The retail supply chain is difficult. Here’s why.
The idea that retail is merely selling is a deceptive simplification of the science behind it. At its core, it involves procuring a set of products to be put on shelves for customers to purchase but the actual steps in getting the products from the suppliers to the hands of the customers however is very complex.
In order to procure products, retailers either approach the manufacturers (if they have sufficient volume to order) or more commonly, local distributors who first procure the products into the local market and then distribute then to the respective retailers. Finding the right manufacturer and distributor is crucial — the distributors are responsible for ensuring the products shipped are genuine, in good conditions as well as satisfy local safety / regulatory requirements.
The process of ordering the products is the next challenge retailers face — ordering the right amount is important. Order too little, and the shelves will run empty (and thus lose customers). Order too much, and the retailers may face the cost of keeping stocks as well as the risk of obsolescence or loss from damage during storage/sale.
There is then the science of placement — how products are put in shelves makes a difference in what and how much customers purchase. Larger retailers often have whole departments dedicated to product placement on shelves, with detailed planograms that stores have to follow when stacking the shelves.
Through all of these, retailers also contend with other issues — one of them is theft. Product theft, especially of high value items is very common. However, what surprises many is that they have to guard against theft from outside and inside. Specifically, theft by staff is a major problem that all retailers contend with. As this Time article reports, retail theft in the US amounts to $50 billion a year.
These thefts can also sometimes extend to collusion between outside parties and multiple staff, and can be very tough to catch. Small, high value items such as batteries (yes, batteries) for example can be easy to steal and disposed off to secondary markets.
There is currently no system that allows retailers to track individual items. Most products are tracked by barcodes that are product specific — that is products of one type all share the same identification code.
Almost all retailers have downtimes that they have to take to do stock keeping — the physical act of manually counting all the stocks in store to confirm that the actual numbers of stock match those indicated in the system. For some stores, this leads to loss of sales as there can be no movement of stock at this time. Any items discovered missing at this point of time has to be written off and taken as a loss.
Thanks for reading this article. A bit about myself, I’m Chironjit Das and I’m in charge of Community and Finance at Devery. We are aiming to solve product counterfeiting and fraud using the blockchain. We’ll be launching our crowdsale over the next few weeks.
If you’d like to find out more please visit the links below —
Check out our site at: https://devery.io/
Join the conversation: https://t.me/deverychat
