Three Reasons Why Industry Collaboration is Paramount to Omnichannel Success

by SJ Guest Editorial

Posted on December 8, 2015 in Retail

Collaboration has always been a valued business strategy, but it is becoming even more essential to success in today’s rapidly changing marketplace. In fact, it is an outright necessity for those manufacturers who strive to innovate as omnichannel pressures mount and retailer expectations rise.

Tackling this industry disruption head-on, manufacturers and retailers are taking a collective approach to ensure efficient operations and achieve critical end-to-end item level inventory visibility. Leading retail organizations leverage the common language of GS1 Standards—including various types of barcodes and Electronic Product Code (EPC)-enabled radio frequency identification (RFID) technology—to minimize cost, maximize fulfillment flexibility and optimize supply chain operations, ultimately satisfying consumer demand for a seamless shopping experience.

The cornerstone of the GS1 System of Standards is the Global Trade Item Number (or GTIN). A GTIN uniquely identifies a trade item and can be serialized and encoded into a barcode or an EPC-enabled RFID tag to track individual items as they move through the supply chain. Used in conjunction with case and pallet serialization, standards provide real-time inventory accuracy across the entire supply chain network.

Operating proprietary systems that do not leverage interoperable GS1 Standards can mean inconsistent data exchanges between trading partners. These inconsistencies result in incorrect and out-of-date product information in a time when the consumer expects trustworthy information. A recent Shotfarm study revealed 78 percent of consumers say the quality of product content is very important when making purchase decisions.

Industry collaboration helps trading partners agree on scalable, repeatable processes—leading to the improved inventory visibility and actionable intelligence needed to deliver on the omnichannel promise. Customer-centric retail supply chain trading partners should pay attention to three specific ways industry collaboration, via the use of standards, improves omnichannel strategies.

Bridging the gap

A recent PwC and JDA Software study revealed “an enormous amount of money, energy and time is being spent” by retailers and manufacturers to improve omnichannel capabilities—yet only 16 percent say they can currently fulfill consumer demand profitably.

To bridge the gap between what consumers want and what the industry can provide, trading partners must recognize the interdependency between consumer-facing operations and supply chain practices. Manufacturers are being asked by their retailer partners to collaborate on item-level RFID implementation with the mutual goal of capitalizing on new sales opportunities. Many retailers are specifically requesting that items be RFID tagged at the point of manufacture, not at the distribution center. Source-tagging enables all trading partners to gain inventory visibility to the movement and sharing of data through their many disparate systems—a critical enabler of making products available for the consumer regardless of their path-to-purchase.

Aside from the collective benefits of enhanced visibility, RFID also speeds the manufacturer’s reconciliation process, allowing them to be paid more quickly. With unique item-level identifiers, more granular data becomes available to help accelerate supply chain problem-solving.

Avoiding “square peg” syndrome

With the rapid increase in e-commerce sales influencing a multitude of supply chain decisions over the next few years, manufacturers and retailers are teaming up to determine the best way to modernize supply chain processes, with an emphasis on fulfillment. Today’s fulfillment processes have become akin to a square peg trying to fit into a round hole. Omnichannel fulfillment is fundamentally different than yesterday’s e-commerce or shop-in-store scenarios. Retailers no longer think only about “floor-ready” or “e-commerce-ready” merchandise separately, they think about both together. In turn, manufacturers must rethink product presentation—new packaging should maintain the integrity of the product and the presentation should be comparable to what consumers expect to see in-store versus online.

By adopting a standards-based approach, manufacturers achieve maximum supply chain efficiency while supporting the flexible fulfillment requests of retailers. It has become clear that traditional models cannot be applied haphazardly to a system that demands a speedier, more customized approach.

Staying always open and always on

In this new e-commerce driven era of the “endless aisle,” where the “store” is always open and there are no lines, retailers need to know quickly “what do I have?” and “where is it located?” The implementation of RFID has brought manufacturer-retailer collaboration to the forefront in ways that have never been explored before in retail. Retailers and manufacturers need to be more nimble than ever before to optimize fulfillment from any channel to satisfy their customers.

This desired flexibility starts with the effort to make products more visible—something that can be achieved with RFID implementation. With true inventory visibility, a retailer is finding a manufacturer’s products faster, enabling them to fulfill their orders faster, and thus, reducing the incidence of mark-downs. RFID allows for retailers to communicate better with manufacturers, facilitating faster reordering and better demand planning and forecasting.

Manufacturer-retailer alignment, interoperable standards and trading partner collaboration are critical to achieving omnichannel success. Today’s supply chain fulfillment challenges can evolve into new sales opportunities if they can deliver on the customer’s expectations to have the right product in the right place, at the right time.