Retail supply chain management


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Retail supply chain management

  1. 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. 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. 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. 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. 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. 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 co’s 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. 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. 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 DC’s 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. 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.