Scott, You examined this subject from the angle of manufacturers of finished devices and retailers. As you pointed out, a different supply chain strategy might be required for dealing with direct sales. As these companies update their strategies, they also must content with changes at their own suppliers. I assume suppliers too would have to modify their systems to accommodate the new demands. What do you expect will happen at the component suppliers in response to this situation?
I doubt those suppliers further down the supply chain will see much difference in their order process because of direct shipments. The only change might be an increase in urgency for timely delivery. If the finished products ship directly from the manufacturer, that removes some of the 'flex' in delays that could be covered up in the extra shipping.
In order words, just-in-time on steroid! I wonder, though, how a retailer or even the direct-to-consumer OEM would be able to handle the forecasting. That's still one of the more difficult aspect of this entire process. How do you determine potential demand and match this with actual sales in a fluid market?
I agree. Forecasting will be the sticking point, and it will bet more difficult as traditional retailers take advantage of the emerging 'instant catalog' where suppliers host their product information online and retailers can simply include the products in their online catalog without having to inventory them at all. Talk about unknown and unpredictable markets...
One of the biggest hurdles retailers face with direct sales is the returns process in that customes dread having to return a product anywhere else except a brick and mortar store. Some retailers are very slick at this and I imagine do very well as a result.
I agree. Product returns are a complex issue, partly because the end customer may have options to return to the shipper, the online retailer, or the physical store. In the name of customer convenience those options need to be made available. But the order process and financial stream can make things highly convoluted.
Great blog! I found out the hard way that some retailers treat online and retail sales completely differently. I bought a bulky item online from a sporting goods store that wouldn't take the item back in their retail location. Mailing the thing back was a nightmare. From the business standpoint, I can understand why stores do it this way. As a consumer, though, I hate it.
It provides wonderful experience of selling direct. If you provide very good customer service, including returns, consumer will like purchase more online.
I would say that one of the biggest hassles dealing with some online ordering was keeping the two separate. Many stores do pick up orders on line now. Pay for your order online and by the time you arrive it is sitting there ready to pickup. This is an excellent idea that saves time. Recently we saw something we wanted to buy at Sam's club online. Since we didn't know if this would exactly fit our needs we figured we would just go to the store and check it out since it said you could do store pick up. When we got there they didn't have any, not even a spot on the shelf. When we asked an employee about it he said their online stuff is separate from in the store. When we asked why the computer said we could pick it right up, he had no answer. His answer was one of the irritating things about keeping the sales separate.
I'm seeing more retailers separate their business between online and physical stores. Look at WalMart's practice of store delivery (I expect it is similar to what you experienced at Sam's - a WalMart store really). You can purchase online and pick up at the store. That doesn't mean the product is stocked at the store, but it does mean you don't pay shipping because your purchase piggybacks the daily WalMart delivery. And delivery may not be instantaneous because of that.
Of course, that scenario means the product comes from WalMart's/Sam's distribution center rather than directly from the supplier.
I see an opportunity here for an organization such as UPS to step in and manage the reverse logistics. Instead of suppliers or retail stores dealing with returns, outsource the function to a carrier and let them channel the return to the appropriate warehouse. The downside is, this might add cost, whihc is the point of buying diect from the supplier in the first place. Any feedback?
Logistics is certainly an issue, but a more important and complex issue is the financial aspect of the return... Granting the return authorization, processing the payment/refund, and properly transacting the $ between the retailer and the supplier.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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