Executive Briefings

Retail: The Supply Chain Shopping List for Next-Generation Retailing

Analyst Insight: With online retail sales projected to reach 17 percent of total company sales in 2010 and double-digit growth expected each year through 2012, retailers must take measures to offer next-generation retail. That would create a model that focuses on consumers and their experiences up to and through the purchase, or moment of truth. While most retailers have invested in some form of online capabilities, few (7 percent) have built the appropriate supply chain infrastructure to support a true, seamless, cross-channel experience for the customer.

In order to progress to next-generation retailing, retailers must be capable of integrating multichannel selling, multichannel fulfillment, and multichannel service capabilities that span cross-channel order and inventory management, replenishment, logistics and fulfillment services, and returns processing. Next-generation retailing insists consumers have many options for where to shop, return and pick up or send their purchases.

The key to delivering consistent experiences lies in increased integration of enterprise-wide and network-wide systems and processes. In order to accomplish this new multichannel retail initiative, all fundamental supply chain systems need to be integrated at levels not realized before. Key brick-and-mortar touch points include:

• Enterprise-wide, multichannel inventory management system
• Multichannel order management system
• Warehouse management system
• Workforce management system
• Transportation management systems
• Replenishment system
• Demand planning and forecasting system
• Order, inventory, and shipment tracking system, with event management and alerts
• Returns management system

Current retail systems remain fragmented by channel: store operations, back office, and e-commerce. Retailers must achieve an integrated corporate-wide, cross-channel processing and information infrastructure for inventory, orders, sales, fulfillment, replenishment, and returns-an operational data warehouse of sorts. Most retailers are currently at some stage of this integration, but for the most part, haven't achieved tight integration between online systems and traditional store and back-office systems. Even loose integration can mean manual, people-based processes that don't provide, with any uniformity, reliability or scalability, a next-generation retail customer experience.

The Outlook

A recent AMR Research survey indicated that 43 percent of retail respondents plan to re-platform their e-commerce solution by 2011, recognizing the need for tighter internal integration.  Retailers must divert current e-commerce investments from mere online site enhancements to areas that will provide a more uniform cross-channel customer experience, starting with an integrated, corporate-wide, inventory visibility infrastructure, and then integrating e-commerce, in-store, call center, and catalog as well as kiosk-based channels and processes.

In order to progress to next-generation retailing, retailers must be capable of integrating multichannel selling, multichannel fulfillment, and multichannel service capabilities that span cross-channel order and inventory management, replenishment, logistics and fulfillment services, and returns processing. Next-generation retailing insists consumers have many options for where to shop, return and pick up or send their purchases.

The key to delivering consistent experiences lies in increased integration of enterprise-wide and network-wide systems and processes. In order to accomplish this new multichannel retail initiative, all fundamental supply chain systems need to be integrated at levels not realized before. Key brick-and-mortar touch points include:

• Enterprise-wide, multichannel inventory management system
• Multichannel order management system
• Warehouse management system
• Workforce management system
• Transportation management systems
• Replenishment system
• Demand planning and forecasting system
• Order, inventory, and shipment tracking system, with event management and alerts
• Returns management system

Current retail systems remain fragmented by channel: store operations, back office, and e-commerce. Retailers must achieve an integrated corporate-wide, cross-channel processing and information infrastructure for inventory, orders, sales, fulfillment, replenishment, and returns-an operational data warehouse of sorts. Most retailers are currently at some stage of this integration, but for the most part, haven't achieved tight integration between online systems and traditional store and back-office systems. Even loose integration can mean manual, people-based processes that don't provide, with any uniformity, reliability or scalability, a next-generation retail customer experience.

The Outlook

A recent AMR Research survey indicated that 43 percent of retail respondents plan to re-platform their e-commerce solution by 2011, recognizing the need for tighter internal integration.  Retailers must divert current e-commerce investments from mere online site enhancements to areas that will provide a more uniform cross-channel customer experience, starting with an integrated, corporate-wide, inventory visibility infrastructure, and then integrating e-commerce, in-store, call center, and catalog as well as kiosk-based channels and processes.