Dive Brief:
- To avoid a preponderance of post-holiday inventory, retailers are working hard to carefully gauge needs through supply chain analysis as peak season continues, Business of Fashion reported last week.
- The goal behind limiting inventory is to ultimately increase profits, even at the cost of immediate revenue. Managers hold frequent meetings to ascertain the need for promotions or markdowns to best balance their inventory.
- The challenge is intensified by now-required omnichannel sales options, which complicate matters when an online item is returned in store.
Dive Insight:
Relying on supply chain input isn't truly new, but tweaking it to the best advantage could be.
A "dynamic demand forecasting process" is this year's term for reducing peak season inventory, modeled after that consistently maintained by TJX Cos., which relies on its nimble yet carefully controlled supply chain to rake in profits.
"My position is the need for four supply chain tenets which are achieved via good supply chain management – agility, visibility, risk mitigation, and cost," said Gary M. Barraco, director of Global Product Marketing at Amber Road. "Each of these are interdependent on the others, yet supply chains aren’t vanilla."
"So each organization will balance the levels between these four factors based on the importance to the operation," he told Supply Chain Dive. "Some might need to be more agile to respond to consumer trends, demand or need in certain sales channels. Others might want to have the lowest price to be competitive. Companies running a digitized global supply chain can increase operational efficiency, reduce direct costs, and create a faster, leaner, more agile supply chain."
