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What Is the Role of SCM In the Retail Mantra?

Jan 5, 2018

With the retail market booming, companies operating in the retail industry are leaving no stone unturned to make the best of the opportunities at hand.”

Supply chain management also popularly known as SCM plays an integral role in the smooth functioning of activities in the retail cycle. As far as a retailer is concerned, to maintain a long-term fruitful association with the customers, it is essential to provide the right customer with the right product. But with the increasing competition in the market, today it has become inevitable for players in the industry to reach their customers ‘at the right time’ and before the competitor does. This where an efficient SCM plays a vital role, supply chain ensures a smooth transition of a product in the stages ranging from manufacturing to the point-of-sale. A slight distortion in the SCM of a business can cost the company big in terms of dissatisfaction of the customers as well as an increase in the risk of losses. So how does supply chain management affect the retail landscape?SE_Demo2

Reduces operating cost

An effective SCM can help retail industry players reduce their operating costs considerably in multiple ways. Firstly, a good supply chain strategy allows companies to decrease their inventory holding cost by making quick and timely delivery of the product from the manufacturing stage to the final consumers. This will enable players in the retail industry to reduce their spend on inventory holding and warehousing costs. Secondly, manufacturers depend heavily on the supply chain to deliver materials to production or assembly plants within a stipulated period. In the absence of an appropriate supply chain, the whole production unit would suffer due to material shortage.

Withstand market competition

Retail industry organizations rely on SCM to deliver the products from the point of production to the point of purchase with the minimum cost and time. The mounting cut-throat competition in the market among players to grab the bigger slice in the market share makes it essential to satisfy the customers more efficiently than the competitor does. If companies can analyze the competitor’s supply chain strategies and adopt better measures to reach their customers faster, then it can work wonders for business.

Improve customer service levels

There is no shortage of competition in today’s market scenario. As a result, customers always expect their demands to be met on time because otherwise, they know they still have other options available in the market. This could cause serious trouble for businesses aiming to retain customers for their business. By depending on a good supply chain companies can be sure that the products will be available and delivered to the customers when they desire it.

Improves the financial position

As discussed earlier, SCM helps firms to reduce the warehousing and storage costs. Also, an efficient supply chain reduces the lead time, i.e., the steps involved in the cycle from production to sale of goods, thereby saving the costs and increasing the revenue inflow for companies. With a right SCM in place, companies can continuously assess their current process and fill the gaps and eventually lower the costs.

Seamless information flow

The right SCM strategy in the retail industry not only integrates material flow but also incorporates information flow in the supply chain. With customers constantly demanding for easy access to products and real-time response to their queries, the information flow should be uninterrupted. Insufficient information flow due to a fragmented supply chain could result in a poor supplier-customer relationship. SCM also provides timely, accurate, complete and relevant information flow to avoid possible risks and other missed opportunities.

To know more about the opportunities, challenges, and trends in supply chain management for the retail industry

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