Logistics IT Technology (TMS and Optimizers) is the Key to Retail “Fortunes”

A Chinese proverb recently observed in a fortune cookie states, “May you live in interesting times”.  Today’s retailers should consider themselves lucky then, because their industry is experiencing some very interesting times.  Driving unpredictability are technologies both causing retailers’ challenges (like online sales portals) and solving them (like TMS, YMS and other logistics IT).  Those that can remain calm and centered as a Buddhist monk can harness the tech forces roiling the waters of the industry.  Here are some “interesting” new data points that illustrate how and why technology is crucial to retail fortunes.

The National Retail Federation forecasts retail sales will grow at a rate of 3.1% in 2016 which is higher than the 10-year average of 2.7%.  More tellingly the NRF announced this week that it expects non-store sales to grow by between 6% and 9%.  With consumers driving economic growth again after a long period of negative and flat wage growth, retailers are feeling the wind at their backs for the first time in a while.  However, retailers, distributors and suppliers alike are realizing that e-commerce sales are the larger driver of growth than ever before.  And this has ramifications for their supply chain logistics.

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The SPS study shows 59% protecting legacy systems and 38% citing aversion to change among retailers; both of which are impediments to implementing the modern supply chain logistics tools needed to be competitive in a market driven by e-commerce.

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According to a SPS Retail Insight Study published in Inbound Logistics earlier this year, retailers rank e-commerce as a higher priority than store-based sales for the first time ever.   In fact, 75% of those polled ranked e-commerce as their priority over the 53% who cited in-store experience.  The Inbound Logistics article also noted that retailers rated their visibility to available inventory as critically low prompting increasing demand for suppliers that can provide critical omni-channel capabilities needed for the rapid fulfillment demanded by e-commerce.

With all the technology behind e-commerce clearly driving the lion’s share of growth in retail, it seems counter-intuitive that technologies perfectly suited to support e-commerce supply chains (like TMS and optimizers supporting faster more predictable distribution and fulfillment) are not more widely embraced.  The SPS study shows 59% protecting legacy systems and 38% citing aversion to change among retailers; both of which are impediments to implementing the modern supply chain logistics tools needed to be competitive in a market driven by e-commerce.

Retailers pursuing omni-channel success need not only TMS and optimizers to provide visibility and control over transportation logistics, but also yard management tech, warehouse management tech and other tools; each of which contribute to the reduction of fulfillment times and tighter inventory controls.  The sooner retailers embrace life in these interesting times the quicker they will attain good fortunes.

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