Thursday, March 8, 2012

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Report highlights e-commerce’s growing impact on retail supply chains

A retail report that surveyed close to 200 supply chain executives representing companies with over $1 billion in revenue, revealed the growth of multi-channel retailing will receive increased focus in areas that include the online, mobile, and tablet platforms, creating a more complex environment for fulfillment practices.

The Third Annual State of the Retail Supply Chain report, prepared by the Retail Industry Leaders Association, Auburn University and Accenture, found electronic ecommerce sales have grown by more than 15 percent to $35.3 billion compared to overall sales growth of 4.1 percent over the previous year.

The report forecasts e-commerce sales to grow 10 percent annually, driving multichannel retailing growth and adding more fulfillment complexity.

As a result, RILA said in a statement on the report's release that over 85 percent of the survey respondents indicated direct consumer fulfillment has become a top priority.

“Traditionally retailers have used separate operational models to move goods and fulfill orders,” said Casey Chroust, RILA’s executive vice president of retail operations.

“Now those models need to be merged so that companies can continue to deliver the products consumers want across any channel without losing efficiency or adding cost. This requires advanced integration and innovation and working closely with suppliers and service providers while utilizing technology,” Chroust said.

RILA said its report also highlighted the various multichannel challenges facing retailers, including: variation in shipment size, order filling processes and delivery methods as well as the inconsistent SKU assortment of multichannel retailers, as less than 18 percent of the retailers surveyed offer the same SKUs across channels.

“As sales volume grows in nontraditional channels, achievement of technology integration, operational flexibility, and process visibility will separate the leaders from the pack,” said Brian Gibson, professor of supply chain management at Auburn University.

The report’s findings include the emergence of distributed order management software “as a common-sense response to retailers’ multi-channel needs. DOM allows retailers the ability to capture, manage and optimize orders regardless of origin-computer, retailer store, kiosk, or mobile phone.”



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