Retail-supply chain management

1
Retail-supply chain management

• Def- SCM in retail is an end to end process in
  merchandise planning and movement, from planning
  the inventory (preparing the purchase order) to
  the point of reaching the merchandise to the
  customer.
• It is an integrated process where every activity
  is interlinked with the system for information
  throughout the cycle time of each step of the
  process so that timely action can be taken.
• Individual activities of the SCM process-i. e..-
  warehousing, distribution , transportation both
  for inbound and outbound movement of merchandise
  which were handled separately in the past are now
  carried out in logical sequence fallowing a
  specific time table i.e. Logistics.
• Managing continuous supply of right products, at
  right time from different entities is the
  challenge of managing supply chain.
• Information technology tools has helped retailers
  in greatly reducing cycle times and attaining
  efficiency.

2

• operational and quality management and control
  initiatives like JIT, TQM, ZI (0-inventory)ECR
  (efficient consumer response) and VMR (vendor
  managed inventory) all these fragmented
  approaches have now been integrated within the
  domain of SCM process.
• Supply chain is a network of facilities and
  distribution options that performs the functions
  of procurement of materials. transformation of
  these material in to intermediate and finished
  products and distribution of these products to
  the customers.
• Objective of SCM is to ensure reaching right
  product at right place at right time and for the
  right price and profit for the retailer (fig).
• Product and information flow from stage of
  procurement till finished product reaches to
  store customer feed back of info from store to
  vendors. (fig)
• Simple supply chain existed in past (fig) changes
  due to expansion of organized retail industry in
  dynamic , which now links demand management
  resource management supply management. (fig)
  Demand change as per fast changing consumer
  buying habits a short life cycles for products
  and inventory. Cost of holding inventory ay
  restrict store to provide reasonable prices as
  funds locked up. in inventory

3

• Demand change to b handled in SCM-due to 1-short
  life cycle of products and inventory, 2-cost of
  holding inventory,3-no of suppliers large in
  retail and vary as per consumer demand patterns,
• So sourcing, vendor management and logistics big
  role in for all rights-time, place, and form
• SCM evolved due to cost pressures and so
  optimization with efficiencies in procurement,
  logistics etc with various models like jit-
  inventory management model, t q m each model
  oriented to optimization of sub part of system.
  Integration needed SCM.
• Quick response-(QR)- share information/data
  thru scanning, EDI (electronic data interchange),
  for inventory UPC ( universal product code) ,QR
  information of promotion, discounts, and forecast
  in supply system and meets required availability,
  low inventory investments and logistics expenses.
  Vendor supply floor ready merchandise-direct to
  store than thru DC can eliminate secondary
  transport cost.
• .

4

• ECR- (efficient consumer response)- working
  groups evolved mainly in grocery stores to
  expedite and quick/accurate flows in store
  enabled DC and distributors/suppliers, an
  improvement for edi and pos systems.
• MRP( material requirements planning) real
  beginning of SC practice fallowed by JIT in
  manufacturing and finally SCM evolved (fig)
• Construct- framework in scm implementation
  (fig) of issues like- base level implementation
  functional structural strategic.
• Integrated supply chain planning-
• Demand mgt resource mgt supply mgt in retail
  store means mktg team works for sales data, ways
  to meet targets etc merchandise team works for
  designing matching C needs purchase dept work
  for getting best price for materials.

5

• Each dept excels with aim but share common
  approach and info between each dept suppliers
  vendors
• Nature of retail influences supply chain and
  logistics e.g. grocery has 1-short life
  cycle,-seasonal,perishable,2-high
  volatility-demand varies vagaries of weather, not
  stable,3-low predictability-difficult to forecast
  with accuracy.4-high impulse purchase,
• To handle above uncertainty quality forecast
  helps but need to focus on lead time reductions.
• shorter lead time means low risk due to short
  horizon of forecast.
• Three types of lead time- 1-time to market
  period taken from identifying mkt opportunity to
  translate it in to product /service to bring it
  to market 2-Time to serve- period between
  capturing order and deliver it to retail
  customers satisfaction,3-time to react- between
  adjusting output to meet volatile demand,
• -time to market-Not to miss out opportunity
  that may not b repeated, rtc, rte products,
• -time to serve between mfr to retail, may b jit
  to reduce costs, - time to react
• -time between seeing real demand and
  replenishments-fashion merchandise.

6

• The lead time gap-
• the difference between time of sourcing r.m
  converting it in to product movement to mkt i.e.
  logistic pipeline and customer order cycle
• challenge for logistic mgt is to find ways to
  reduce if not close gap
• Many retail cos r agile and r able to capture
  consumer demands/imaginations and simultaneously
  achieve twin 1-reducing logistics lead time,
  2-capture info timely abt C demand.
• Vendor managed Inventory (VMI)
• vendor undertakes the inventory management of
  the stores. Also called quick response inventory
  system (QRIS ),thru EDI,ECR systems eliminating
  paper work , reducing lead time, reducing vendors
  reordering errors.
• It increase product availability and low
  inventory investments. low logistics expenses. QR
  systems enables direct delivery to store than
  thru dc thus reducing cost of dc and secondary
  transport.

7

• VMI partnerships supplier may b mfr, distributor
  reseller decides abt order quantity, shipping
  timings etc and monitors buyers inventory
• Collaborative planning forecasting and
  replenishment (CPFR) Aligning forecast of
  retailer and vendor thus reducing inventory
  investments and stock outs and increasing
  opportunities in stock positioning, gross margins
  and sales.
• It is based on managing forecasts and
  inventory levels by alerting participating org to
  potential problems.
• It is business practice that reduces inventory
  costs while improving product availability across
  the supply chain.
• process starts with agreement between trading
  partners to share information and collaborate on
  planning with ultimate goal of delivering
  products based on true market demand.

8

• Cross Docking
• A system and a function of warehouse or
  distribution centre. Vendor ships merchandise to
  a DC prepacked in quantities required by each
  store. and then is stored on one side of DC and
  floor ready merchandise is then transferred to
  other side of Dc for delivery to store.
• Merchandise goes from delivery to
  shipping/transportation dock so the term cross
  docking. The DCs r equipped with laser guided
  conveyors which reads UPC,s of incoming cases and
  direct them to right truck for delivery to
  stores. extensively used by wall mart.
• Food and grocery supply chain- role of APMC. (ex)
• Retail logistics-
• Def-It is that part of supply chain process, that
  plans , implements and controls ,the efficient,
  effective ,forward and reverse flow and storage
  of goods , services and related information
  between the point of origin and the point of
  consumption in order to meet customers
  requirements.
• Main objective of logistics management is to
  reduce inventory holding costs and improve
  profits

9

• Efficient logistics system needs strong systems
  for information transport, DC and handling
  capabilities
• A logistics system has to b built to suit the
  needs of the retail organization keeping in mind
  the kind of products, and competition.
• Retail logistics is the process of managing the
  flow of merchandise from the source of supply to
  the customer.
• It involves 1-physical movement fro mfr/dc/store
  ,2-stocking, 3-entire process management.
• Reverse logistics- the process of planning
  implementing and controlling the efficient ,cost
  effective flow of raw materials, in-process
  inventory, finished goods and related information
  from point of consumption to the point of origin
  for the purpose of recapturing value or proper
  disposal.
• A process of moving goods from their final
  destination for the purpose of capturing value or
  proper disposal. It is more than reusing and
  recycling .It includes redesigning packaging to
  use less material or reducing the energy and
  pollution from transportation or pollution as
  Green logistics.
• It no goods r being sent backward the
  activity is not a reverse logistics.