Companies involved in the retail supply chain face a recurring problem: how to handle constraints-those shortages of capital, people, equipment, and space that keep products from flowing smoothly through the supply chain. Expensive optimization systems can help deal with these constraints when they occur, but what if you could use advanced planning to eliminate these constraints before they ever occur? How much more smoothly and efficiently would your business run then? This paper shows how companies are achieving this today.

In the past few years, the retail world has been assaulted by a new catch phrase: “Optimize your supply chain by eliminating constraints.” A constraint occurs when a supply chain does not have enough capital, people, equipment, or space to acquire, transport, manufacture, warehouse, and/or sell product. Many software companies are promoting optimization algorithms as a way to solve or eliminate retail supply chain constraints. But is the management of constraints the real issue? And if so, do we need optimization algorithms to solve retail supply chain constraints? Based on personal experience, I would say that the answer 90 percent of the time is no.

There is no doubt that constraints do exist and cause major problems across the retail supply chain—which not only includes the retailers themselves, but also the suppliers, carriers, and other providers that serve them. In short, the supply chain implications of constraints in the retail sector are far-reaching. Retailers struggle every day with questions such as:

Do we have enough capacity to receive and put away suppliers’ deliveries
(receiving constraints)?
Do we have enough space to hold inventory (space constraints)?
Do we have enough resources to ship to our stores (labor constraints)?