April 28, 2015 Industry news
There was a time when shopping as an activity was a real chore. Consumers could visit a store in order to make a purchase, or, browse a mail order catalogue, and then place an order, which was then finally posted, alternatively, if they were in luck, they could contact the company’s order department by telephone.
From a supply chain perspective, the majority of deliveries were direct to the store - certainly from large suppliers. Store managers would agree orders with suppliers’ sales representatives, but weren’t then always sure the right product would arrive, in the right quantity on the right day.
Happily, shopping is now very different. Retailers work hard with their suppliers, to make sure they offer a seamless shopping experience, however the shopper chooses to make a purchase.
The supply chain has changed beyond all recognition. Complex warehouse management and logistics systems have been introduced, supported by advanced forecasting and planning applications. With a new level of control over their inventories, retailers can run leaner and tighter stocks. In turn suppliers are becoming more agile and flexible in meeting retailer’s needs - especially when coping with volatile changes in demand.
Even with the process improvements that have been achieved, there are new multi-faceted challenges for the supply chain - order fulfilment sticks out as a current hot topic. Retailers’ existing business models are being stretched by changing shopping habits. Shoppers have more demanding expectations around range and assortment, better, more detailed product information, product availability and a choice of delivery options. Especially when shopping online.
Many retailers are having difficulty in meeting the demands of the modern shopper. Being able to offer a consolidated, a real time view of their inventory across stores and distribution centres is quickly becoming a competitive advantage.
The physical movement of product through the supply chain from source through to the point of purchase relies on speed and accuracy.
- Speed in responding to retailers’ needs in order to maintain product availability, whether in store or online
- Accuracy in making sure the right products arrive in the right quantity, at the right time in the right location
There are two key enablers to achieving this and to improving supply chain efficiency. The first one is data – good data. Data which is 100% accurate, timely and is well maintained at source (i.e the supplier). In the current climate, retailers are looking for cost efficiencies to make up for any shortfall in margin. Significant costs are still being incurred throughout the industry as a result of poor data quality. As a result, there is a negative effect on trading relationships due to a lack of trust.
The second enabler is EDI (Electronic Data Interchange) to help automate the ‘Order to Cash’ process. This is an important driver of efficiency and whilst some great progress has been made, the UK retail industry has a long way to go. Improving efficiency at this point in the supply chain will lead to a better in-bound goods received process.
GS1 UK has been working with the industry to champion supply chain efficiency. In the coming twelve months, we will see more retailers adopting more GS1 standards, by implementing the use of Advance Shipping Notices (ASN’s).
How does this work?
In preparing a consignment for delivery, the supplier attaches a label to each pallet which contains a Serial Shipping Container Code (SSCC). The pallets are loaded and scanned onto the truck, triggering an Advance Ship Notice (ASN) message to the retailer.
Using the SSCC, the retailer’s warehouse then scans and verifies each pallet against the ASN. With everything in order, the retailer sends an Electronic Proof of Delivery message (EPOD) prompting an invoice from the supplier.
With the use of accurate and timely data the amount of human intervention in the process can be reduced. Enabling both sides to reduce the time the whole process takes, and capture significant cost savings.
GS1 UK is working closely with the retail grocery sector to increase master data accuracy through its Quality Assurance function, this will include a new capability to provide certification, auditing and assurance services. Helping our members to improve quality and efficiency throughout their supply chain operations.
The supply chain is becoming more strategic, trading partners - especially suppliers - are striving to improve their overall trading relationships with retailers. Improving data quality, and implementing solutions such as ASNs and EPOD messaging, means suppliers can develop a more meaningful and trusted relationship with retailers.
These ways of working and process improvements are paying dividends in the grocery retail sector, but are transferrable to the whole of the retail sector.
If you’d like to know more, Andy Robson, our Supply Chain Solutions Manager, will be happy to help.
Contact: andy.robson@gs1uk.org , mobile 07717 652444