takeover of the Veti store chain. In its supply chain transformation, the company wanted its supply chain technology to not only facilitate growth but at the same time reduce distribution costs, improve logistics performance, decrease order-to-delivery cycle times, provide tighter control over order fulfilment and optimise operational processes. By installing an advanced supply chain technology platform, Kiabi comfortably handled a volume growth in excess of 25 per cent over two years while improving fulfilment accuracy and accommodating order changes up until goods dispatch.
Similarly, Jockey, a leading supplier of underwear increased its scope to 120 countries and into online retailing, without compromising its existing services. The deployment of more flexible supply chain technology has helped Jockey meet its multi-channel needs and speeded up the delivery of goods from suppliers, lowering lead times by as much as 80 per cent.
Such companies have successfully grown their business and capitalised on evolving market trends by modernising and optimising their supply chains. Ultimately, today’s supply chains are required to be increasingly flexible, scalable and agile to address more and more specific market requirements across a wider number of channels and geographies. This is essential to ensure companies can maximise sales at every opportunity, make their extended supply chains as efficient as possible and protect the organisation’s brand equity.