This article was originally published on TotalRetail.
While e-commerce sales were expected to reach $4.2 trillion by the end of 2020, a big part of that money goes to waste due to inefficient processes. Items get damaged, remain unsold, and end up in landfills, not to mention high return rates that have skyrocketed and are expected to reach a whopping $550 billion by the end of 2020.
However, the right technology can help your business navigate these challenges successfully. Retail executives can now gain greater visibility and insight into operating costs and inventory. Here’s an overview of some of the solutions available to the supply chain industry, and how technology is revolutionizing the industry as we speak.
Minimize Returns and Unsold Stock
The reality is, the majority of retail businesses operate with massive inventory without really knowing what their customers need. These companies can’t accurately determine marketing spend or demand, often forecasting nine months in advance of products hitting retail stores. In 2018, fashion retail giant H&M lost $4.3 billion in unsold clothes, which means even big brands struggle to match product inventory to actual demand.
Currently, data-driven analysis and advanced algorithms are capable of shedding light on what garments, shapes or colors the consumers are most likely to pick. Information on their previous shopping patterns can help deliver a high level of personalization. But what else is there?
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1822 Denim, a New York City-based women’s denim brand known for offering the best fitting jeans for all shapes and sizes, sought to be an all-inclusive brand. It understand the importance of designing products with body data analytics of its customers. Through the use of 3DLOOK’s body data platform, 1822 Denim discovered 80 percent of its customers are more petite and curvier than their current fit model.
1822 Denim used this data to fundamentally improve its product design and development. It also provided precise fit recommendations using 3DLOOK’s solution, which led to an increase in conversions and noticeable reduction in unsold stock and returns.
Cut Down Inventory Costs and Optimize for Efficiency
Strong cash flow is the lifeblood of any thriving business. Having excess stock dries up working capital and can be detrimental to companies that have volatile demand.
On-demand production can help reduce carrying costs and minimize excess inventory. Instead of booking production runs with factories, brands can book machine slots to initiate production of any of their digitized products to match consumer demand.
Modern custom-built software systems can connect design and merchandising teams to factories. This results in shorter lead times for production while also giving businesses the ability to manufacture one-off custom-made products.
These supply chain software solutions, like Unmade, are an asset for efficient and more responsive production as they help businesses reflect their consumers’ needs accurately. It merges all essential product data to allow the creation of new SKUs without reinventing the wheel. By using such platforms, brands can tweak designs digitally and start production with the click of a button. Thus, businesses can cut back on unnecessary inventory and ensure instant production without communication hurdles blocking the way.
Reduce Buffer Stock and Achieve Greater Visibility of Inventory Across Your Channels
Supply chain technology gives you greater visibility of inventory as it helps track demand and determine stock availability at any given moment.
Blockchain-empowered smart sensors, such as Provenance, can provide consumers with real-time visibility of their products across the entire supply chain journey. The technology also helps monitor transportation and immediately alert relevant partners (such as insurance companies) when something goes wrong. Combined with the company’s end-to-end traceability protocol, it allows businesses to show customers where their products come from, how they’re handled and distributed, and everything in between.
Wrapping it Up
Sixty-one percent of retailers say they want to achieve an autonomous supply chain in five years. Utilizing technology in your supply chain management can help optimize your business processes for efficiency and streamline your operations online. Machine learning algorithms and transportation management systems enable retail executives to deduce patterns in data sets, allowing them to plan for accuracy and adapt to volatility in the market.
All in all, businesses reap bigger benefits if they have a comprehensive vision for the future of their supply chains. This transformation road map is only reliable when managers take time to assess existing performance and find the technology- and operations-related supply chain improvements that can benefit them.
Image via TotalRetail