Top issues for retailers – a technology vendor’s view
When it comes to transportation and compliance concerns, retailers have enough on their plates to make even the healthiest eater blush.
But it’s often difficult to determine just what the highest priority issues are at any given moment. And often, those best placed to assess the market’s pain points are technology vendors, since they see the range of problems their portfolio of customers face versus the individual problem of any one shipper.
According to Derek Gittoes, vice president of value chain execution product strategy at Oracle, there are a number of issues his team sees retailers facing at the moment.
Among the top dilemmas: how will retailers that have oriented their supply chains to import goods into a given country reengineer those supply chains to export?
“We’re seeing retailers move beyond international logistics operations purely focused on the U.S. and distributing to stores or shipping direct to customers, to exporting,” Gittoes said. “It’s really tied in to omni-channel distribution, getting goods to customers anywhere they want them.”
Gittoes said retailers across the globe are facing this issue. For instance, on a recent trip to South Africa, he saw retailers there wrestling with how to re-export imported goods to neighboring markets. “All of their systems designed for import don’t work for export,” he said.
Second issue: retailers continue to be plagued by the web of regulatory controls that can ensnare the unsuspecting. Gittoes referenced the oft-maligned U.S. government’s Lacey Act as one that regularly trips up importers.
“Often retailers are not aware of the government agency regulations on the goods that they are importing,” he said. “Any company that imports anything wood or paper related – it could be wood buttons -- have to have the genus and species of the wood. It means that as early as possible the shipper has to figure out what regulatory hurdles you have to clear before executing on the purchase order.”
Gittoes emphasized it is the shipper’s responsibility to keep abreast of these regulations, but that there are tools to manage them. Oracle, for instance, has a global trade management solution that assesses the ramifications of a product all the way back to the product design phase (Oracle is not alone in offering such a tool – there are a handful of vendors that offer varying suites of trade compliance management systems).
He said it’s typical for a company to forgo examining the trade compliance implications of a new product or market when designing a product.
Third issue: more demand for supply chain visibility back to the purchase order level.
“Once they begin to execute on purchase orders, they want that magical view of their PO (purchase order) – when is it going to arrive at its next location,” Gittoes said. “And it’s not just the transportation data. It’s data from their suppliers, freight forwarders, carriers, their own personnel.”
Gittoes said retailers are particularly sensitive to supply chain delays and are thus among the most interested in the benefits of more comprehensive visibility.
“There’s more sensitivity to those products not arriving when they’re supposed to be there,” he said. “If I don’t make this season, I don’t get next season. There’s no point selling snow blowers in June. There’s such a high proportion of goods that are imported, depending on the type of retail segment you’re in, that the vast proportion of products on your shelf are international in nature. And if those products don’t make it, it’s not an insignificant lost opportunity. It doesn’t mean 1 percent of sales; it could mean more like 10 percent.”
Part of the visibility challenge that retailers face, Gittoes said, is the flow of information is such that data from a transportation document might be needed in a trade document, and vice versa.
“It’s about pulling those things together,” he said.
He argues for the idea that GTM and transportation management systems have to be in sync, and standalone visibility solutions are not really what the market wants.
“That’s the challenge, the business justification challenge of pure visibility,” he said. “Visibility has to be aligned with business practice improvement, whether it be related to better use of free trade agreements or container utilization. Tends to be tied in.
“Vendors just with visibility – those went away. It’s a tough justification. Visibility these days comes from supply chain vendors. If you get a notification that your shipment sailed 24 hours late, what do you do with that? Through TMS visibility, I know I have four days slack time at port, so there’s no material effect of the shipment delay. If it doesn’t tie in as a function of my logistics solution, it’s harder to justify that investment,” he said.