Retail Sourcing of the Future: Supercharge your Supply Chain

Retail is changing. Fast. We’re not starting with anything that you don’t already know. But the changes in the retail landscape have an impact on how consumer products are sourced. And the best supplier partners find ways to elevate their sourcing strategies.  Each year, each season, they become more efficient, while offering better value to their retail partners. Here are two key approaches to look for from your suppliers.


Harnessing data and analytics to fuel businesses growth and profit

Efficiency thrives when there are clear visibility and communication.  A common way to do this is by using Enterprise Resource Planning solutions (ERPs).

For more than a decade, ERPs have allowed organizations to manage day-to-day activities for retailers and their suppliers. They allow business processes to be managed on a single platform and enable the flow of data between them.

But now, like retail, ERPs are also evolving.

Newer, digitized ERP tools, allow retailers, brands, and suppliers to digitize their data, using a cloud-based web and mobile platforms.  Data collected is then converted into accessible analytics. These analytics give teams and partners a “common language.”

Analysis of this data allows suppliers to reduce production waste and inefficiencies. This means a lower cost to you. And a greater likelihood of on-time shipment of product.  Product that meets your requested quality level.

Understand how your key suppliers harness the power of data and analytics with ERP tools.  Where are they investing in new tools to improve their analytic skills? How are they becoming more efficient and cost viable partners for you?


Just in Time Production

Another way to speed up the supply chain is to change where production is happening. Changes in trade policy remind us all that revisiting where products are produced is an essential part of responsible sourcing.

Manufacturing in the US began its decline decades ago. Now, advances in production technology have made production in North America more cost viable. Or as the McKinsey team recently put it,” Is it time for apparel manufacturing to come home?” This is true not only for apparel business but small to mid-sized production runs of home goods and consumables.

In demand-driven manufacturing, companies will use data and automation to produce consumer goods in just-in-time. That is, once a customer makes a purchase, the manufacturing process itself activates.  Production is often in small production facilities located across the country. Not across an ocean.

Powerful new technology such as 3D printing or purchase activated manufacturing (PAM) makes this transformation possible. 3D printing is a great option for producing hard goods of a single material. Many PAM operations exist for apparel brands today, changing the landscape of the fashion industry.

When companies have technology like this at their disposal, they are more insulated against the impact of trade dynamics. You exercise greater control over where and when your products are produced.

Another benefit comes in the form of inventory management. When you use demand-driven production, product is ordered once the consumer purchases. You can have confidence that you can sell an item for full price without the risk of heavy discounts or clearance markdowns.

Demand-driven production may be new for you or your supplier base. Try testing a couple of lines of products with the new technology. Companies that test and innovate in this new space will be best positioned to outpace their competition. Those that choose to wait and see will only be marking time.  The longer they wait to jump in, the harder it will be to pivot.


Moving forward

To survive as a retailer today, you will need the best partners.  Look for suppliers who have the future on their minds. That means they will:

  • Show a passion for learning and have a proven record of testing new ideas and strategies.
  • Collaborate with external resources so they can learn, grow, and go after the next big thing.
  • Cultivate the ability to capture and process data, from having “basics” such as key performance indicators (KPIs) and ERP systems to advanced tools such as on-demand manufacturing, purchase-activated manufacturing, and 3D printing.


What lies ahead for retail sourcing doesn’t hinge on the latest technology. It is, however, based on a shifting mindset— to the digital age ideals of innovation and curiosity.


Nurture that mindset in your organization. Look for it in your partners. Your customers will thank you.


Juli Lassow is founder and principal of JHL Solutions  in Minneapolis, a retail business consultant/solutions/management firm. Lassow advises her retail clients how to increase their productivity, growth and profits and specializes in partnering retailers and suppliers.

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