Retailers’ intense focus on the consumer experience demands extreme speed, agility and precision in managing the movement of goods. However, demand volatility, evolving trade policies and rising expectations for speed and reliability create unique challenges within their supply chains. From sourcing decisions to last-mile execution, logistics performance is central to how retailers keep products moving, protect revenue and maintain customer loyalty.
“We’re engineering solutions around the parameters that are unique to the retail industry,” said Amy Ilyes, vice president of logistics engineering for Penske Logistics. “Between tariffs, sourcing shifts and changing fulfillment models, there is considerable uncertainty in the market right now.”
To tackle top supply chain challenges, retailers are placing greater emphasis on data-driven planning, network flexibility and tighter operational control.
Managing OTIF Performance
On-time, in-full (OTIF) delivery is one of the most critical performance indicators in retail supply chains. Loads must arrive on time with exactly what was ordered, and many retailers enforce strict compliance standards, penalizing shipments that arrive late or incomplete. Maintaining OTIF performance requires close coordination across suppliers, carriers and distribution partners.
In retail environments where receiving space is limited and customer traffic is high, on-time deliveries become even more critical. Loads arriving either early or late can disrupt store operations, block traffic around the location and delay restocking. Route planning tools that incorporate traffic and weather data, realistic unloading times and site constraints improve schedule reliability. “Understanding traffic, parking and how long it takes to load or unload helps us stay on time,” Ilyes said.
Meeting these demanding OTIF standards requires selecting the right transportation approach for different shipping needs. Outbound transportation options in retail typically include truckload services, dedicated contract carriage and managed transportation. Selecting the right combination is essential for balancing cost, capacity and service. Full truckload freight works well for long-haul replenishment and seasonal surges, while dedicated fleets offer more control for predictable, consistent capacity and high service levels. Managed transportation combines multiple carriers to optimize capacity, rates and service.
Taking Control of Inbound Freight
To help ensure seamless freight movements and increase visibility, some retailers are taking control over their inbound transportation. Managing inbound freight gives retailers greater control over carrier selection, execution and scheduling; it can also reveal hidden costs in the supply chain.
“They're taking a more hands-on approach to handling inbound loads themselves.” Ilyes adds, “Penske has the capabilities to work with customers to unbundle freight costs from the cost of goods, which creates transparency and often uncovers savings opportunities.” Managing inbound transportation gives retailers control over carrier selection, execution and scheduling.
Regardless of who manages the freight, maintaining OTIF performance depends on accountability throughout the supply chain. Supplier scorecards, real-time shipment tracking and proactive communication help ensure compliance and identify issues before they disrupt operations.
“We have a variety of ways to help the customer manage their supply base and make sure suppliers are shipping on time,” Ilyes said. “It’s about creating visibility and accountability at every handoff point.”
Data-Driven Forecasting and Inventory Accuracy
Accurate demand forecasting is critical for retailers, especially during seasonal peaks, planned promotions or periods of economic uncertainty. Inaccurate forecasts can lead to excess inventory, lost sales or higher costs for expedited shipments. Retailers are constantly trying to balance lean inventories with the need for buffer stock.
Maintaining accurate inventory information is especially important given the seasonality retailers must manage. Retail products often have specific sales windows that need to be maximized. Overstocking increases carrying costs and markdown exposure, while shortages directly impact customer satisfaction and revenue.
“We’re making sure we’re keeping accurate records of inventory, meeting cut times for loading outbound shipments and unloading inbound freight on time,” Ilyes said. “Those execution fundamentals make all the difference.”
Technologies such as barcode scanning, automated data capture and cycle counting improve inventory accuracy, while cross-docking and flexible storage strategies help retailers manage demand variability and product life cycles.
Scenario Planning and Network Resilience
Retail logistics decisions frequently involve trade-offs between transportation spend, delivery speed and inventory positioning. Determining which elements to prioritize directly impacts both cost and performance. Scenario modeling and network design tools enable retailers to evaluate these trade-offs in advance and make data-informed adjustments, such as reassigning stores to different distribution centers or adjusting safety stock levels.
“Most retailers want a high level of service, which means keeping inventory closer to their customers. In some cases, we recommend reallocating specific SKUs to different distribution centers or opening smaller facilities in strategic locations based on customer profiles and demand patterns.”
Beyond improving service, network optimization can significantly reduce total transportation costs. “Transportation costs are usually much higher than warehouse and inventory costs. So, we try to optimize service from the closest facility,” Ilyes explained.
Modeling also strengthens resilience by allowing retailers to test various sourcing, routing and inventory strategies against potential disruptions. Advanced models incorporate risk scores that assess the geopolitical environment, potential for natural disasters and severe weather, and other location-specific risks.
“If you have what I call a ‘living model,’ meaning you're refreshing it periodically or it is a digital twin that updates as things change within the supply chain, you can react much quicker to any kind of disruption. You’re not starting from scratch. You already have a contingency plan,” Ilyes said. These models also support strategic decisions around tariffs and sourcing by calculating lead times, landed costs and total cost of ownership across different scenarios.
The Future of Retail Supply Chains
As retail supply chains continue to grow more complex, success will increasingly depend on end-to-end visibility, scenario planning and integrated technology platforms. These capabilities enable retailers to deliver accurate, timely shipments while controlling costs, even amid ongoing disruption and uncertainty.
Retailers that strengthen visibility, improve collaboration across supply chain partners and continuously optimize their network will be best positioned to respond quickly and precisely to market changes. The goal remains constant: ensuring the right amount of inventory arrives at the right place, at the right time and at the right cost.
Success in retail logistics requires balancing competing priorities: speed versus cost, flexibility versus efficiency, service versus inventory investment. The retailers navigating these trade-offs most effectively are those investing in visibility, taking control of freight decisions and using data to model scenarios before disruptions occur. From OTIF performance to network optimization, every element of the supply chain must work together.
Penske Logistics works with retailers to address these challenges through integrated solutions that span transportation management, network optimization and supply chain engineering. With expertise in both inbound and outbound logistics, along with advanced capabilities, we help retailers build the visibility, flexibility and operational control needed to meet today’s demands while preparing for tomorrow's uncertainty.
Contact us to discuss your retail supply chain challenges.
