Spend Matters welcomes a guest post from Dean Vella, who writes about supply chain management topics and best practices for University Alliance.
Despite signs of a recovery, albeit a slow one, retailers are still feeling the effects of the recession as higher prices for fuel, freight and raw materials drive up the cost of doing business. In order to stay competitive in this climate, retailers have had to develop better efficiencies and innovative management processes. In other words, they've had to get creative with an increasingly complex supply chain.
The supply chain has long been a point of vulnerability for retailers. Managing uncertainty and working to mitigate risk is an art perfected by supply chain leaders.
In their 2012 report on the State of the Retail Supply Chain, the Retail Industry Leaders Association (RILA) and Auburn University examined best practices utilized by some of North America's leading retailers. This year's participants included Best Buy, Dillard's, Sam's Club, Target, Petco and Staples. The findings shed light on how supply chain leaders are reworking strategies to remain competitive.
While cost-cutting was a primary focus of retailers in the past, the perspective has shifted toward increasing multichannel operations, expanding global sourcing and building online platforms. Sustainability was another topic mentioned by many participants in the annual report, with more retailers becoming aware of the fact that sustainability is required in today's marketplace in order to be profitable.
The idea has been slow in coming but is now an area of ongoing concern for many supply chain leaders.
Walmart Supplier Sustainability
Walmart is considered a leader in the sustainability movement, aggressively seeking out suppliers who will help the multinational company reach the goal of reducing its carbon footprint by 20 million metric tons.
In April 2012, Walmart released its sustainability requirements for 100 of its product categories. Using assessment guidelines developed with The Sustainability Consortium, Walmart now requires suppliers to respond to a questionnaire that will determine whether or not sustainability measures are being utilized to the fullest.
To help these efforts along, the retail giant has created a Sustainability Hub website that provides a forum for suppliers to spotlight successes achieved through operational efficiencies.
Walmart's supply chain leaders contend that sustainability is crucial for future growth as consumers become even more demanding in terms of purchasing products that have the least environmental impact possible.
Liz Claiborne's Supply Chain Initiatives
With its merchandise sold at more than 30,000 locations worldwide, Liz Claiborne Inc. is another retail giant that is constantly seeking supply chain innovations in an effort to stay competitive. The apparel and accessories company contracts with GT Nexus for supply chain services, including utilizing "cloud" computing to track the movement of inventory along the supply chain.
"GT Nexus connects Liz Claiborne to its global partner network and provides visibility across the supply chain, from a broad shipment level view down to specific style and color level detail," according to a 2011 press release announcing that Liz Claiborne had extended its contract with GT Nexus.
In addition, GT Nexus also provides performance data that allow Liz Claiborne to identify trends respond to trouble spots and make necessary adjustments along its supply chain in order to boost efficiency.
Retailers like Liz Claiborne and Walmart understand that supply chain efficiency and innovation are needed to succeed in an increasingly global and competitive market. As noted in the State of the Retail Supply Chain report, "retail supply chain leaders must develop nimble strategies and capabilities. They must maintain control but be prepared for growth ... and manage an increasingly complex inbound supply chain."
- Dean Vella, University Alliance