Executive Briefings

Online Retailers Take Innovative Approach to Supply Chain Management

Innovative online retail companies are learning how to compete with well-established companies by creatively managing their supply chain. By combining best practices and technological advancements, these companies are disrupting their competitors while maintaining lean inventories and cutting out the middleman to deliver lower prices to consumers.

"The pace of change happening within supply chains is extraordinary. These companies are forcing the marketplace to change due to their innovative supply chain practices," according to Patrick Penfield, Professor of Supply Chain Practices at the Whitman School of Management at Syracuse University. "If you do not keep up with technology or constantly improve your supply chain you will not be in business long. Today’s supply chains are vital to the success and health of an organization."

Warby Parker, an online retailer, illustrates an innovative approach. Warby Parker was founded in 2010 with the mission of selling high-quality eyeglasses at a reasonable cost. While LensCrafters may be the largest retailer—known for its one-hour guarantee—Warby Parker focuses on selling stylish eyeglasses and sunglasses that would retail for $300 to $500 for less than $100, and that’s including the prescription lenses. The company has three distribution centers in just the U.S. and meets with suppliers to help formulate plans for scaling. Warby Parker sources raw materials—even down to the screws in the eyeglasses. An Italian company creates the acetone for the frame, and the company has the frames assembled in Asia before arriving to the U.S. where the lenses are edged and then inserted into the frames. The company recently opened brick-and-mortar stores, and to cut down on inventory taking up sales space, they use the type of pneumatic tubes found in banks to move products from the basement to the showroom.

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"The pace of change happening within supply chains is extraordinary. These companies are forcing the marketplace to change due to their innovative supply chain practices," according to Patrick Penfield, Professor of Supply Chain Practices at the Whitman School of Management at Syracuse University. "If you do not keep up with technology or constantly improve your supply chain you will not be in business long. Today’s supply chains are vital to the success and health of an organization."

Warby Parker, an online retailer, illustrates an innovative approach. Warby Parker was founded in 2010 with the mission of selling high-quality eyeglasses at a reasonable cost. While LensCrafters may be the largest retailer—known for its one-hour guarantee—Warby Parker focuses on selling stylish eyeglasses and sunglasses that would retail for $300 to $500 for less than $100, and that’s including the prescription lenses. The company has three distribution centers in just the U.S. and meets with suppliers to help formulate plans for scaling. Warby Parker sources raw materials—even down to the screws in the eyeglasses. An Italian company creates the acetone for the frame, and the company has the frames assembled in Asia before arriving to the U.S. where the lenses are edged and then inserted into the frames. The company recently opened brick-and-mortar stores, and to cut down on inventory taking up sales space, they use the type of pneumatic tubes found in banks to move products from the basement to the showroom.

Read Full Article