Supply Chain Integration As A Competitive Advantage
Updated: Jun 25, 2019
This post was originally published in September 18, 2013 but has been updated in March 8, 2018
More and more retailers, and in particular the big retail chains, prefer a model in which their vendors play an active role in determining the offered collection. Examples of those models are Consignment or Vendor Managed Inventory, but on a detailed level there are many differences in the agreements made.
From a business perspective, it can be a real challenge to engage in such retail models: Fashion businesses need to be able to offer constantly changing store collections. This requirement stablished by the market and the consumer's shopping habits entails processes must be agile: Slow moving items need to be sent back and shortages need to be refilled constantly - when necessary even from other underperforming stores. And last but not least, it is critical to have up-to-date inventory levels at all times. To be able to stay ahead of all these challenges, companies have to make sure that every inventory change is registered and synchronized with their system: whether it is a damaged, returned or stolen item or an item that the retailer decided to move to another store.
Because retailing is a different ball game, it usually takes multiple years to be profitable when rolling out such models.
What are the outcomes of an integrated Supply Chain?
Despite its challenges, building a supply chain integration as competitive advantage leads to numerous benefits: achieving an appealing offering against your competitors when you are able to make the profit per square meter higher if you’ll be allowed to decide what items are being offered. And, of course, placing your brand in the bigger retail chains has a major impact on brand reputation and awareness.
In order to successfully achieve the goals set, two vital aspects need to be considered: On one hand, a strong and lasting relationship with the retailer is of utmost importance; on the other hand, a powerful software system that enables visibility through all business processes.
Software's Role in Supply Chain Integration
A reliable software system is critical to oversee all supply chain processes when companies choose models such as Consignment or Vendor Managed Inventory.
Systems like pebblestone|fashion can aid businesses with different functionalities that give flexibility and insight into business processes. To set several examples: The Point of Sales transactions can be imported, when necessary corrected and be posted to synchronize the inventory levels of all the stores. It can initially be done at once for multiple items and for multiple stores, but it can always be adjusted for every SKU in a specific store.
Within pebblestone|fashion's module there is one approach for Consignment, Vendor Managed Inventory, Own Stores or Franchises. The only difference between those models is the moment of invoicing. Therefore, transfer orders are proposed to replenish the stores within the Consignment model or Own Stores, while for VMI and franchises sales orders are used.
Regardless of the selling model retailers choose, the pressure of achieving a fast time to market and meeting consumer's expectations is undeniable in today's apparel market. In order to remain competitive, retailers need to know their own supply chain thoroughly. If you need to redirect a shipment, balance your inventory sheets, or respond to a customer demand, supply chain integration enables you to achieve a competitive advantage and increase your revenue in the long-run.