Back in January following the big NRF conference in New York City, we conjectured that “retailers (are) talking about what it means to their employees, operational processes, and supply chain, when consumers use more than one ‘channel’ to execute a single purchase with a retailer. “

Perhaps that comment was a little premature — wishful thinking. In the forthcoming benchmark study entitled Retail Supply Chain 2012: Globalization, Localization, and Cross-Channel (scheduled for 3/7/12 release), survey responses reveal that Cross-channel challenges appear to be eclipsed by localization and globalization. Even so, it has been having a major impact on retailers’ supply chain designs. So as retailers struggle with rethinking how to assort inventory across a broader range of cultures, and align that assortment against the unique global nature of consumer goods manufacturing, cross-channel challenges are still there, lying just beneath the surface. And the demands for inventory flexibility that a cross-channel strategy makes on supply chain are only beginning to be felt. In the relatively slow world of supply chain evolution, globalization — a trend that has been creeping up for decades — has taken a big upswing, in part thanks to the economic uncertainties of mature retail markets. But cross-channel’s impact is the wrench in the works that makes retailers’ global plans — and local ones — that much more difficult to execute.

No Consensus on Opportunities

The study shows that retailers’ number one supply chain business challenge is consumers’ price sensitivity. The sensitivity that came out of the economic downturn has stayed, in part because of price transparency that comes from cross-channel visibility into price and inventory availability. And, the more sensitive a customer is to price, the more pressure there is on supply chain to deliver more for less. In past RSR supply chain studies, Retail Winners have said that they are willing to give up some supply chain speed and efficiency if they can increase their flexibility — in large part to meet demands for cross-channel capabilities.

But in the study responses, there is no majority opinion about which supply chain opportunities present the best future for retailers. Favored opportunities cover the gamut of supply chain functions, but are inconsistent. For example, more real-time monitoring of supply chain conditions ended up in the middle of the list, but enabling management by exception of supply chain events — something that one might think of as hand-in-hand with monitoring (what’s the point of monitoring if you can’t do anything about it?) — is at the bottom of the list.

As is often the case, Retail Winners (over-performers) assign significantly higher priorities to several opportunities than do their peers. For supply chain, that means real-time monitoring, better management of supplier performance, and continuous supply chain improvement.

Roadblocks

RSR’s forthcoming report shows that retailers, especially average and under-performers, struggle to respond to the related issues of price visibility and unpredictable demand. But while Retail Winners also are concerned about the challenge, they give it no more weight than “lost sales from out of stocks ” and that “Supply Chain Management and Merchandising Management are often in conflict “. As is often the case, Winners focus on things that are within their control, while laggards tend to fell victimized by things that they can’t.

So what stands in the way of a more agile supply chain? Technology, coupled by difficulty in identifying the ROI for upgrading. Technology is clearly viewed as an inhibitor for over one-half of Winners — they cite it as a top inhibitor to adequately address cross-channel activity on both buy-side and sell-side. For these retailers, it’s time to replace the technology “engine ” that powers the supply chain, but they worry just as much that the ROI will be difficult to prove. The concern is a murky reflection of the growing but still unknown importance of cross-channel shopping.

Wait for It…!

RSR has, in the past, examined different aspects of the retail supply chain — we have looked at inventory visibility, demand forecasting, supply chain fulfillment, among other topics. But our forthcoming benchmark study Retail Supply Chain 2012: Globalization, Localization, and Cross-Channel examines the end-to-end retail supply chain — and just in time for the rapidly increasing pace of supply chain change driven by rapidly changing consumer cross-channel behaviors.

Look for the report to be released on March 7, 2012. In the study, we will examine not only today’s challenges and opportunities, but also how Retail Winners address those challenges and take advantage of the opportunities identified.