Retailers Expanding Role of Supply Chain Management to Battle Economic Conditions

Companies are investing in process improvement, management development, technology and workforce training.

The expenses falling under the control of SCM (supply chain management) executives are receiving strong attention from the top of the organization, according to a report released on Oct. 6 by the Retail Industry Leaders Association (RILA) and the Auburn University Supply Chain Management Program.

SCM executives now find themselves in the spotlight and must perform their brand of magic to save the show, says the report, which reveals that the role of supply chain management (SCM) within their organizations to better manage inventory, control costs and maintain first-rate customer service.

"In this challenging economic climate the critical role of supply chain management is underscored," said Casey Chroust, executive vice president of retail operations. "Retailers have responded with strategic investment and process improvements that focus squarely on delivering the products customers want and the value and service that they deserve."

According to the report 90% of respondents have invested the same or more in supply chain process improvement; 70% in management development; 60% in technology and 60% in workforce training. These gains emphasize the desire to improve supply chain efficiency.

Additionally, to offset declined consumer spending, 80% of supply chain management executives report focusing their efforts on reducing inventory with close to 70% reporting that they are placing smaller initial orders.

Four major themes emerged as leading practices within retail supply chain management. Best-in-class retailers:

  1. leverage strong distribution networks that are capable of supporting high volumes
  2. create flexible capacity to adjust supply chain infrastructure and support unanticipated fluctuation in demand
  3. align inside and outside the organization to break down silos and manage processes more holistically
  4. continually develop the internal talent pool to enhance the quality of the workforce
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