Decoding the formula for an efficient Retail Supply Chain

Supply chains for a while now, are experiencing intense pressure, owing to the global disruptions taking place one after another. The retail supply chain that encompasses the end-to[1]end process of delivering products and services to consumers now more than ever needs a strong leg to stand. In such times, a supply chain that can mitigate delays and challenges is requisite for smooth and efficient operations. In an exclusive chat with Logistics Insider, Vivek Nayan Kumar, Assistant VP at Reliance Retail through his personal experiences help us crack the code to achieving an effective retail supply chain. He talks about the importance of effective coordination and collaboration; the “less is more” inventory management philosophy in retail, his first-hand experience in implementing process improvement, and much more.

Ensuring an end-to-end supply chain requires one to ensure effective coordination and collaboration. How do you ensure the same between different stakeholders in the retail supply chain, such as suppliers, manufacturers, distributors, and retail outlets?

Effective coordination and collaboration are essential parts of any business function, be it supply chain operations, human resources, Information technology, or any other function. A supply chain is all about the flow of goods and Information between different stakeholders.

We are lucky to live in the 21st century where technology has helped us to collaborate with multiple stakeholders seamlessly. We have ERPs in the retail ecosystem which talk seamlessly across organizations. Let’s take an example of a simple purchase order lifecycle. Once a purchase order is raised its flows from retailers to suppliers via Electronic data interchange (EDI) and gets consumed in suppliers ERP. Once suppliers invoice and dispatch materials information flows back to retailer via Advance Shipping Note (ASN). Processing of invoices and reconciliations also happens smoothly enabled by tech ecosystems.

This was for the upstream supply chain. Now let’s take an example of the downstream supply chain. Once a retailer bills to its end customers this information is passed electronically up to the respective distribution centre (DC)/manufacturer and in many cases the replenishment happens automatically.

Managing inventory in a retail supply chain is not without its challenges. What strategies have you implemented to optimize inventory management and reduce stock-outs while minimizing excess inventory costs?

Inventory management in retail can be best governed by the philosophy of “Less is More”. This simply means a very tight assortment coupled with the right inventory modelling is key to managing inventory. Also, let us understand Inventory is not a problem, it’s a symptom or you can say outcome which indicates there is a problem somewhere. That somewhere could broadly be found on the supply side or demand side. Very high demand volatility needs high inventory cover and many times demand is fuelled by many investments. If you see global players like Walmart they always follow the principle of EDLP (everyday low prices) and try to minimize volatility. The same is true from the supply side. If we want to manage inventories I would rather prefer to manage volatilities in demand and supply rather than managing inventories directly which is not a problem but a symptom. Also as I said “Right tail” is important to keep a fine balance between customer experience, profitability, and working capital.

Could you share an example of a time when you successfully implemented process improvements or cost-saving initiatives within the retail supply chain? What were the results?

There are multiple actually but one example stands tall in my memory lane. This was when I was working with one of the topmost healthcare companies in the Netherlands (Holland). The problem statement was how quickly we deliver services to hospitals and the expected turnaround time varies in hours (being a hospital service has to be super quick). We had three manufacturing locations across the globe, one in Hamburg (Germany), Lewisville (US) and Pune (India). There was one global DC in Singapore. Just to give a quick overview we had implemented an end-to-end planning tool that covers all aspects of demand planning, supply planning, and Inventory management. This was very tightly knitted with the service level expectation from the customer end. Using tech platforms and training every stakeholder right from manufacturing to distribution was a key element in our design solution.

How do you ensure compliance with regulations and standards related to product quality, safety, and sustainability within the retail supply chain?

There are stringent processes to comply with the law of the land. As far as product quality is concerned we have two apex laws first on FSSAI and Legal metrology. Retailers have terms of trade (TOT) signed with respective suppliers around these. Apart from these, there are strict processes around goods receiving, storage, and dispatch. All the third-party operators also comply with the same.

This is an abridged version of the interview published in the July edition of the Logistics Insider Magazine. To read the complete interview, click here.

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