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Research Team
Brian J. Gibson, Ph.D. and C. Clifford Defee, Ph.D.
Sponsored By
Table of Contents
Page 1
Our primary focus is to put in place a supply chain that will deliver an
interconnected universal retail experience that happens in-store and elsewhere.
Study Methodology
Online Survey
76%
86%
Director-level or above
88%
21 years
Summary
Page 2
Jo-Ann Stores
The Jones Group
Lifeway Bookstores
Limited Brands
Lowes
Meijer
Michaels Stores
Neiman Marcus
Nordstrom
Office Depot
Pep Boys
Petco
Sears Holding Co.
Staples
Target
Toys R Us
Walgreens
Walmart
The Vitamin Shoppe
Rank
1
While youre trying to figure out how to invest in the future, youre also trying to
be cost-conscious in the short-term. Balancing those two needs is our challenge.
Strategic Focus
The critical issues listed in Table 2 require supply
chain leaders to continuously monitor existing
strategies and adjust to changing conditions. In
addition, the growth of omni-channel activity is
driving many retailers to conduct comprehensive
strategic planning initiatives. Supply chain leaders
recognize the need to adjust their structure and
focus to become more customer-driven.
Each year, we ask the survey participants to
identify their primary supply chain strategy for
the current and upcoming year. Figure 2
summarizes the shift in retailers strategic
priorities over the life of the SRSC Report.
Figure 2: Strategic SCM Focus
issue on the table. You dont get to do something like this every year and its just fun to do.
Page 4
Best-In-Class Capabilities
Pursuing Supply Chain Excellence in an Omni-Channel World
Supply Transformation
Page 5
The Response
Our study participants recognize the importance
of supply chain talent management as highlighted
in Table 3. Nearly 98 percent strongly agree or
agree that the organization will benefit from
having well-prepared supply chain talent.
Likewise, the vast majority clearly recognize the
link between talent development and retention.
Table 3: Value of SCM Talent Initiatives
Statement
Level of Agreement
Low
High
Usefulness
Rank
100%
100%
98%
87%
87%
87%
Mentoring program
87%
87%
87%
Professional certification
66%
10
57%
11
Method
Talent Retention
Turnover can be a major challenge for retailers.
An exodus of supply chain professionals depletes
the talent pool, impairing efforts to attract,
develop, and advance future leaders.
Among our participating organizations, the
majority have low turnover of supply chain talent
and indicate that their retention rates are
excellent. Still, Figure 5 reveals that some
retailers experience an undesirable churn rate.
Page 7
Usage Level
80%
76%
74%
67%
63%
My job is to find two or three people that could step into my role if I win the
lottery tomorrow. Why? Its the right thing to do for the organization.
Succession Planning
Historically, succession planning has focused on
C-level roles. However, three trends signal a need
for supply chain talent succession planning:
(1) The focus on leaner organizations reduces
opportunities to build bench strength.
(2) The improving economy increases the risk
of high potential talent turnover.
(3) The growing number of retirement eligible
supply chain executives creates a threat
of institutional knowledge loss.
Despite its importance, Figure 6 indicates that
only four in ten retailers have established formal
processes to prepare future SCM leaders.
Figure 6: Succession Planning Status
Level of Agreement
Low
High
Key Takeaways
The potential benefits of SCM can only be
realized by retailers that develop and retain top
talent. Thus, supply chain leaders must put
people investment on equal footing with process
and technology initiatives. This builds teams that
can deliver on the promise of supply chain
excellence and competitive advantage in an
increasingly complex omni-channel environment.
An improving economy in 2014 will increase the
risk of turnover. To avoid a potential talent
shortage, supply chain leaders must create
cohesive talent management programs that
foster professional growth, retention, and
advancement. The Retailer Profile highlights an
initiative to build and sustain a strong SCM team.
where they are not comfortable, surround them with good talent, and give them individual guidance.
They emerge with a broader understanding of the supply chain, says the executive.
Page 8
The Response
Page 9
You dont want to have separate pools of inventory to flow to separate demand
streams. But, it takes a lot of systems work to pull that off.
Multiple inventories mean greater safety stock. As
online sales have grown some retailers find that
their inventory investment has grown. A solution
is to share retail and online inventories for
common SKUs. Figure 7 reveals that retailers are
sharing inventories, with only 29 percent relying
on dedicated inventories or limited inventory
sharing. The majority are effectively leveraging
their inventory across multiple channels.
Page 10
Key Takeaways
Retailers are pursuing a variety of strategies to
support omni-channel inventory management
and order fulfillment operations.
The trend
appears to be in the direction of combining
inventories and fulfillment where possible to gain
efficiencies. No one approach fits all situations.
SKU assortment breadth, product characteristics,
retail vs. on-line demand patterns and other
retailer-specific considerations must be evaluated
to determine the best solution in each case.
and much more intricate home delivery all of that needs be real easy for you on the front end.
To support fulfillment of these orders and smash their competitors, the retailer fills orders from
DCs, stores, and vendor locations. We need to utilize the infrastructure we have in most every
community to get product to you at the lowest cost and highest service so that we can compete.
Page 11
Type of Measure
Usage
Level
Usefulness
Rank
Company-wide
91%
Functional area
85%
Downstream w/ customers
54%
61%
Upstream w/ suppliers
57%
Page 12
Theres no on time per share in the Wall Street Journal. Its earnings per share!
The only metric thats in the Wall Street Journal is earnings per share.
Key Performance Metrics
Retailers use a wide range of metrics to evaluate
supply chain performance. However, a handful of
KPIs were identified frequently by the study
participants. These focal KPIs include:
Cost / Productivity measured via Cost per
Carton and Space Utilization for example
Service Level measured via Store In-stock
Percentage and Fill Rate
Inventory Turnover
Employee Safety
The cost, service and inventory turn metrics are
long standing and expected. This was the first
time we have heard safety mentioned repeatedly.
Two reasons for the growing interest in safety are
apparent. First, as the economy has improved
over the last two to three years retailers are
finding it more difficult to attract and keep quality
employees in their SCM operations. The focus on
safety demonstrates commitment to employees
without further escalating pay.
Page 13
You really need some computer firepower and get into more sophisticated
analytics to weight every single combination that could exist.
Only recently have best-in-class retailers begun to
invest in analytical capabilities to draw in-depth
insights from big data sources such as POS,
suppliers, and customer loyalty programs. As the
Retailer Profile highlights, supply chain leaders
are beginning to use more sophisticated tools to
optimize performance. Predictive analytics and
prescriptive analytics are helping on this front.
weve talked about that lets talk about some facts and lets talk about the data. Its amazing how
powerful the data can be.
Page 14
On the Horizon
Impending Issues, Opportunities, and Challenges
Page 15
We need to optimize fulfillment based upon where the inventory is, where the
customer is, and what time frame they need the product in.
Store Format Changes
eGroceries 2.0?
Page 16
Summary
Final Remarks from the Fourth Annual SRSC Report
Key
Our Quote
supply chain is optimized for freight. Weve got to figure out how to be a
lot more nimble in providing value to our customers.
Research Resources
1.
2.
3.
4.
5.
6.
7.
8.
9.
Siddharth Cavale, Discounts, Promotions Spur Sales in U.S. Holiday Season, Reuters, December 26, 2013.
Allison Enright, U.S. E-Retail Jumps 14.6% in Q3, internet RETAILER, November 8, 2013.
Kyle Stock, The Ample Evidence Behind a Christmas Shipping Surge, Bloomberg Businessweek, December 26, 2013.
Brian Gibson, et. al., Talent Management: The Acquire Process, Oak Brook, IL: CSCMP, 2013.
Occupational Outlook Handbook, Washington, DC: Bureau of Labor Statistics, 2012.
Kim Ruyle, Measuring and Mitigating the Cost of Turnover, SHRM Webcast, July 17, 2012.
Jennifer Baljko, Betting on Analytics as Supply Chains Next Big Thing, EBN, May 3, 2013.
Dunn, et. al., Whats the Deal? The Affordable Care Act in Labor Negotiations, The Metropolitan Corporate Counsel, December 17, 2013.
Joanna Glasner, Why Webvan Drove off a Cliff, Wired, August 10, 2001.
Page 17
Chain Management.
Page 18
JDA
JDA Software is a leader in global supply chain management, offering
a broad portfolio of integrated planning and execution solutions and
services to help firms manage the entire supply chain from raw
materials to finished products and into customers hands through
any channel. Built on the rich heritage of growth, innovation and
market leadership of its integrated brands, including i2 Technologies,
Manugistics, E3, Intactix and now RedPrairie, JDA is committed to
making businesses more efficient, sustainable and profitable.
Page 19
Lisa La Bruno
Cindy Kim
Director of Marketing
JDA - The Supply Chain Company
Worldwide Headquarters | Scottsdale, Arizona, U.S.A.
Cindy.Kim@jda.com
T: (480) 308-3294