Have we reached the supply chain tipping point?

Have we reached the supply chain tipping point?
Have we reached the supply chain tipping point?

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When I read that Myer’s biggest store is now its warehouse, it made me think, ‘Are we at the tipping point’? 

Pressure is on supply chains to perform at speeds not seen before. Traffic demand on our aging city infrastructure means slower transits and higher costs.  But ‘time is the new currency’, and customers are demanding different services. 

Supply chains with relatively cheap warehouses on a city fringe struggle to meet the need. Designed to support ‘bricks and mortar’ shops, are they obsolete? It depends… 

A truly demand-driven supply chain needs to understand who the customer is and develop strategies to profitably serve them.  ‘Segmentation’ is required to match time, place and what customers are prepared to pay for. 

A mix and match network model may be required as a result, so that a ‘one size fits all’ strategy is not blindly adopted. While online is becoming a normalised and accepted form of retailing, the recent NAB Online Retail Sales Index highlights that on-line represents under 10 percent of all retail sales. 

In a true ‘omnichannel’ world, the customer can buy goods and services from many options. For the supply chain, there may be a requirement to service a fast paced ‘pull’ online world, a slower replenishment based model to stores and a ‘push’ supply chain that supports Christmas type events.

Processes that we once fit for purpose need to be refined, economies of scale where attainable should still be exploited and the right locations chosen to enable service at the right time. Finding the best location in a network model needs to contemplate how the inventory will flow, inbound and outbound transport costs, demographics of current and future customers, IT costs, operating costs plus what properties are available now and in the future.

Big Data to the Rescue?

Data is all around us. In the age of ‘Internet of Things’, sensors and data capture, there are massive amounts of data to be captured and purposed. The challenge is how to use it in a model that provides true insights to support supply chain decisions. Building models takes time and expertise. Loading and maintaining the data takes discipline. But fortunately when both come together, quick precise fact based decisions can be made. 

Savills is a leading global real estate service provider offering the full spectrum of services from strategic advice to managing assets and projects and transacting deals.

Bob Quirk is the Director of Supply Chain, Industrial & Logistics at Savills Australia. To learn more about Savills, visit savills.com.au.

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Savills Supply Chain

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