retail suppy chain management

8/3/2019 Retail Suppy Chain Management

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McGraw-Hill/IrwinLevy/Weitz: Retailing Management, 5/e Copyright 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Information SystemsInformation Systems

and Supply Chainand Supply Chain

ManagementManagement

Chapter 10Chapter 10


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Supply Chain Management is the

integration of business processes

from end user through originalsuppliers that provides products,

services, and information that add

value for customers.

Supply Chain Management


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Illustration of Supply Chain


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Strategic Importance of

Supply Chain Management

Opportunity to Reduce Costs

Transportation Costs

Inventory Holding Costs

Provide Value to Customers by Making sure theRight Merchandise is in the Right Place at theRight Time

Fewer Stockouts

Greater Assortment with Less Inventory

Improved ROI


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Return on assets = Net profit margin x Asset turnover

Net profit = Net profit x Net sales

Total assets Net sales Total assets

Improve Return on Investment

Efficient Supply Chain Management Higher Asset Turnover

Same Sales Using Less Inventory


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The Flow of Information and Merchandise

- - - - Merchandise flow Information flow

Buyer

Vendor

Stores

Distribution

center

Customer

Quickresponsesystems

Sales info


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Information Flow

2. Information about purchase istransmitted from POS terminal to thebuyer/planner.

3.Information about purchases areaggregated by buyer/planner and

sent to distribution center andvendor

1. When customer makes a

purchase, sales associate

scans UPC code on merchandise

and customer credit card/loyalty card


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Information Flow

6. Store managers informdistribution center about receipt ofmerchandise and coordinatedeliveries

4. Buyer/planner communicates with

vendor and places a purchase order

to re-supply stores.

5. Buyer/planner notifies distribution

center about incoming orders and

how they are to be distributed to stores


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Data Warehousing

Data warehousing is the coordinated and periodic

copying of data from various sources, both inside

and outside the enterprise, into an environment

ready for analytical and informational processing

Wal-Mart makes good use of its data warehouse.

It should. Experts estimate that it is second insize only to that of the U.S. government


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Data Warehouse Structure


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Electronic Data Interchange

EDI is the computer-to-computer exchange of

business documents between retailers and vendors

Merchandise sales

Inventory On Hand

Orders

Advanced shipping notices

Receipt of merchandise

Invoices for payment


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Physical Flow of Merchandise

Merchandise is sent from vendor

either to the retailers distribution

center (1) or directly to store (3).

Retailer send merchandise from its

distribution center to its stores (2).


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Activities Performed by Distribution Center

Receiving and checking merchandise

Managing inbound transportation

Storing or cross docking merchandise

Preparing merchandise for the sales floor

Ticketing and marking

Putting on hangers

Shipping merchandise tostores

Managing outboundtransportation


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More cost effective

More accurate sales forecasts

Less merchandise in the individual store,

thus a lower inventory investment system-wide.

Less out-of-stock

Advantages of Using a Distribution Center


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When to Use Distribution Centers

Unpredictable merchandise sales wide

fluctuations in demand

Frequent replenishment required highnumber of units sold per day

Items shipped to store in less than full case

quantities

Many retail outlets that are not concentrated in

one area


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When to Use Direct Store Delivery

Retailer has only a few outlets

Many retail outlets are concentrated in metro areas

yielding increased efficiency of direct store delivery

Important to get merchandise in store quickly

Fashion - first to have latest video game

Merchandise perishable - produce


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Crossdocking

Merchandise flows directly from the vendors trucks

through the retailers distribution center and is

loaded on the trucks going to the retailers stores

without being stored in the distribution center


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Logistics Strategy

Pull

Merchandise shipped

to stores based on

sales and inventorylevels in the stores

Push

Merchandise shipped to

the stores based on

forecasted sales rate


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Quick Response Delivery System

QR delivery systems are inventory management

systems designed to reduce the retailers lead time

for receiving merchandise, thereby lowering

inventory, improving customer service levels, andreducing logistics expenses.

CPFR (collaboration, planning, forecasting,replenishment)


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Benefits ofQR Systems

Reduces lead time

Increases product availability and lowers

inventory investment

Reduces logistics expenses


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Costs ofQR Systems

Smaller orders - more expensive to transport

Greater order frequency - deliveries andtransportation more difficult to coordinate

Computer hardware and software must be

purchased by both parties.


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Logistics Support forElectronic Channel

Requires a different type of distribution center

Picking and packing individual items sent to

customer vs.

Receiving, storing, and cross docking cartons

to stores

Multi-channel retailers may outsource fulfillment

of Internet orders to third party


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Outsourcing Supply Chain

Management Functions

Transportation

WarehousingFreight Forwarders

Integrated Third Part

Logistics Services

Cost

vs.

Control

retail suppy chain management

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