The retail value chain involves manufacturers, warehouses, carriers, and suppliers, with each adding value to the process of getting goods to retail stores. Technology helps streamline the ordering process and reduce errors. Retailers save costs by using partners for transportation and warehousing.
The retail value chain is a series of activities that enable companies to sell goods to consumers. Each activity provides a small amount of value to the overall process. Four steps are common in the retail value chain: manufacturer, warehouse, carrier, and supplier. All parts are needed for retail stores to stock their shelves with consumer goods. While each business adds a small portion of the cost to the products flowing into the retail store, costs are typically lower than the retail store going directly to each manufacturer for goods.
Manufacturers are companies that produce goods. They are commonly referred to as conversion agents. They take raw materials and labor as inputs, using these items to produce goods that customers value. Few manufacturers actually have the ability to ship goods directly to retail outlets. This calls for the need for retail chain partners to transport goods from manufacturer to warehouses via couriers.
Warehouses stock a wide range of retail products in their facilities from different manufacturers. They rely on different manufacturers to stock goods for easy distribution to retail stores. Larger retailers may have their own warehouses. This allows retailers to locate distribution centers in strategic areas to easily deliver goods to retail stores.
Carriers represent trucking companies that move goods from one point to another. They deliver goods from manufacturers to warehouses and from warehouses to retail stores. Their sole purpose in the retail value chain is to work as a service for every business. Retailers rarely have trucking divisions as part of their retail operations. They contract this service to save on insurance, fuel, wages and maintenance costs.
Suppliers are the last step in the retail value chain. Retailers can own their own supply chains as part of their retail companies. These are the localized distribution centers that deliver goods directly to retail stores. Not all retail value chains have suppliers as part of their processes. Retailers can avoid these tasks by working directly with warehouses to deliver goods to their stores.
Technology allows retailers to shorten the ordering process within the retail value chain. Electronic ordering ensures that retail stores order goods in a real-time format. This helps avoid stock-outs and reduces the chance of losing sales from consumers. Electronic systems also remove human flaws from the ordering process. Employees should not write paperwork or telephone suppliers, warehouses or manufacturers.
Protect your devices with Threat Protection by NordVPN
