One of the golden rules in retail management is to ensure that the right product is available to the consumer at the right time and at the right place. For smaller retailers it is even more imperative as h olding too much inventory, or the wrong inventory, ties up valuable cash, while not having enough inventory in key items or categories deprives a small retailer of desperately needed gross profit rupees .  In an interview with DNA Money John Williams the founder of JC Williams Group, he mentions that the three most important trends in retail would be – use of technology, specialize retailers and upswing in cost effective third party logistics service providers. The above two have been there in India for some time now with more effective IT Retail solutions being introduced along with specialty retailers trying to create their niche. But the one area which has been a domain of mostly large retailers should now be looked as an effective means of saving money for the smaller retailers as well.

In another interview by The Economic Times with DHL Exel Supply Chain CEO Bruce A Edwards mentions that though their current operations concentrate only on larger retailers but he goes on to say " it is quite obvious as markets continue to develop, local companies will start to realize the value of outsourcing the supply chain and go back to core competency. The pressures exerted upon them by the entry of multinationals in the market will also be a factor."

The areas in supply chain and logistics that can be outsourced by a retailer include – Warehouse management (Location of ware house, distribution and storage of goods), Vendor management (sourcing and building up the vendor base), Inventory management (keep a check on the movement of inventory) and Merchandise planning (Requirement planning and Loss prevention).

With the present state of infrastructure it becomes instrumental for any medium or small retailer (having two or more stores) to ensure the distribution of goods to be able to align the retail operations with the market demand. For small companies, which are either present in diverse locations or scaling up their operations, it is imperative to identify the right logistics partners.

The need of the hour is to employ creative solutions in order to cut costs. One such solution could be tying up with larger players in areas such as inventory order placement and distribution of goods to various stores on cost sharing basis. The problem here for the smaller retailers would be to match the inventory turns or the number of orders to be placed in a specific time period. As a smaller retailer would have more inventory turns of smaller quantity as compared to a larger retailer. In order to overcome this problem another option could be forming a procurement alliance with a number of small organised retailers. Once the procurement order of these retailers is collated a large order can be placed directly with providers to obtain procurement advantages of low cost and high quality. At the same time, the alliance cuts off any unnecessary intermediate layers and provides an efficient logistics support for goods distribution.

Source: The Economic Times