Retailers Are Struggling with Cost vs. Value

According to a recent article over on the National Retail Federation’s Retail’s BIG Blog, retailers will continue to be challenged by balancing the demand for value and keeping prices down. In addition, seventy-six percent of participants said the top supply chain strategic initiative for 2011 is cost reduction/cost containment. This should not be a surprise. It’s the tail end of a lingering recession, thanks to the jobless recovery — and this translates into less dollars in customers’ pockets to spend. Raw material and transportation prices are going up again, and this translates into higher costs. Unless the value is there, customers are not going to spend.

However, this does show the heightened need for next generation sourcing techniques throughout the supply chain. Retailers need to get the right high-value products on their shelves at the right price. Manufacturers need to source the right high quality materials at the right price. Material suppliers have to source the right high-value components at the right price to process the raw materials. And each has to insure that the materials flow up the chain at the right time to minimize inventory and distribution costs. Not easy without systems and processes that keep the modern value chain in sync.