Supply chain management: The last mile

When it comes to the supply chain, inventory management stops at the distribution center dock door for most companies. Yes, a retail chain may have an inventory management program to track the inventory inside its stores, but it’s still in a silo. Often, there is a disconnect between the inventory in the store and the inventory in the warehouse.

In recent years, a couple of supply chain execution software providers have begun to extend the supply chain into the store. RedPrairie, for instance, offers solutions to manage inventory and labor inside the four walls of a retail location just like they’d manage those processes inside a distribution center.

HighJump customers, meanwhile, can place an order to replenish the inventory inside a convenience or grocery store that will trigger an order in the distribution center and create an optimal route for the delivery trucks.

This week, Sterling Commerce introduced Sterling Always in Stock, a new application designed to help retailers save a sale when an item is out of stock. But I think it does something else, which is to extend the supply chain right to the cash register for those retailers that take advantage of its full capabilities.

Here’s the concept, according to Jim Bengier, global retail executive for Sterling Commerce.

What happens when retailers cut inventory to the bone? They don’t have what you want about 8% of the time you step into their store; out of stocks are about double that rate for promotional items. “If you’re looking for a shirt and they don’t have it in your size or color, that’s a lost sale,” says Bengier.

Today, most retailers handle that situation in one of three ways: they send someone to scrounge around the stock room just in case; they take your name and promise to call to see if other stores have what you’re looking for; or they throw up their hands and shrug.

Sterling Always in Stock replaces the shoulder shrug with a layer of intelligence, visibility and automation  to save the sale.

First, it enables a retailer to complete the process at the cash register, at a kiosk in the store or to do it online at a service desk.

Once the system is opened, a user gets global visibility into the inventory network as defined by the retailer. That could be visibility into neighboring stores, all the stores in a district or region, or inventory in the warehouses.

And, it lets the retailer decide how to complete the sale, either by having a warehouse deliver the product directly to the customer’s home or place of business or to a nearby store for pickup, or by having a similar store send the product to the customer’s home.

“The critical backbone to the solution is the combination of our order management, global inventory visibility and store management operations,” says Bengier. “We’ve bundled them together to provide a complete solution.”

But in addition to addressing the out-of-stock issue that retailers wrestle with, it completes that last mile, connecting what’s going on inside retail stores forward to the customer’s home and backwards to the distribution center. “This is the starting point,” Bengier says. “But, if a retailer wants to do this, we could extend visibility all the way back to the manufacturer.”