Month: August 2022

Categories
Business Technology

5 sure shot techniques to reduce costs in the retail supply chain

Creating a highly competitive retail supply chain depends on how well you’re able to control/reduce your costs. Incurring unnecessary costs can mean that your processes aren’t efficient enough, your funds are blocked in too many fixed assets, or your supply chain isn’t performing at an optimum level. These factors could pile up costs, impact margins, affect your competitiveness, and eventually make your business falter. 

Keeping costs under control is therefore one of the most essential aspects of supply chain management. Let’s look at 5 sure shot techniques that can help you reduce your costs:

  1. Localize fulfillment

Transportation accounts for about 40 to 50 percent of logistics costs, and 4 to 10 percent of the selling price of final products. Reducing the distance between your warehouse and customer clusters is, therefore, necessary to control overall costs. The closer your warehouse, or fulfillment center, is located to your customer cluster, the quicker fulfillment will be, which also means a significant reduction in fuel consumption. Regional Utilisation (RU), the idea of fulfilling maximum orders locally, is one of the topmost solutions for cost management in supply chains today. 

RU becomes even more effective when coupled with new-age merchandising solutions. Powered by data insights, this enables brands to conduct Pincode level analysis to place the right products at the right warehouse, or store, as per demand in a particular market. Shelving the right styles and size combinations can boost regional sales significantly while saving costs on logistics.

Download e-book: What is the hype around Regional Utilization?

  1. Rethink warehousing!

As a brand expands, operating from a centralized warehouse can raise distribution costs and impact business quite significantly. In fact, as per Logistics Bureau, up to 12 percent of companies are unprofitable after distribution costs are taken into account.

This can be tackled with Distributed Warehousing which enables brands to expand into other regions, and support efforts toward regional fulfillment. Fulfillment of orders from various local and widely distributed warehouses is quick and cost-effective. 

Technology solutions like Increff Cloud warehousing allow brands to rent out spaces based on regional requirements. This means investment in warehouse infrastructure is not required and brands are able to convert CAPEX into OPEX thus controlling their overhead costs. In recent times, this has been further augmented with the rapid rise of 3PL players with whom brands can partner for renting warehousing spaces and adding value to the supply chain. 

Read: 6 Reasons to outsource your warehousing operations

  1.  Manage manpower costs

Costs incurred due to human labor is another significant portion of your expenditures. These include their wages, training and development costs, costs incurred in hiring additional/ad hoc labor during peak season sales, and adjusting manual errors committed by the workforce. 

With new-age WMS and merchandising solutions, brands can successfully avoid a lot of unnecessary labor costs and reduce errors in decision-making. Simple UX/ UI facilitates easy training which is extremely useful during crunch times when the technically skilled workforce is scarce or expensive. The ease of use increases the fungibility of staff and maximizes the use of the available workforce.

Automated solutions ensure continuous, seamless workflow with minimum decision-making errors. Digitizing inventory through serialization allows easy scanning of individual pieces of inventory for efficient tracking and reduces training time to 5-10 mins. This minimizes efforts and costs related to elaborate training and development of the human resource operating the system.

  1. Make data-backed decisions

Holding on to obsolete inventory can add up to 25 to 30 percent more to the unit cost of your products. Besides, the capital tied up with this inventory could account for about 15 percent of opportunity costs. Obsolete inventory is mostly a result of the inability to forecast demand accurately.

However, new-age merchandising solutions backed by relevant data enable brands to create product assortments with the right styles and sizes. This helps them meet the customer demand perfectly, without causing problems of overstocking or under-stocking, both of which impact costs, the former causing wastage and the latter calling for in-season redistribution. 

New-age solutions facilitate analysis of future demand over a time horizon of the next season or business year. Analyzing past sales data helps create a favorable estimate of the upcoming season stock requirements so the right quantity can be placed in the right location. Manufacturing the right quantity as per demand avoids overproduction, unnecessary expenditure, and resource wastage. 

Read: Maximize store performance with optimum assortment planning

  1. Use multiple channels for order fulfillment

Last mile connectivity is known to be the costliest part of the supply chain and accounts for about 53 percent of the total shipping costs. This calls for transforming order fulfillment through omnichannel retail, which is a fluid vision of fulfillment that allows customers to receive their orders in the faster possible time. 

Fulfillment options like Buy-Online-PickupIn-Store (BOPIC), store fulfillment, curbside pickup, home delivery, etc. are getting popular. Conversely, a customer visiting a store who is unable to find the desired product can make use of the ‘endless aisle’ online option to purchase it and get it delivered at home or the nearest store. This doesn’t just offer immense customer ease, but also allows brands to resort to the most cost-effective fulfillment option.

Cost control is the first step towards business process efficiency and with the above-given tips, brands can simply rule the roost among their competitors. Effective cost control has great benefits for not just the business stakeholders, but also the environment and society at large.

Categories
Technology

7 Biggest supply chain mistakes & how to solve them

You could be one of the most seasoned merchandisers and yet you could fall for some common supply chain mistakes. Often these result in inflated costs, poor workforce management, sub-optimal processes, delays in fulfillment, and lots of confusion and errors. It is necessary that these mistakes are brought under the scanner and fixed before they leave a severe dent on the business growth.

Below we discuss 7 common mistakes that need immediate attention. 

1. Choosing too many tech vendors

Mistake

It could be quite tempting to implement multiple tech solutions from different vendors, considered experts or specialists, at multiple stages of the supply chain. However, this can result in creation of silos, and a lack of coordination among different processes especially if there are separate screens to track the progress of each stage. Multiple dashboards require extensive coordination and great resource time in management, it affects inventory visibility and reduces clarity, leading to a fragmented workflow.  

Fix

Instead of installing separate tech solutions to monitor individual processes e.g. OMS, WMS, Returns Management, etc. within a warehouse, it is beneficial to find the right tech partner with a single comprehensive solution to ensure seamless workflow and inventory accuracy. A single view of inventory provides one source of truth and ensures transparency within the warehouse to boost efficiency by making coordination between different arms of retail operations easier. 

2. Inappropriate use of data

Mistake

Making the maximum use of data is crucial to take accurate supply chain decisions, cutting costs, and ensuring the right products reach the right customer clusters. Inaccurate analysis or working manually on tedious Excel worksheets can lead to incorrect interpretations and missed sales opportunities.

Fix

Install algorithm-based, intelligent merchandising solutions that automated decision-making to minimize human intervention, offer quick decisions, and ensure accurate merchandise planning, buying, and allocation. By drilling down analysis to the individual store level, decision-making becomes highly granular and accurate. This also enables brands to shelve the right stock at the right store in the right quantity, thus avoiding over or under-stocking and capturing sales effectively.

3. Ill inventory health in stores

Mistake

Fashion brands are especially sensitive to the health of the inventory in stores because the demand changes rapidly with seasons and trends. With expanding business requirements, brands could overlook the importance of keeping the right stock, in the right quantity, at the right location, and at the right time. This leads to problems like aging stock, leftover stock, and inadequate size and style. Stock brokenness can lead to the unavailability of popular styles and a significant loss of sales.

Fix

Ensure you conduct an accurate demand forecast for the upcoming season and regularly replenish the stores to meet in-season demand spikes. Pull back slow-moving inventory to make space for better-performing styles. By maintaining the health of the inventory, you also minimize the possibility of running out of popular styles. Investing in good inventory management software enables you to minimize human errors, streamline merchandising, and maintain a healthy inventory.

4. Poor cost management strategies

Mistake 

A number of poor management practices can lead to an unnecessary increase in costs. This starts with the overproduction of goods which overshoots the estimated market demand causing overstocking, obsolescence, and wastage. A mismatch in supply and market demand can cause wastage or shortage, and subsequently a rise in transportation costs due to in-season redistribution. As brands expand their territorial footprint, ordering from a faraway centralized warehouse can become costly. Likewise, investing in warehouse infrastructure where you hope the demand would increase, also means unnecessarily blocking precious resources.

Fix

Use data-backed solutions to accurately forecast demand for a particular customer cluster. Merchandising solutions can help you stock the right styles and sizes for each market, ensuring zero wastage. With distributed warehousing and collaboration with 3PL partners, you can avoid investing in warehousing infrastructure, and convert your CAPEX into OPEX. Likewise, with regional utilization brands can ensure that most of their orders are fulfilled locally, and transportation costs are reduced dramatically. 

New-age technology solutions like Increff Cloud Warehousing, enable automation and offer a simple UX/UI to avoid the need for costly and time-consuming training. This increases the fungibility of your manpower and reduces dependency on expensive skilled labor. 

Read: How Distributed Warehousing Benefits E-commerce

5. Single delivery service

Mistake 

Brands that focus only on one sales channel (say a website or social media) and develop myopia for all the others are likely to face the heat of intense competition. This is because customers are increasingly looking for quick fulfillment and ease of delivery from multiple points of contact with the brand. Brands which are unable to rise up to this new trend are likely to become irrelevant as omnichannel begins to dominate order fulfillment.

Fix

Create a walled garden of brand touch-points and experiences around your customers. Adopting omnichannel fulfillment and the latest fulfillment practices such as BOPIS, curbside pickup, or in-store pickup, enhances customer convenience and satisfaction. Omnichannel is also a cost-effective practice as it enables the brands to choose the most economical option to deliver goods to the customer.

Read: Faster Omnichannel Order Fulfillment is the Future of Retail

6. Inefficient returns management

Mistake 

Brands could commit the mistake of ignoring their returns management as an auxiliary function of their supply chain. This can cause delays in returns logistics, slowing down of resale, stockpiling and obsolescence, or in-transit damage. Lacking the data about the reasons for return or the most repeatedly returned items could lead to regular repetition of past mistakes.

Fix

Have an automation-based returns management solution in place that will streamline the entire returns process. It enables you to sort and grade the returned goods, resell the good stock, and redirect the refurbished stock to the secondary market. This minimizes waste and enables brands to earn maximum value from the returned goods. Serialization enables 100% tracking of inventory and capturing the exact reason for returns in the barcode. Repeatedly returned products can be easily quarantined, analyzed, and removed from circulation to prevent unnecessary expenditure.

Read: E-commerce Returns Analysis: Solution to the trillion dollar returns problem

7. Excess discounting to clear stock

Mistake

Discounting could seem like the easiest way out to clear the stock at the end of the season, or during periods of slow sales. However, excess and indiscriminate discounting don’t just impact your margins, it also affects your brand image. Excessive discounting dilute the reputation of your brand and your customers may find it hard to trust the pricing of your products in the future.

Fix

Increff Markdown optimization solution enables brands to offer the right percentage of discount, just tipping the balance towards conversions, and preventing an excess drop in margin. This depends upon the ongoing performance of an item and the status of its inventory.

Read: What is High-Low Pricing Strategy

The mistakes discussed above could cost your business dearly as the intensely competitive marketplace of today leaves very little room for inefficiencies. Brands, therefore, need to plug all the possible loopholes and ensure the highest possible efficiency in their supply chain processes.

Categories
Business Warehouse Management

10 Unrealized Benefits of Serialization

Itemized serialization pays rich dividends to your business by optimizing processes, making inventory 100% traceable, minimizing human errors, and increasing transparency throughout the supply chain. Here are 10 unrealized benefits of serialization for the brands:

  1. Inventory accuracy and traceability

Serialization detects and prevents duplicate scanning of items thus ensuring 100% accuracy. Since all the information is stored in the barcode, it is very easy to trace its journey within a warehouse and through the supply chain.

2. Easy tracking of user and machine actions

Since barcode scanning allows capturing 100% data in the system, in case an incorrect step is taken by a staff member it can be easily tracked. Brands can get down to the exact item barcode which is faulty, and the staff member that has made the mistake. This makes error mapping quick for training purposes and helps identify loopholes in the processes. This is not possible to record on SKUs as the number of items having the same barcode are many and zeroing in on the exact faulty item is difficult. 

Read: Perfect warehousing solution for higher efficiency and inventory management

3. Automate processes to reduce the resource time investment

Rather than using lengthy spreadsheets or approximations for taking crucial warehousing decisions, serialization enables easy automation of processes. Consolidating multiple steps helps reduce manpower and handle repetitive tasks more efficiently allowing managers to focus only on important tasks. It avoids costly errors and consequent business losses.

4. No need for wall-to-wall audits

In an SKU-based system, conducting wall-to-wall physical verification of the items require all operations of the warehouse to stop in order to avoid recounting the same items. This is not an issue with itemized serialization as each item has a unique ID and is perfectly mapped to the bin. With real-time inventory sync, in case there is any change the barcode will ensure it gets captured in the system. With 100% bin level inventory accuracy, regular wall-to-wall audits are not required.  

5. FIFO and FEFO for order picking

By having all the information accurately stored in the barcodes, brands can prevent piling up of aging inventory, obsolescence, and wastage. As the product expiry date of each item gets mapped to the barcodes, brands can use the First-In-First-Out (FIFO) algorithm to push out those items that entered the warehouse first. This method is widely used in industries where inventory is prone to obsolescence, such as fashion. 

Likewise, the expiry date of each item being stored, items expiring first are sold off first by the First-Expiry-First-Out (FEFO) method. Companies dealing in perishable products such as packaged milk or pharmaceuticals mostly use the FEFO method.

6. Location Adherence in Picking

In a scenario where an SKU is distributed among several bins and the whole SKU is represented by a single barcode, the picker may pick the items from any bin thus impacting bin level accuracy. SKU-based order picking will either not specify which bin the item needs to be picked from, or the system will not prompt an error when the item is picked from a mapped location. This can lead to inventory mismanagement, obsolescence, and errors in counting. On the other hand, when picking is done by following the individual barcode of each item, the picker will pick the item from the bin specified by the system. This ensures the inventory count is accurate at all times, there is no need for regular audits, and there is 100% traceability within the warehouse. 

Read: How to make picking and packing more efficient for B2B and B2C customers

7. Effective price analysis with the possibility for daily margin adjustments

Processes get interrupted whenever prices are revised in the stores. With serialization, brands can keep track of their cost prices and sales prices dynamically for different items. Margin adjustments can be made at individual style and piece level. Given the fact that the inventory is completely digitized, brands can easily adjust the prices of their stock depending upon the demand and location. 

8. Efficient returns management and processing

Serialization allows brands to link each returned item’s barcode with its reason for return. This makes for great insights into why customers are rejecting the products and what corrective measures must be taken. Repeatedly returned items can be quarantined for a thorough quality check, to understand the defect. Rather than creating new SKUs, serialization of inventory enables brands to send the exact item back to the vendor in RTV (return-to-vendor). As soon as a serialized item is returned, it can be made live immediately (depending upon its condition), expediting re-commerce and increasing the chances of resale. 

Read: E-commerce returns analysis – solution to the trillion dollar returns challenge

9. Easy SPF (Seller Protection Fund) claims to process 

When the exact reason for return is mapped to individual pieces of inventory, along with the image, it is easier for marketplaces to file a claim with brands for the rejected item. This ensures quick reconciliation with the brands.

10. Simple UX/UI for faster order processing

Serialization helps digitize the warehousing process and allows brands to use handheld devices or Bluetooth scanners for scanning items. This eliminates chances of human error and enables working with an automated system accessible through a simple UX/UI. All of this precludes the need for costly high-skilled labor, cuts down on training time, easy cross functioning, and ensures faster order processing.

As is clear from the above pointers, serialization lies at the very heart of automation in warehouses and is the first step toward making supply chain processes more efficient, cost-effective, and highly competitive. 

Categories
Smart Merchandising

4 Myths on Store Sales Maximization

As the marketplace becomes increasingly competitive by the day, store managers are dealing with a tremendous amount of pressure to maximize sales, meet targets and boost profitability. In the last couple of years, the conditions created mainly by the pandemic have only added to that pressure and compelled brands to explore new options and innovative practices. 

But these have also given an impetus to a lot of myths surrounding supply chain management, four of which we are going to bust in this blog. So let’s get started!

Myth 1: Keep 100% inventory in stock to fulfill any order that may come

This could be one of the most tempting ways to ensure no sales opportunities are lost, and customer satisfaction is maintained at the highest possible levels. But having all your inventory in stock will raise your carrying costs sharply and may also result in a lot of stockpiles. 

The way forward instead is “rightsizing” your in-stock inventory and leveraging the services of your trusted suppliers for delivering on time. The future of profitable supply chains in fact lies in how well you are able to balance between in-store and Just-In-Time (JIT) inventory.

By building shorter supply chains, you can make your business continuity plans more robust and avoid disruptions that are typical of long and winding supply chains. Another crucial factor is your ability to integrate and coordinate with local and last-mile partners. These not only understand the immediate customer cluster better but also make a lot more logistical sense for your brand.

Read Case study – Lenskart boosts store revenue performance by 23% for JIT & OTC merchandise with the right allocation and on-time replenishment

Myth 2: Calculation in Excel is easy. The new-age merchandising tool can be complex & time-consuming

Well, this statement is highly illustrative of your inertia to grow and evolve as a brand! Excel is great for storing and manipulating data and generating forecast reports. But it is a generic tool that will seem too primitive for the growing challenges of today’s marketplace that demands automation, specialization, and speed.

New-age merchandising tools may appear rather formidable or complex. But in reality, these are exactly the opposite. The great thing is, that these do not work on a rip-and-replace model and can easily be accommodated into your pre-existing systems. These are highly adaptable and operable as plug-and-play solutions. 

Read: The cost of human error in merchandise planning: MS excel vs new-age Merchandising solutions

Myth 3: Discounting will increase sales & help earn more

Discounting could be a good short-term ploy to get the aging stock off your shelves and make room for fresh products. But using it indiscriminately could be rather counterintuitive and harm the stature of your brand in the long run. More immediately, it will reduce your margins and have serious implications for the overall profitability of your products.

What you really need, is to be able to use discounts in combination with data-based insights, from new-age merchandising solutions like Increff Markdown Optimization. These help you figure out what percentage of discount to use at what time and which store locations, so as to boost sales while maintaining healthy profit margins.

Read: How dynamic pricing strategy can help retailers

Myth 4: Forecasting the right width and depth is sufficient to improve inventory turnover

For starters, forecasting can give brands a foundational idea about the expected sales and demand patterns for the upcoming season. But in a fast-changing marketplace, a lot of in-season changes could upset even the most elaborately designed plans. 

For instance, fashion brands being highly influenced by cultural dynamics could suddenly experience a spurt in demand for a certain style, after a movie release. Likewise, a supply chain shock due to strikes, conflicts, or calamities could put significant pressure on some parts of your supply chain network.

Dealing with these dynamic market conditions in highly disruptive times requires you to think on your feet, rather than putting your supply chain on auto-pilot mode. New-age merchandising solutions allow you to do exactly that, by giving you insights into in-season changes in demand. Responding to these changes using inter-store or inter-warehouse transfers can be highly effective when backed by real-time data from across your network.

To sum up!

Sales maximization is obviously the most sought-after goal for every brand. But in the hoard to achieve their targets, brands could often fall for unfounded myths and unproven strategies that could hamper their growth or cause serious damage to their reputation. To keep evolving in the face of fresh challenges, formidable competitors, and volatile market conditions, brands need to keep an eye out for the latest technologies, cutting-edge processes, and robust strategies.