What's next in retail distribution? Bill Pace, CEO of consultant Kurt Salmon, breaks the future down to three imperatives: better in-stock levels, improved inventory efficiency and better supply chain visibility.

"Retail needs to redefine itself from the store shelf and work back into the supply chain," he said at the recent RedPrairie users conference.

Pace said that in-stock levels need to be high but only when necessary. That means retailers will have to think in terms of when the customer wants a product. "No one buys from the back room. Inventory status only counts when an item is on the store shelf," he says. Getting to that point will require retailers to redefine how, when and where they measure in-stock inventory levels.

He also says that inventory cycle times will have to get faster. "The justification for supply chain improvements is improved margins. It's all about fewer markdowns and lower markdowns," Pace says. He adds that this requires a shift away from traditional cost cutting moves to improve margins.

The third imperative of improved supply chain visibility is going through a transitional phase. In the past, it has been "nice to have," says Pace. Going forward, supply chain visibility will be "essential to managing the retail business." In addition, those retailers now using supply chain visibility point solutions will have to expand it to a much broader scale.