Wednesday, February 25, 2009

Marketing and Supply Chain Management: A Matter of Merging Realms

Nikki Baird, Managing Director of Retail Systems Research, conducted an interesting case study on the retail industry, with respect to supply chain management and online retail. In Baird’s study, she made notice of something very significant among the “winners” in the retail industry. Of the retailers both in-store and online, over half of the respondents were offering more assortments online than in their stores.

There are two factors that can be attributed to this data. One, the nature of online retail allows for greater flexibility in inventory mix, as well as supply-chain fulfillment. And two, the more successful retailers have a comprehensive inventory plan the leverages both revenue channels based on their logistical strengths. As Baird put it, “winners have waited to figure out the processes to support multi-channel capabilities before scaling them”, which requires more effort with planning and strategy.

This leads to a common business issue with technology, and how it has been utilized in the overall organizational strategy. Using this case as an example, those retailers who infused technology in the overall business strategy realized more success than the majority of their counterparts and competitors. Inversely, the organizations that view technology as an add-on, or even an added cost-factor, have failed to gain any competitive advantage in the marketplace.

Like it or not, there are two realms – physical and virtual. However, the rate in which technology has become a major factor in most business process has given most organizations very little time to make the proper adjustments in their strategy. As it relates to all factions of business, the two realms must eventually function as one hybrid realm. It’s a totally paradigm shift for most operations, but in these economic times, it’s a necessary one. How has your business viewed technology, as a cost or profit center?

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