As the digital marketplace expands and global markets fluctuate, retailers are facing mounting pressure to maintain agility and resilience in their supply lines. At the same time, consumers' expectations are also skyrocketing, calling for more personalized products delivered at faster speeds. This complexity puts retail procurement professionals to the test.

In response to these growing demands, technology solutions are evolving rapidly. Advancements in AI-driven procurement and logistics are leveling the playing field for retailers aiming to stay at the forefront of ever-evolving supply chain management. 

This article outlines strategic supply chain management in the retail industry and how it improves outcomes for today's retail teams. It focuses on proven methods like supplier diversification, lean inventory management, and robust analytics that help meet today's retail demands.

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Understanding supply chain management in the retail industry

Supply chain management (SCM) in retail is network management that controls the flow of goods from suppliers to retailers. It oversees the entire supply chain, from sourcing vendors and buying products to managing inventory levels, logistics, and distribution. Each part of the process plays a critical role in helping meet customer demand and maintaining competitive pricing and service.

The importance of effective supply chain management in retail

Robust SCM helps retail buyers and suppliers manage operational costs, minimize waste, and optimize inventory to ensure efficient resource use. Strong retail supply chain management enhances the customer experience by building loyalty and trust. It creates a competitive advantage by enabling retailers to offer better prices and maintain higher service standards.

SCM also boosts operational efficiency, optimizing processes and building resilience against supply chain disruptions so retailers can enjoy smooth operations—even in challenging times. It helps improve cost savings, speed order fulfillment, and ensure resilience when shortages or issues with third-party logistics providers occur. Strong retail supply chain management is foundational to executing a brand’s procurement strategies and sales activities.

Common challenges in retail supply chains

The retail industry presents unique challenges for procurement teams, who must purchase goods based on demand forecasting, inventory management, and rapidly changing market trends. These complexities often result in several common obstacles to efficient operation.

Stockouts: Customers come to depend on consistent products and services. Out-of-stock items can cost a business sales and negatively impact customer relationships.

Overstock: Having too much on hand is as damaging as running out. Overstock wastes working capital and drives up inventory costs and warehousing fees.

Quality changes: Even in strong supplier relationships, things change. The availability or quality of a specific product could fluctuate, leaving retailers with gaps in their offerings. 

Shipping disruptions: Outlier events such as natural disasters and geopolitical tension can interrupt supply chains and impact product availability. Strong SCM accounts for these potential risks and builds redundancy into mission-critical items.

Customer trends: Shifting consumer behaviors call for rapid adaptation in product offerings and supply chain strategies. Retailers must be ready to pivot to keep up with customer expectations and seasonal demand.

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Procurement-driven strategies to strengthen retail supply chains

Retailers need solid procurement processes without unnecessary complexities. Enhancing procurement workflows with well-managed strategies can help teams build resilience and adaptability in the retail supply chain. 

Centralize supplier management

Centralizing the supplier management process helps retailers manage the moving parts of their supply chain while maintaining supply chain visibility. Consolidating vendor information and ordering into one platform eliminates operational inefficiencies while reducing costs and improving collaboration with the vendor pool. 

A platform like Order.co helps manage supply procurement using a single, flexible system that creates visibility into the procurement process. It’s one of the only end-to-end retail procurement platforms that manage the supply chain from sourcing to settlement, streamlining workflows with contextual AI product selection, contract compliance features, universal net terms, and integrated AP automation for smooth payment and reporting.

Automate purchase orders

Rogue spend and budget overruns can sap your financial performance in the blink of an eye. Purchase order automation ensures every purchase adheres to pre-approved guidelines and budgets for each department, location, or user. For finance and procurement teams in the competitive retail sector, automation is key to maintaining price competitiveness and product margins.

Order.co’s AP automation workflows can help teams simplify PO and budget management processes. Guided spending and role-based rules help keep purchase orders within policy, and automated approval workflows route requests through appropriate channels to keep spending in check.

Adjust inventory in real time

Inventory management does not start on the warehouse shelf. The most effective way to optimize stock levels is to plan spending based on the rich insights available in inventory data. While a warehouse management platform can tell you what you have and how long it will take to get more, a procurement platform analyzes past spending trends and product selections to help you find the right product at the right price at the right time. A procurement-based approach gives buyers more agility in responding to changing customer needs.

Diversify sourcing channels

A well-rounded supplier base is the best antidote to today’s volatile market. Building supplier diversity and creating redundancy for mission-critical goods helps mitigate the risks of manufacturing issues, logistics hiccups, and supply chain disruptions. It builds continuity and resilience in supplier partnerships to help you maintain a competitive advantage.

Apply predictive data analytics

AI-driven forecasting automates demand planning by leveraging both internal datasets and external benchmarks to predict market changes. AI helps retailers adjust their strategies proactively, and top-performing tools can also make recommendations based on past contextual data and trends. According to McKinsey, 74 percent of retailers are interested in using AI for demand planning.
Predictive analytics also enhances supply chain optimization, helping teams reduce holding costs by forecasting consumer demand. A contextual inventory management system allows teams to prevent stock underruns while maintaining short inventory turnover cycles, ensuring capital doesn’t get tied up in stale inventory.

Leveraging technology for efficient supply chain optimization

Generative AI and machine learning (ML) are bringing new clarity and context to supply chain management by integrating real-time data with predictive capabilities to enhance efficiency and accuracy. Platforms with AI enhancements make it easier for retail businesses to anticipate disruptions, optimize routes, and manage resources. 

By analyzing your internal procurement and logistics datasets, AI tools can predict demand fluctuations and dynamically adjust to global supply chains, recommending the best selections and logistics solutions. AI also holds tremendous potential to reduce waste while building customer satisfaction through speedy delivery times and fewer out-of-stock scenarios. 

Meanwhile, blockchain technology is helping companies create secure and transparent records of all transactions to increase the safety and audit readiness of procurement activities.

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Creating consistent, measurable, memorable in-store customer experiences is your key to standing out from competitors. Download the guide today to get started!

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Order.co: A simpler way to execute your supply chain strategy

Order.co's innovative platform offers a unique procurement solution for supply chain management in the retail industry, empowering retailers with advanced tools to manage orders, track inventory, streamline purchasing, and automatically find the best deals. Order.co helps businesses enhance efficiency, reduce costs, and ensure smoother supply chain operations.

Here are some of the powerful features clients rely on to drive value in the procurement function: 

Front-line empowerment: An easy-to-use, dynamic, and guided purchasing experience lets individual store buyers make purchases aligned to their location's specific needs and preferences. At the same time, the system helps leaders and finance teams keep budgets on track with spend controls and customizable guidelines by location, department, and role. This helps with inventory control, reduces waste, and personalizes the product offering while maintaining brand compliance. By aligning stock with local trends, retail stores can enhance profitability and build stronger connections with their unique customer base.

Approval workflows: Approval workflows within Order.co's platform automate purchase order approvals, enforcing strict spend controls and ensuring compliance with budgetary guidelines. This streamlines the purchasing process, significantly shortening lead times while eliminating time-consuming manual bottlenecks.

Real-time spend visibility: Viewing spend on a category, store, or regional level enables data-driven decision-making and helps keep tight budgets on track. Real-time visibility and centralized procurement offer immediate insights into working capital use so leaders can adjust strategies, prevent overspending, and optimize product and shipping costs.

Centralized supplier management: As procurement teams deal with an ever-increasing pool of vendors to overcome supply chain stresses, a centralized platform helps consolidate vendor information, orders, and communications in a single place. Centralization helps simplify the procurement process, improve negotiation power, ensure effective supply chain management, and foster stronger relationships with suppliers.

Real-world success with supply chain management

Faherty Brand, a casual basics clothing company with over 65 locations across the United States, is no stranger to the pitfalls and challenges of rapid expansion. The fast-growing brand opened dozens of locations over a short period, leading to purchasing becoming a “free for all.” 

Faherty partnered with Order.co to better align purchasing and supply chain management, supporting rapid growth while building centralized visibility and a scalable, end-to-end procurement process: 

• The company used automation to save over 20 hours of procurement work for new store openings.
• The team now manages 22 vendors for 67 locations in one centralized place.
• Accounting and finance streamlined the purchase process with an automated approval workflow to speed requests and shorten cycle times. 
• The platform helped the team standardize product offerings and descriptions across every location.

“What used to take us days now takes five minutes. It’s just one click of the button, and then it’s all in your cart and you’re good to go,” explains Retail Operations Manager Kyler Nichols.

Order.co is more than just another operations solution. It's an all-in-one solution that provides order management, financial control, and cross-functional oversight. Its AI-powered features streamline procurement while improving communication between stakeholders, suppliers, buyers, and approvers, ensuring businesses can manage their supply chains with confidence.

Preparing for the future: Next steps for retailers

The emergence of AI-powered solutions for supply chain management in the retail industry opens new doors for efficiency and contextualized purchasing decisions. By streamlining procurement processes, enhancing communication, and ensuring full visibility, retailers can better navigate supply chain challenges to maintain a competitive advantage.

It’s always the right time to evaluate your supply chain processes, identify quick wins for improvement, and consider new technology that makes the process smoother and faster. A platform like Order.co can help teams enhance efficiency and resilience while managing margins and the bottom line.
To see the power of Order.co to optimize your supply chain and the larger procurement function, get a demo today.