Why effective logistics will be key to the future of retail

Phil Machin
23 January 2014

23 January 2014 | Phil Machin

Phil Machin is director at Bridge Procurement

In a world of shopping centres, high street retailers and an abundance of online options, the consumer has unhindered exposure to the best deals on that much-desired TV or this season’s dress.

Not only this, the consumer is no longer faced with the lack of a size 10 dress, as the floor manager will reveal her iPad, providing multiple options of where you can purchase the dress today, or giving you the option to take delivery at home tomorrow. Omni-channel retailing focuses on retailers competing on the delivery of the ultimate customer experience, ensuring consumers do not stray to the competition.

Until recently a logistician’s primary focus was ensuring goods get to store in a timely manner. Now, more than ever goods are dispatched via couriers direct to the consumer or to the store on a timed delivery. So the logistics manager not only needs to deal with frustrated store managers chasing for an update on next season’s delivery, they have customer services chasing them to establish when Mrs Jones will receive her woollen scarf.

The increase in goods shipped direct to the consumer means more risk of loss or theft, and more risk of customer dissatisfaction as a result of the customer not receiving their must-have suit before an important interview.

Are retailers increasing the size of their logistics departments? It depends. Do retailers necessarily need more logisticians to help drive customer excellence? Or should more emphasis be placed on making sure preferred carriers are operating effectively and are on the hook for above average loss and shrinkage?

Not only must retailers have a collaborative working relationship with their carriers, sufficient service levels, KPIs, metrics and reporting need to be in place to proactively manage and monitor their suppliers. This minimises the increased exposure to losses and theft, and puts the emphasis back on the carriers to be more accountable. After all, retailers are paying for timed deliveries.

Aside from the risk of losing valuable customers, the time spent by customer services managing queries and complaints, and logistics locating missing or delayed shipments and completing claim forms will far outweigh the upfront time spent trialling carriers and crafting robust contracts and service level agreements with teeth.

Retailers can claim on their insurers for lost goods, but they can’t claim for a lost customer or the indirect cost of excessive time pressures put on logistics and customer services to manage underperforming carriers. 

The cost of omni-channel retail is high in the quest to achieve and maintain customer excellence, and yet unsustainable if your carrier is not up to the mark.

☛ Phil Machin is director at Bridge Procurement and previously held senior procurement roles at Burberry and COLT Telecommunications

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