In traditional brick-and-mortar retail stores, consumers buy products off physical shelves. But how do those products get onto the shelves?
Generally in a retail supply chain, raw materials and supplies come together during the manufacturing stage. The manufactured products are often sent to distribution warehouses and finally to retailers where the end consumer can buy them.
Seems simple, right? The difficulty for supply chain managers is making sure that the correct products get to the right place at the right time — a lot can happen between a farm in Southern California, a manufacturer in Utah, and then finally a distributor in Oregon.
How can managers avoid miscommunication and keep the retail supply chain running smoothly? By implementing GPS tracking, a retailer could keep track of inventory as it moves from place to place, but a fleet of vehicles becomes more difficult to track. Manual follow up quickly becomes unwieldy. What strides are being made to track the progression of retail goods through the supply chain?
SAP Leonardo for Retail Can Help
SAP has introduced industry innovation kits to help, including the SAP Leonardo for Retail, logistics option. The kit helps improve communication between distributors and manufacturers. Once that happens, the processes that follow become more efficient. The kit helps to improve both on-time delivery and customer satisfaction, and to reduce logistical costs.
By using SAP Global Track and Trace and SAP Cloud Platform, the kit is able track the shipment of trucks in real time. It then sends the real-time location of the trucks to the cloud, where it can be accessed by the entire supply chain. Everyone can know exactly when and where the trucks are, as well as their anticipated delivery times. These features help to increase on-time shipments and improve employee satisfaction. Logistics costs can also lessen due to more on-time shipments. And because everyone is connected through the SAP cloud, the entire supply chain can react more efficiently to anything out of the ordinary.
Reducing the Bullwhip Effect
The bullwhip effect is a term used to describe the inaccuracy of demand forecasts caused by swings in supply chain inventory levels, which historically increase the further away that step in the supply chain is from the end customer demand signal.
This logistics option offers hope for reducing the impact of the bullwhip effect. When a request for higher demand in products is made, retailers can make a request that is sent to everyone in the supply chain, which allows the entire chain to make the adjustment simultaneously while maintaining transparency. Using SAP analytics, managers can more accurately communicate and calculate how many products need to be shipped, which can help mitigate the chances of the bullwhip effect.
Preventing Stock Outs
The kit can also lessen out-of-stock situations for distributors and keep customers happier. Inventory logistics can become more reliable. Oliver Grob, retail solution manager at SAP explains:“With the assets kit, a retail manager could tell the CPG company when to send a truck to the store to replenish inventory.”
If a retail store is running out of soda, they will know exactly how much they need to get and when they need it. Say the store normally receives a shipment of soda twice a week. If the demand for that month was low, they would be able to tell the CPG company to only come once a week. This could save time, labor, and money. This kit can also help improve customer satisfaction as customers can trust retailers to have what they want when they want it.
Predicting Maintenance Needs
Another important use case is predictive maintenance. SAP Vehicle Insight, included in the kit, sends information about the shipping truck to the cloud. With this information, managers can predict when the truck will need a maintenance check instead of stopping a whole set of trucks for maintenance. Retail managers can stop only the specific trucks that need maintenance.
The supply chain is a difficult thing to manage. It has complex supply networks that need to be made simple. SAP Leonardo for Retail, logistics option, can help the supply chain run more efficiently by improving the communication between retail managers and everyone else involved in the supply chain, allowing for faster reaction time when demand shifts. It also allows for better inventory management, can improve customer satisfaction, and can help cut down on maintenance and logistics costs.