The Retail Supply Chain Management Trends to Watch for in 2015, with LEGACY President Mike Glodziak

With the first quarter of 2015 already behind us, we thought it would be helpful to look at some of the trends and challenges in retail supply chain management that are forecasted for the remainder of the year. Supply Chain Management Review sat down with our own Mike Glodziak, who shared his thoughts and insights on the future of the industry.

A Brief Discussion with Mike Glodziak, President, LEGACY Supply Chain Services

Q: What new challenges should retailers be aware of in 2015?

A:

• Capacity: For starters, the economy continues to strengthen. Five years ago there was plenty of capacity available to retailers, including buildings for lease and transportation capacity. Today, real estate isn’t as readily available and truck capacity is tightening up.
• Lead Times: We’re seeing shorter lead times (speed to shelf), which has a major impact on the success of retailers — especially given the trend in multi-seasonal fashion wear.
• Network Structures: The need for efficient distribution and transportation networks that reduce cost, improve product flow and serve retailers’ multi-channel distribution requirements continues to be imperative.

Q: How should retailers address these shifts?

A: Empty shelves are a retailer’s biggest enemy. Because of this, speed to shelf is important. The retailer that has the widest selection of products and the fullest shelves will win. The key is to focus on fast inventory turns, quick response and getting the job done. To do this, retailers need the ability to look across their supply chain and see exactly where product is located (in a DC, on the water, in a truck, etc.) Without this level of visibility, shippers are challenged in making decisions on short- and long-term capacity. They wont know how much space they need in their warehouses and they’ll never be able to get out in front of the “tightening capacity” curve.

Q: What types of network strategies are shippers using right now?

A: We are seeing three high-level strategies.

• Regional Distribution Locations: In order to reduce miles and costs and increase speed to shelf, there is a trend toward regional distribution locations.
• Pool Point Distribution Networks: Retailers are leveraging pool point distribution networks in certain markets to reduce their brick-and-mortar costs.
• Omni-Channel Distribution: These networks are being developed to meet the demands of the retail customer.

These steps are all being taken in the name of reducing reliance on transportation while effectively managing the capacity constraint issue. A combination of these various strategies are all being employed for the shippers’ unique situations.

Q: What major threats could impact supply chain companies that service retailers?

A: Right now, we’re all dealing with increased competition, tighter logistics capacity, fewer labor/talent options and increased regulations. As a result, margins are getting tighter and we’re looking for even more entrepreneurial and creative ways in which we operate. There’s reduced leverage with building landlords when renewing or structuring new lease deals as the economy improves. With the economy and unemployment rates improving, and an onslaught of governmental regulations (particularly in California) – driver talent is at a premium. Much like the customers we serve, we have to continually focus on managing this new environment to provide high quality and service levels.

Consumer shifts have dramatically changed the playing field for retailers. Having a strong network of service providers who partner with the retailer to solve supply chain challenges is a differentiator. Learn more about our retail supply chain services expertise, or contact us to learn more about how we can become your dedicated logistics partner.