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Delivery bottlenecks in retail

Replenishment and allocation for increasing sales and decreasing costs.

Oct 2021
In general, Increase sales, Umsatz steigern, Reduce costs, Transparency

Delivery bottlenecks in retail

Replenishment and allocation for increasing sales and decreasing costs.

Delivery bottlenecks have been noticeable in retail since the COVID pandemic at the latest. The result is empty shelves and temporarily closed online shops – with devastating effects. But there is also good news: With intelligent solutions for replenishment and allocation, you will delight your customers and be that decisive step ahead of your competitors. How do you get from the cause to the solution? Let us advise you or find out more about avoiding delivery bottlenecks here.

A look at the causes of the delivery bottlenecks

The lockdown requirements of the states around the world have brought the production of many companies to a standstill. Hence there is a shortage of goods in many industries. However, delivery bottlenecks in the retail sector can only be attributed to this clearly falls short. Dwindling resources and insufficient capacities also lead to insufficient stocks. In addition, the markets have become significantly more volatile. Customer requests no longer only fluctuate seasonally, but also with coming and falling international trends. It is in this area of ​​tension that retailers have to move today and in the future.

Falling sales and overwhelmed sales partners

The effects of delivery bottlenecks could hardly be more dramatic. The romantic image of a customer patiently waiting for his goods comes from the economic boom of the 1950s, when demand could not be met either. Modern customers do not want to be patient. Those who cannot meet customer requirements have to accept migration. This leads directly into a downward spiral: missing goods, annoyed customers, long-term falling sales. The first reaction: pressure on sales partners. However, they can no longer take countermeasures in times of shortage.

That means: Current delivery bottlenecks have a noticeable impact on the future. The solution to this problem therefore does not lie in a one-off action, but is a continuous challenge for the next few years.

Interesting in this context is the potential that the situation also delivers. Those who offer customers the right product at the right time and ensure availability gain new customers and increase sales even in times of crisis. In a nutshell, this means: Use delivery bottlenecks as a competitive advantage in order to become even more successful. But how do you do that? In the following, we will introduce you to various approaches.

Manage delivery bottlenecks – from manual solutions to replenishment

How industry or retailers react to delivery bottlenecks varies greatly. Different processes lead to individual advantages and disadvantages.

Manual management of delivery bottlenecks

Manual supply chain management is the first and often the only solution for most companies. The pressure to succeed rests entirely on the sales department, which is faced with the challenge of having to procure goods in a difficult situation.

The advantages of the solution are that all the necessary resources are already available in the company. As a result, the manual management of delivery bottlenecks is cost-effective in the short term and can be implemented without a start-up phase.

However, the disadvantages are obvious: On the one hand, expensive resources are tied up. On the other hand, the solution is not sustainable because every bottleneck has to be identified and resolved individually. One point of criticism also concerns the response time: the sales team must be able to identify potential bottlenecks early on. After a certain phase, missing stocks can no longer be compensated by manual intervention. The chances of success are therefore not always positive.

Replenishment with allocation

Replenishment with allocation is a modern and innovative solution supported by advanced software. With orders from vcs, for example, you have a powerful system at your disposal.

The aim is to ensure the availability of goods and thereby maximize sales. Orders evaluates relevant data from the channel for this purpose. In the allocation, different strategies – partly supported by artificial intelligence – ensure that the scarce goods are always delivered exactly to the customer who has the greatest chance of selling.

On the other hand, with this method you avoid overstock that would otherwise have to be sold off later with high discounts and falling margins. The keyword: Allocation – offer goods in exactly the right quantity at the right time. This is not only about seasonal goods, but also about recognizing increasing or decreasing popularity with customers. This also saves storage costs. As a support for sales and logistics, Orders is the intelligent further development of manual solutions.

Are there any disadvantages to replenishment? The investment in software is often mentioned here. However, this is offset by increased efficiency and falling costs in sales management. In addition, users benefit sustainably from increasing sales, which quickly amortizes the investment.

Process recommendation: What to do against delivery bottlenecks in retail?

In summary, it can be seen that delivery bottlenecks can arise for various reasons. If you want to avoid a loss of sales, you have to be prepared. The classic solution with manual use promises short-term improvement, but ties up expensive resources and does not always lead to success. A modern replenishment solution, on the other hand, is a long-term, sustainable measure against delivery bottlenecks. The simplified principle behind it: lower sales management costs, increase sales. Allocation can also be used to avoid overstocking.

Are you interested in a solution for modern replenishment? We would be happy to present you in detail the opportunities that arise for your company with orders.

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Peter Krebs

Director Customer Success