Part 1 of this blog series set the historical background for supply chain management (SCM) evolution and presented the advantages and shortcomings of vertical vs. horizontal integration. The analysis then moved onto the generally embattled retail sector, where a select group of innovative retailers has found a “happy medium” approach to stay well above the fray.

Kurt Salmon Associated (KSA), the leading global management consulting firm specializing in the retail and consumer goods industries, dubbed this strategy “Act Vertical” in its seminal research study. The firm presented the highlights of the study at the National Retail Federation (NRF) Annual Convention & EXPO 2009 (also known as the Retail Big Show) in January in New York City. The accompanying slide deck can be downloaded here.

Part 2 of this blog series then outlined the five drivers for retailers to act vertical, and the three key tenets of the approach. The post explained in depth the following first two requirements for acting vertical:

1. Effectively bring unique and compelling products and services to consumers; and
2. Offer differentiating customer experiences through multiple, integrated channels.

This final part will focus on the need for retailers to collaborate and synchronize internally and externally with customers and suppliers, often via customized agile supply chains, as necessary. Read the rest of this entry »

Part 1 of this blog series set the historical background for the supply chain management (SCM) evolution and presented the advantages and shortcomings of vertical vs. horizontal integration. The analysis then moved onto the generally embattled retail sector, where a select group of innovative retailers has found a “happy medium” approach to stay well above the fray. Retailers such as PetSmart Inc., Aéropostale Inc., Coach Inc., Trader Joe’s, Walgreens, and Target have realized the need to become serious product innovators and not just merchants of national product brands or sellers of their own knockoffs.

Kurt Salmon Associated (KSA), the leading global management consulting firm specializing in the retail and consumer goods industries, dubbed this strategy “Act Vertical” in its seminal research study. The firm presented the highlights of the study at the National Retail Federation (NRF) Annual Convention & EXPO 2009 (also known as the “Retail Big Show“) in January 2009 in New York City. The accompanying slide deck can be downloaded here.

The gist of the matter is that these avant-garde merchants no longer see the division of labor between suppliers and retailers as the customary one of “they invent and make it, and we sell it.” In fact, the retailers control (without owning per se) every piece of the value chain, from creating new product concepts to getting finished goods into the hands of consumers. Read the rest of this entry »