Why Consumer Issues in Retail are killing Your Business
As a manufacturer or distributor, should you be concerned about the retail consumer in your supply chain? Without a doubt!
The impact of the end-user or consumer can reverberate throughout the entire supply chain. Of course the end-user will affect demand, but that is not the only variable that can be impacted. Whether your company is retail, direct distribution or indirect distribution, the end consumer can cause sales and profits to surge or evaporate.
Consider the following issues that could influence your particular business in the supply chain:
Demand – this is the most obvious impact for a supply chain. Random purchase patterns with high degrees of unpredictability can cause upstream suppliers to overproduce or overstock certain products or components. Almost everyone has heard the story of the entire stock of beef jerky being purchased at one convenience store which caused an upsurge in the stock of beef jerky the following week – only to realize much later that this was a one-time occurrence. Many demand forecasting systems have tuning capabilities that will filter any outliers or unique circumstances. While one time purchase jumps are obvious, sometimes that behavior can be more elusively hidden. It is important to routinely tune your demand forecasting systems and then isolate and resolve any potential issues.
Reverse logistics – one of the most costly parts of any supply chain is reverse logistics. Whether the products are lines of fashion clothing, grocery items or automotive parts the returns process is highly disruptive and difficult to manage in any cost effective manner. End users can return products due to quality issues, fitment issues or other reasons. Inbound Logistics notes that the revenue impact felt by US businesses is between $52 billion and $104 billion annually. Supply chains must have a solid reverse logistics strategy in place that considers all of the facets involved in the returns process. This can include broken packages, fraud prevention, restock/reuse alternatives and the issuance of refunds or credits. Having a reverse logistics process already in place will help to reduce the problems that can occur.
Reputation management – With today’s socially connected world, your supply chain reputation can be influenced more by end users than ever before. While letter writing and newspaper or magazine reviews were once the only avenues for consumers to communicate their opinions, today a plethora of online options allowing a handful of end users to significantly damage your business reputation. This could be caused by a shipping error, quality concerns, or simply a disgruntled employee or customer. In any case your business should have a mitigation process in place to respond to online complaints or reviews to address and diminish problems before they escalate beyond control.
Through higher levels of visibility and increased communication throughout the supply chain, issues caused by end users or consumers can be prevented or more easily addressed. Every step in the supply chain should have a means of 360 degree communication so that every division is kept in the looped into your issues before they become a crisis. This better arms you to address problems. To help in addressing your supply chain from top to bottom and back, consult the experts at TMG for a complete assessment and recommendations.