Study: Retailers willing to sacrifice efficiency to improve service

DENVER — According to a new RSR Research report, "The New Customer-Centric Retail Supply Chain: Benchmark 2008," better performing retailers (what RSR calls "retail winners") are willing to give back supply chain efficiencies in order to improve customer service. This result comes from a survey that RSR conducted in May and June 2008, with 62 responses by retailers.

"Retailers have long been focused on supply chain efficiency — delivering product to stores and customers cheaper and faster," said Nikki Baird, managing partner at RSR Research and the report's author. "It's a real testimony to retailers' commitment to customer-centric retail strategies that they are willing to spend more by operating a less efficient supply chain, simply to make sure that they are meeting consumers' product expectations in channels."

RSR's new publication finds that while less well-performing retailers ("laggards") have started to catch up both in inventory levels and in the number of stockouts they experience, their better-performing counterparts have moved on to make supply chain more customer service focused: by speeding delivery times to consumers, offering more shipment choices and providing more information about inventory availability.

According to the report, supply chain visibility poses the biggest opportunity for improving supply chain performance. However, retail winners are more interested in turning that information into something actionable, while laggards struggle to get their arms around basic information about what is happening in their supply chain.