Category Management Insights for Retail and CPG Teams for Retail & CPG teams.

Supply Chain: More Than Moving Products

Written by Sue Nicholls, Founder & President CMKG | Dec 15, 2015, 2:37:51 PM

When you hear “product supply chain,” what comes to mind?

Trucks? Warehouses? Products moving from a manufacturer to a store?

That’s usually where the conversation starts. But there’s a lot more happening behind every product that reaches a shopper.

Information needs to move. Payments need to happen. Teams need to make decisions about demand, inventory, availability, and service—and those decisions need to work together.

So if we think supply chain is only about moving products, we’re missing connections that affect the whole business.

Supply chain belongs in more conversations

It’s easy to think, “Our logistics team takes care of that.”

But consider a promotion. Marketing builds the campaign. Sales agrees on the offer. The category team forecasts an increase in demand. Someone needs to buy the inventory, move it, receive it, and make it available where shoppers expect to find it.

What happens if the promotion changes but the forecast doesn’t? Or the product arrives at the distribution center, but never reaches the shelf?

The shopper sees an empty space. The retailer misses a sale. The supplier may have inventory sitting in the wrong place.

That’s why supply chain understanding matters beyond operations. Decisions made by sales, marketing, finance, category management, IT, and store teams all influence how well it works.

Follow the product—and the relationships

One useful way to understand a supply chain is to follow a product from its starting point to the shopper.

A raw material producer supplies a manufacturer. The manufacturer may supply a distributor or retailer. The retailer then sells the finished product to the shopper.

At each step, an organization can be someone’s customer and someone else’s supplier. Each relationship brings expectations about quantities, timing, quality, information, and payment.

The route can vary too. Products may move through a distribution center, go directly to a store, ship to someone’s home, or be picked from store inventory for an online order.

Those differences matter. They affect who holds inventory, who prepares the order, what information teams need, and who is responsible when something goes wrong.

Three flows need to work together

When I explain supply chain, I come back to three connected flows: products, information, and money.

Let’s look at what each one means—and why moving the product is only part of the job.

1. Product flow: where does it need to go?

This is the physical movement of raw materials and finished goods. It includes transportation, storage, replenishment, order fulfilment, and returns.

But “delivered” doesn’t always mean “available to the shopper.”

A product might be in the retailer’s building and still be sitting in the back room. It might be available in one store while an online order is being fulfilled from another location.

Teams need to think about the full route:

  • Where is the inventory now?
  • Where will demand occur?
  • How will the product reach the shelf, pickup point, or customer’s door?
  • What happens if it is damaged, unsold, or returned?

Following that route helps teams spot where availability can break down.

2. Information flow: does everyone have what they need?

Products can’t move reliably if the information supporting them is missing, late, or inaccurate.

Think forecasts, orders, product details, inventory records, shipment updates, and delivery confirmations. Information needs to move between teams and organizations—and back again.

Here’s a simple example. A website shows that an item is available, so a shopper places a pickup order. But the store’s inventory record is wrong.

The product hasn’t moved, but a promise has already been made. Someone now needs to find an alternative, contact the shopper, or cancel the item.

That’s an information problem with a very real service impact.

Before blaming execution, ask: Were people working from accurate information, and did they receive it in time to act?

3. Financial flow: what happens to the money?

Then there’s the financial side: invoices, payments, credit terms, discounts, charges, and refunds.  These connect to decisions about how much inventory to carry, how quickly it sells, and what it costs to get the product to the shopper.

For example, buying a larger quantity might reduce the purchase price per unit. But what if that inventory takes much longer to sell than expected?  The business has committed money to stock that still needs to be stored and managed. Some of it may eventually require a markdown or write-off.

That doesn’t mean buying more is always wrong. It means the purchase price is only one part of the decision. Teams also need to consider demand, service, handling costs, profitability, and cash tied up in inventory.

A promotion puts all three flows to the test

Imagine a retailer planning a promotion on pasta sauce.

The offer is attractive, the advertising looks great, and shoppers respond. But the stores run out halfway through the event.

Where would you start looking?

  • Product: Was enough stock ordered, delivered, and replenished onto the shelf?
  • Information: Did the forecast reflect the offer? Were changes communicated? Could teams see where stock was running low?
  • Financial: Were the agreed costs, promotional funding, and payment terms understood? What did extra deliveries or leftover inventory do to the result?

Looking at one flow alone won’t explain the whole event. Teams need to connect what happened across all three.

And sometimes the product comes back

The supply chain doesn’t always end with the sale.  A shopper may return an online purchase to a store. A delivery may arrive damaged. Products may need to be withdrawn or recalled.  These situations involve reverse logistics: moving products or materials back through an appropriate process for assessment, recovery, recycling, or disposal.

Again, all three flows matter. The returned product needs a destination. Its condition and inventory status need to be recorded. A refund, credit, or other financial adjustment may also be required.

Simply moving the item into a returns area doesn’t complete the process.

Balance the service promise with the business result

The goal is to get the right products to the right place at the right time, while balancing service, cost, inventory, and risk.

The cheapest option doesn’t always deliver the best business result. A lower delivery cost means little if unreliable service leads to empty shelves and missed sales. Equally, promising more speed or availability than the business can sustainably support creates its own problems.

Teams need to understand the trade-offs and agree on what they’re trying to deliver.

Bring it back to your decisions

You don’t need to become a supply chain specialist to ask better questions.  Before your next promotion, assortment change, or delivery commitment, ask:

Can the product, information, and financial flows support what we’re promising?

Then consider who needs to be involved before that promise is made.

That’s the value of building a shared understanding of how retail works. People can see how their decisions affect other teams—and work together to deliver a better result for the business and the shopper.

Free download: Product Returns & Inventory Flows

A returned product still needs somewhere to go—but moving it is only part of the job. What happens to the inventory record? Who handles the refund or supplier credit? And who makes sure the process is complete?

Our one-page reference connects the product, information, and financial flows involved in returns, with practical questions to bring back to your team.

Download the free Product Returns & Inventory Flows reference

 

CMKG’s Retail Fundamentals course explores these connections as part of the Understand the Retail Environment learning track. Through our Learn → Connect → Apply approach, retailer and supplier teams connect the concepts to their own business and put them to work.

Explore Our Learning Approach