This document summarizes an operations research study conducted in collaboration with the fast-fashion retailer Zara. The study addresses the problem of distributing a limited inventory across Zara's large retail network over time. The researchers developed an optimization model that uses demand forecasts and inventory data to determine optimal weekly shipment quantities from the warehouse to each store, with the goal of maximizing overall predicted sales. A pilot implementation found that using the new optimization-based allocation process increased sales by 3-4% compared to Zara's previous process, and also reduced inventory transfers between stores. Zara is now using the new process for inventory allocation worldwide.
This document discusses quick response (QR) and efficient consumer response (ECR) in retail supply chains. It defines QR as providing goods to retailers in exact quantities based on demand within short lead times to minimize inventory. ECR aims to further integrate retailers and suppliers through information sharing and joint planning. Examples are given of QR in fast fashion industries, where trends change rapidly and inventory becomes obsolete quickly, requiring rapid replenishment. The document also discusses trends in the grocery industry toward more centralized distribution and automation to reduce costs and improve availability.
Transnational Strategic Management-Value Chain Analysis-Write UpMeenaskhi Gaur
Value chain analysis examines the series of activities within an organization that create and build value for customers. Michael Porter identified nine value-creating activities grouped into primary and support activities. This case study examines Zara's value chain. Zara designs, produces, and distributes fashion products in only two weeks to satisfy demand. It manufactures 50% of products internally and uses 300 subcontractors for other production. Zara's integrated design process allows for continuous updates based on customer feedback. Its efficient logistics network distributes products to stores several times per week from its main distribution center.
The document discusses key aspects of supply chain management including demand creation and forecasting, product development and commercialization, distribution network configuration, information sharing, and inventory management. It emphasizes the importance of integrating these different elements and having clear communication across the entire supply chain to quickly fulfill customer demand like the fast fashion retailer Zara, which can design, produce, and deliver new products to stores within 3 weeks through a highly coordinated process.
The document outlines the key steps in a merchandise planning cycle for a retail company. It includes reviewing past season performance, creating budgets and sales forecasts, developing merchandising plans at the department and category levels with product mixes and assortment plans, signing off on plans, optimizing supply chains, allocating stock to stores, and reviewing sales performance. It also provides frequently asked questions about each step in the planning process.
Due to the large variety of products made in textile fabric manufacturing, companies involved in this industry typically utilize a make-to-order production system, which causes potential operational inefficiencies due to suboptimal production scheduling in an industry where demand is generally unpredictable.
Nestlé is the world's largest food and beverage company operating 435 factories across 35 countries. It has a global supply chain network sourcing key ingredients like coffee, cocoa, milk and sugar. Nestlé implements quality management systems and provides technical training to farmers to ensure product quality. Its distribution network includes over 1600 warehouses and uses IT tools for inventory management and seamless information flow. Britannia is India's second largest biscuit manufacturer focusing on cost effectiveness through scale, technology and waste reduction. It sources some materials locally and imports others like palm oil. Britannia uses an intensive distribution strategy through retail and institutional channels.
The document discusses supply chain management and the value chain of Brandix, a Sri Lankan apparel manufacturer and exporter. It defines value chain and supply chain management concepts. It then analyzes Brandix's value chain activities including R&D, design, inbound logistics, operations, outbound logistics, sales and marketing, and services. It also discusses Brandix's supply chain network and key functions like transportation management, operations, supplier relationship management, warehouse management, and demand management. The document identifies challenges like shrinking lead times, increasing style changes, capacity issues, information flow problems, and inventory and logistics issues. It outlines solutions Brandix has implemented such as new inventory systems, lean manufacturing, cost reduction, expanding raw
The document discusses merchandise planning and management systems for retailers. It describes staple and fashion merchandise categories and the different systems used for each. Staple items have predictable demand and use continuous replenishment systems. Fashion items have unpredictable demand and use merchandise budget plans and open-to-buy systems to allocate funds and monitor spending. The document provides details on how these systems work, including calculating order points, order quantities, and developing merchandise budget plans.
This document discusses quick response (QR) and efficient consumer response (ECR) in retail supply chains. It defines QR as providing goods to retailers in exact quantities based on demand within short lead times to minimize inventory. ECR aims to further integrate retailers and suppliers through information sharing and joint planning. Examples are given of QR in fast fashion industries, where trends change rapidly and inventory becomes obsolete quickly, requiring rapid replenishment. The document also discusses trends in the grocery industry toward more centralized distribution and automation to reduce costs and improve availability.
Transnational Strategic Management-Value Chain Analysis-Write UpMeenaskhi Gaur
Value chain analysis examines the series of activities within an organization that create and build value for customers. Michael Porter identified nine value-creating activities grouped into primary and support activities. This case study examines Zara's value chain. Zara designs, produces, and distributes fashion products in only two weeks to satisfy demand. It manufactures 50% of products internally and uses 300 subcontractors for other production. Zara's integrated design process allows for continuous updates based on customer feedback. Its efficient logistics network distributes products to stores several times per week from its main distribution center.
The document discusses key aspects of supply chain management including demand creation and forecasting, product development and commercialization, distribution network configuration, information sharing, and inventory management. It emphasizes the importance of integrating these different elements and having clear communication across the entire supply chain to quickly fulfill customer demand like the fast fashion retailer Zara, which can design, produce, and deliver new products to stores within 3 weeks through a highly coordinated process.
The document outlines the key steps in a merchandise planning cycle for a retail company. It includes reviewing past season performance, creating budgets and sales forecasts, developing merchandising plans at the department and category levels with product mixes and assortment plans, signing off on plans, optimizing supply chains, allocating stock to stores, and reviewing sales performance. It also provides frequently asked questions about each step in the planning process.
Due to the large variety of products made in textile fabric manufacturing, companies involved in this industry typically utilize a make-to-order production system, which causes potential operational inefficiencies due to suboptimal production scheduling in an industry where demand is generally unpredictable.
Nestlé is the world's largest food and beverage company operating 435 factories across 35 countries. It has a global supply chain network sourcing key ingredients like coffee, cocoa, milk and sugar. Nestlé implements quality management systems and provides technical training to farmers to ensure product quality. Its distribution network includes over 1600 warehouses and uses IT tools for inventory management and seamless information flow. Britannia is India's second largest biscuit manufacturer focusing on cost effectiveness through scale, technology and waste reduction. It sources some materials locally and imports others like palm oil. Britannia uses an intensive distribution strategy through retail and institutional channels.
The document discusses supply chain management and the value chain of Brandix, a Sri Lankan apparel manufacturer and exporter. It defines value chain and supply chain management concepts. It then analyzes Brandix's value chain activities including R&D, design, inbound logistics, operations, outbound logistics, sales and marketing, and services. It also discusses Brandix's supply chain network and key functions like transportation management, operations, supplier relationship management, warehouse management, and demand management. The document identifies challenges like shrinking lead times, increasing style changes, capacity issues, information flow problems, and inventory and logistics issues. It outlines solutions Brandix has implemented such as new inventory systems, lean manufacturing, cost reduction, expanding raw
The document discusses merchandise planning and management systems for retailers. It describes staple and fashion merchandise categories and the different systems used for each. Staple items have predictable demand and use continuous replenishment systems. Fashion items have unpredictable demand and use merchandise budget plans and open-to-buy systems to allocate funds and monitor spending. The document provides details on how these systems work, including calculating order points, order quantities, and developing merchandise budget plans.
The document describes a methodology for optimizing assortments across a large national retail chain to maximize revenue. It estimates demand based on product attributes and fractional demand levels. It then uses the estimated demand to create 1 to N assortments and assign stores to assortments through optimization. Testing on pasta transaction data showed a significant revenue increase from 1 to N assortments, with most gains achieved with fewer than N assortments. The approach only requires transactional data that retailers already have.
This document defines and discusses quick response (QR). QR aims to provide customers with a diverse range of products and services in exact quantities and at the right time, place, and price based on real-time demand. It was developed in the late 1980s based on the Japanese concept of time-based competition. QR focuses on reducing lead times throughout the supply chain to improve quality, reduce costs, and eliminate waste. It requires responsiveness, reliability, resilience, and relationships between supply chain members. When implemented successfully, QR benefits suppliers and retailers through reduced inventory, improved cash flow, higher sales and profits, and enhanced customer satisfaction.
Procter & Gamble implemented several supply chain initiatives to reduce variability and improve responsiveness. Their Collaborative Planning, Forecasting and Replenishment (CPFR) initiative involved collaborating with retailers to create a single shared forecast and order plan. Their Consumer Driven Supply Network (CDSN) used point-of-sale data and intelligent daily forecasting to produce products based on actual consumer demand. These initiatives helped P&G reduce out-of-stocks, cut response time, improve forecast accuracy, and increase sales and profits.
Here are some key ways the conflicting goals of different partners and facilities in Barilla's supply chain can be addressed:
- Improve information sharing and coordination across the entire supply chain from manufacturers to retailers. Visibility into demand data can help align forecasting and operations.
- Adopt a Vendor Managed Inventory or collaborative planning approach to transfer responsibility for demand planning to Barilla and better integrate facilities/partners.
- Reduce complexity by streamlining SKU numbers and product varieties to improve forecasting accuracy and production planning.
- Pursue Just-In-Time manufacturing and distribution methods within Barilla's control to minimize inventories while still meeting customer needs. Overall, prioritizing integration, information sharing, and reducing
Managing Supply Chain of Zara. It defines what a supply chain is and outlines the steps that makes up the chain. It Explain the factors that affect its design and understands the processes of designing and managing the supply chain. It outline the benefits of effectively managing supply chains
This presentation deals with Marico's inbound and outbound supply chain. We discuss here the supply chain problems that Marico faced and the remedial steps it took to solve the problems. Use of IT (ERP/SAP solution) and disintermediation in supply chain appear as notable steps Marico undertook to solve its Supply Chain problems.
Barilla is an Italian pasta company founded in 1875. It used a vertically integrated supply chain but faced issues with fluctuating demand from distributors who lacked forecasting tools. Barilla implemented a Just in Time Distribution (JITD) system where it collected sales data electronically from distributors daily and used it to predict demand and make shipments, aiming to reduce inventory levels and stock-outs. The new system improved customer service, boosted cost savings and competitive advantage through more efficient planning and information sharing across the supply chain.
This was part of the solution that we suggested towards SCM & Operations case study competition Marico - Over the wall. However, the idea was not accepted we believe that this will make an impact.
This document summarizes Marico's implementation of Vendor Managed Inventory (VMI) to address issues with its supply chain. Marico faced problems like low forecast accuracy, high inventory levels, stockouts and lost sales. It implemented VMI using systems like ERP, APO and MiNET to give visibility of distributor inventory in real-time. This led to benefits like 50% reduction in sales skew, distributor stockouts and inventory levels. Forecast accuracy improved to over 90%. The changes helped Marico achieve double digit sales and profit growth while improving availability and ROI for distributors. Potential challenges for VMI include reliance on technology, willingness of vendors to take on more responsibility, and developing accurate forecasts.
The Mumbai Grahak Panchayat's (MGP) distribution model was highlighted by the Norwegian Environment Ministry as a role model for promoting sustainable consumption. The MGP model operates through buying groups that consolidate orders to get lower prices for their members while saving transportation and reducing waste. It services over 15,000 families through over 1,500 buying groups, saving members 15-20% on their monthly grocery costs while reducing environmental impacts like greenhouse gas emissions. The model has been successful due to factors like operating on a non-profit basis, emphasizing health/nutrition, and relying on voluntary community participation.
The document describes the evolution of the structure of the apparel industry over 40 years through 5 distinct stages:
1) The immediate post-World War II era had a simple structure with sales, manufacturing, and CEO roles.
2) In the 1960s, marketing became important and was added to the structure.
3) In the late 1960s, design and merchandising roles were added.
4) In the 1970s-1980s, market research was incorporated and responsibilities shifted from production to consumer needs.
5) The current structure has specialized roles across marketing, merchandising, design, sourcing, manufacturing, and finance/administration.
Barilla is the largest pasta manufacturer in the world with a 35% market share in Italy and 22% in Europe. It produces over 200 varieties of pasta along with other bakery products. The company was organized into several divisions but faced issues with poor communication, decentralized information flow, and inconsistent sales strategies. This led to thinning margins. To address this, the Director of Logistics proposed implementing a Just-in-Time Distribution system to improve demand forecasting, reduce inventory levels, and strengthen relationships between Barilla and distributors. However, the change faced resistance from some distributors and internal departments.
Managing the merchandise and retail marketingSanjay Jana
these are very useful slides related to retail marketing and merchandise management. it helped me a lot in understanding the changing scenario of the consumers from unorganized retailing to organized retailing.
Rising costs, increased complexity, and growing customer demands are forcing manufacturers and distributors to reconsider their warehouse management practices. Legacy ERP systems lack capabilities to provide visibility and efficiency. Advanced warehouse management solutions help maximize productivity through capabilities like inventory management, order management, work and task management, and RF/voice direction. This allows companies to strengthen order management, increase labor productivity, and maximize asset use to reduce costs, protect profitability, and enhance competitiveness.
The document discusses the assortment planning process for retailers. It defines key terms like variety, assortment, and product availability. It also outlines factors to consider when determining variety, assortment, and product availability like profitability, store characteristics, and complementary merchandise. Additionally, it discusses assortment planning issues specific to internet retailers like determining what products will sell online based on target customers, competition, visual appeal, and shipping. The overall goal of the assortment plan is to select and plan products to maximize sales and profits for a specified period through balancing variety, assortment, and availability.
Marico faced challenges with its initial outbound supply chain as it sought to expand into new areas and increase penetration in rural India. Forecasting accuracy was only 70%, leading to stockouts costing 30% of potential sales. Planning issues included a 30-day cycle, spreadsheets, and only one planner. This supply chain could not support Marico's growth strategy. To address this, Marico implemented SAP solutions including APO, along with custom software MIDAS and MINET, to improve demand forecasting, planning, and provide real-time supply chain visibility. This redesign led to decreased stockouts, lower inventory levels, improved salesforce productivity, and increased turnover.
The document provides a summary and analysis of operations at Tesco Express convenience store. It analyzes the store's performance based on five objectives: quality, speed, dependability, flexibility, and cost. Quality, speed, and dependability are rated fairly good by customers, while flexibility is rated lower. Both customers and managers rate cost as low. Cost is identified as the most important objective for success. Capacity measures including design, effective, and actual capacity are calculated. Main bottlenecks are identified as the number of checkouts and staff, physical space, and technology. The capability index is calculated as 0.52, indicating unreliable variation likely due to poor leadership and management.
Retail merchandising involves developing, pricing, supporting, and communicating a retailer's product assortment. It aims to offer the right products at the right time, price, and appeal. Merchandise management encompasses analysis, planning, handling, and control of products. The merchandise planning process involves developing sales forecasts, determining product requirements, merchandise control using tools like open-to-buy, and assortment planning to determine product quantities.
Microsoft power point zara strategy caseTanya Boichun
Zara has been able to achieve competitive advantage and sustained profits above industry averages through its business model and vertical integration. It can design, produce, and deliver new fashion items to stores within 2-3 weeks, much faster than competitors. This speed and flexibility allows Zara to stay responsive to the latest trends. Its organizational structure with store manager autonomy and technological integration of feedback also enables rapid design adaptation. While imitable, Zara's full business model would be difficult for competitors to copy due to the costs and time required to develop comparable integration, culture, and processes.
Inventory Management: How Incremental Improvements Drive Big GainsCognizant
By feeding social and mobile data into planning systems and overlaying analytics, manufacturers and retailers can reduce inventory waste and more precisely target customers.
The document describes a methodology for optimizing assortments across a large national retail chain to maximize revenue. It estimates demand based on product attributes and fractional demand levels. It then uses the estimated demand to create 1 to N assortments and assign stores to assortments through optimization. Testing on pasta transaction data showed a significant revenue increase from 1 to N assortments, with most gains achieved with fewer than N assortments. The approach only requires transactional data that retailers already have.
This document defines and discusses quick response (QR). QR aims to provide customers with a diverse range of products and services in exact quantities and at the right time, place, and price based on real-time demand. It was developed in the late 1980s based on the Japanese concept of time-based competition. QR focuses on reducing lead times throughout the supply chain to improve quality, reduce costs, and eliminate waste. It requires responsiveness, reliability, resilience, and relationships between supply chain members. When implemented successfully, QR benefits suppliers and retailers through reduced inventory, improved cash flow, higher sales and profits, and enhanced customer satisfaction.
Procter & Gamble implemented several supply chain initiatives to reduce variability and improve responsiveness. Their Collaborative Planning, Forecasting and Replenishment (CPFR) initiative involved collaborating with retailers to create a single shared forecast and order plan. Their Consumer Driven Supply Network (CDSN) used point-of-sale data and intelligent daily forecasting to produce products based on actual consumer demand. These initiatives helped P&G reduce out-of-stocks, cut response time, improve forecast accuracy, and increase sales and profits.
Here are some key ways the conflicting goals of different partners and facilities in Barilla's supply chain can be addressed:
- Improve information sharing and coordination across the entire supply chain from manufacturers to retailers. Visibility into demand data can help align forecasting and operations.
- Adopt a Vendor Managed Inventory or collaborative planning approach to transfer responsibility for demand planning to Barilla and better integrate facilities/partners.
- Reduce complexity by streamlining SKU numbers and product varieties to improve forecasting accuracy and production planning.
- Pursue Just-In-Time manufacturing and distribution methods within Barilla's control to minimize inventories while still meeting customer needs. Overall, prioritizing integration, information sharing, and reducing
Managing Supply Chain of Zara. It defines what a supply chain is and outlines the steps that makes up the chain. It Explain the factors that affect its design and understands the processes of designing and managing the supply chain. It outline the benefits of effectively managing supply chains
This presentation deals with Marico's inbound and outbound supply chain. We discuss here the supply chain problems that Marico faced and the remedial steps it took to solve the problems. Use of IT (ERP/SAP solution) and disintermediation in supply chain appear as notable steps Marico undertook to solve its Supply Chain problems.
Barilla is an Italian pasta company founded in 1875. It used a vertically integrated supply chain but faced issues with fluctuating demand from distributors who lacked forecasting tools. Barilla implemented a Just in Time Distribution (JITD) system where it collected sales data electronically from distributors daily and used it to predict demand and make shipments, aiming to reduce inventory levels and stock-outs. The new system improved customer service, boosted cost savings and competitive advantage through more efficient planning and information sharing across the supply chain.
This was part of the solution that we suggested towards SCM & Operations case study competition Marico - Over the wall. However, the idea was not accepted we believe that this will make an impact.
This document summarizes Marico's implementation of Vendor Managed Inventory (VMI) to address issues with its supply chain. Marico faced problems like low forecast accuracy, high inventory levels, stockouts and lost sales. It implemented VMI using systems like ERP, APO and MiNET to give visibility of distributor inventory in real-time. This led to benefits like 50% reduction in sales skew, distributor stockouts and inventory levels. Forecast accuracy improved to over 90%. The changes helped Marico achieve double digit sales and profit growth while improving availability and ROI for distributors. Potential challenges for VMI include reliance on technology, willingness of vendors to take on more responsibility, and developing accurate forecasts.
The Mumbai Grahak Panchayat's (MGP) distribution model was highlighted by the Norwegian Environment Ministry as a role model for promoting sustainable consumption. The MGP model operates through buying groups that consolidate orders to get lower prices for their members while saving transportation and reducing waste. It services over 15,000 families through over 1,500 buying groups, saving members 15-20% on their monthly grocery costs while reducing environmental impacts like greenhouse gas emissions. The model has been successful due to factors like operating on a non-profit basis, emphasizing health/nutrition, and relying on voluntary community participation.
The document describes the evolution of the structure of the apparel industry over 40 years through 5 distinct stages:
1) The immediate post-World War II era had a simple structure with sales, manufacturing, and CEO roles.
2) In the 1960s, marketing became important and was added to the structure.
3) In the late 1960s, design and merchandising roles were added.
4) In the 1970s-1980s, market research was incorporated and responsibilities shifted from production to consumer needs.
5) The current structure has specialized roles across marketing, merchandising, design, sourcing, manufacturing, and finance/administration.
Barilla is the largest pasta manufacturer in the world with a 35% market share in Italy and 22% in Europe. It produces over 200 varieties of pasta along with other bakery products. The company was organized into several divisions but faced issues with poor communication, decentralized information flow, and inconsistent sales strategies. This led to thinning margins. To address this, the Director of Logistics proposed implementing a Just-in-Time Distribution system to improve demand forecasting, reduce inventory levels, and strengthen relationships between Barilla and distributors. However, the change faced resistance from some distributors and internal departments.
Managing the merchandise and retail marketingSanjay Jana
these are very useful slides related to retail marketing and merchandise management. it helped me a lot in understanding the changing scenario of the consumers from unorganized retailing to organized retailing.
Rising costs, increased complexity, and growing customer demands are forcing manufacturers and distributors to reconsider their warehouse management practices. Legacy ERP systems lack capabilities to provide visibility and efficiency. Advanced warehouse management solutions help maximize productivity through capabilities like inventory management, order management, work and task management, and RF/voice direction. This allows companies to strengthen order management, increase labor productivity, and maximize asset use to reduce costs, protect profitability, and enhance competitiveness.
The document discusses the assortment planning process for retailers. It defines key terms like variety, assortment, and product availability. It also outlines factors to consider when determining variety, assortment, and product availability like profitability, store characteristics, and complementary merchandise. Additionally, it discusses assortment planning issues specific to internet retailers like determining what products will sell online based on target customers, competition, visual appeal, and shipping. The overall goal of the assortment plan is to select and plan products to maximize sales and profits for a specified period through balancing variety, assortment, and availability.
Marico faced challenges with its initial outbound supply chain as it sought to expand into new areas and increase penetration in rural India. Forecasting accuracy was only 70%, leading to stockouts costing 30% of potential sales. Planning issues included a 30-day cycle, spreadsheets, and only one planner. This supply chain could not support Marico's growth strategy. To address this, Marico implemented SAP solutions including APO, along with custom software MIDAS and MINET, to improve demand forecasting, planning, and provide real-time supply chain visibility. This redesign led to decreased stockouts, lower inventory levels, improved salesforce productivity, and increased turnover.
The document provides a summary and analysis of operations at Tesco Express convenience store. It analyzes the store's performance based on five objectives: quality, speed, dependability, flexibility, and cost. Quality, speed, and dependability are rated fairly good by customers, while flexibility is rated lower. Both customers and managers rate cost as low. Cost is identified as the most important objective for success. Capacity measures including design, effective, and actual capacity are calculated. Main bottlenecks are identified as the number of checkouts and staff, physical space, and technology. The capability index is calculated as 0.52, indicating unreliable variation likely due to poor leadership and management.
Retail merchandising involves developing, pricing, supporting, and communicating a retailer's product assortment. It aims to offer the right products at the right time, price, and appeal. Merchandise management encompasses analysis, planning, handling, and control of products. The merchandise planning process involves developing sales forecasts, determining product requirements, merchandise control using tools like open-to-buy, and assortment planning to determine product quantities.
Microsoft power point zara strategy caseTanya Boichun
Zara has been able to achieve competitive advantage and sustained profits above industry averages through its business model and vertical integration. It can design, produce, and deliver new fashion items to stores within 2-3 weeks, much faster than competitors. This speed and flexibility allows Zara to stay responsive to the latest trends. Its organizational structure with store manager autonomy and technological integration of feedback also enables rapid design adaptation. While imitable, Zara's full business model would be difficult for competitors to copy due to the costs and time required to develop comparable integration, culture, and processes.
Inventory Management: How Incremental Improvements Drive Big GainsCognizant
By feeding social and mobile data into planning systems and overlaying analytics, manufacturers and retailers can reduce inventory waste and more precisely target customers.
This document summarizes a model developed by suppliers to monitor retailers' stocking efforts using only shipment and sales data. The model distinguishes between store stockouts (zero inventory in the store) and shelf stockouts (empty shelf but inventory elsewhere), identifying the root cause. The model was applied to data from a frozen vegetable supplier and national grocery chain. It found wide variation in stockout rates between stores, with two stores over 10% compared to under 6% for most. Over 95% of stockouts were shelf stockouts. The model identifies stores and products with stocking issues and estimates sales losses from stockouts of 60-80% on average.
World Co. uses an advanced supply chain system called Sparks to manage its inventory and respond quickly to demand changes. Sparks allows World to track inventory daily at the store level and share data across the company. It also helps World forecast demand accurately at the SKU level through methods like Obermeyer voting. As a result, World achieves high inventory turns and margins through tight coordination between its merchandising, production planning, and supplier relationships.
ARTICLE IN PRESS0925-5273$ - sedoi10.1016j.ijp.docxdavezstarr61655
ARTICLE IN PRESS
0925-5273/$ - se
doi:10.1016/j.ijp
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Correspondi
E-mail addre
(K. van Donsel
Int. J. Production Economics 121 (2009) 620–632
www.elsevier.com/locate/ijpe
Logistics drivers for shelf stacking in grocery retail stores:
Potential for efficiency improvement
Susan van Zelst, Karel van Donselaar
�
, Tom van Woensel,
Rob Broekmeulen, Jan Fransoo
Department of Technology Management, Technische Universiteit Eindhoven, P.O. Box 513, 5600 MB Eindhoven, The Netherlands
Received 17 March 2006; accepted 28 June 2006
Available online 30 August 2006
Abstract
In retail stores, handling of products typically forms the largest share of the operational costs. The handling activities are
mainly driven by the shelf stacking process. While the impact of the handling costs on the profitability of a store is
substantial, there are no models available of the different drivers influencing store handling. In this paper, a study of the
shelf stacking process is presented. First, a conceptual model based on warehouse operations is derived. It is shown that
stacking costs are non-linear with the number of consumer units stacked. Secondly, by means of a motion and time study,
data has been collected for dry groceries in four stores of two different European retail companies. Using regression, the
developed model clearly demonstrates the impact of the most important drivers for stacking efficiency: case pack (CP) size,
number of CPs stacked simultaneously, the filling regime and the working place of the employees. Efficiency gains of
8–49% by changing the driver parameter value are identified. Based on the presented insights both retail companies have
already decided to structurally change their current operations.
r 2006 Elsevier B.V. All rights reserved.
Keywords: Retail operations; Handling; Store; Shelf stacking; Motion and time study; Model
1. Introduction
In times of severe competition, many retailers
recognize the importance of controlling costs. With
known supply chain costs, the information needed
to most effectively structure the supply chain can be
provided. Moreover, different opportunities needed
to simultaneously reduce costs and increase perfor-
mance can be identified. In Fig. 1 (see Broekmeulen
e front matter r 2006 Elsevier B.V. All rights reserved
e.2006.06.010
ng author.
ss: [email protected]
aar).
et al., 2006) the operational logistical costs made in
the part of the supply chain that includes the
retailer’s warehouse and the store are presented.
Since we focus on operational costs, total shelf
space and the assortment are assumed to be known.
Furthermore, since this cost analysis is based on
non-perishables (dry groceries), obsolescence costs
are negligible. As a result, the inventory costs in the
cost pie in Fig. 1 only consist of the inventory
holding costs. It can be seen that the majority of the
operational costs are handling costs. In another
empirical study by Saghir and Jönson (2001) the
same trend was .
New Reality Omnichannel new selling new supply chainTom Craig
Read about the new selling reality and what you must do to compete in this world of customer power, order delivery velocity, and the Perfect Order--all driven by strategic and weaponized Supply Chain Management. It will be about leaders and laggards.
This document provides a case study analysis of Zara's agile supply chain. It summarizes that Zara designs over 40,000 items per year but only produces around 10,000 based on feedback from stores. Zara is able to replenish stores twice a week on average due to its efficient supply chain and proximity to factories in Europe. The constant feedback loop between stores and designers allows Zara to quickly adapt to changing fashion trends and demand. Zara's agile supply chain is a key factor in its success competing in the fast fashion industry.
Zara uses an agile supply chain model that allows it to respond quickly to fashion trends. It has in-house designers that create over 40,000 designs per year, with only 10,000 selected for production. More than 50% of its production is in Europe, not Asia, to shorten lead times. Zara is able to expand sales and profits over 20% annually due to frequent new designs, minimal markdowns, and an efficient supply chain that takes only 2 weeks to deliver new designs to stores. Procurement plays a critical role through supplier selection, product decision making, and strategic buying that allows Zara to compete on time to market with minimal inventory.
Zara is a major fashion retailer known for its "fast fashion" business model. The document discusses Zara's current business state, which relies heavily on manual processes and limited information technology. Store managers have autonomy to select products for their stores. It is recommended that Zara implement a central inventory database and upgrade point-of-sale systems to provide employees with up-to-date inventory information across stores. This would increase productivity and allow Zara to enter the online retail space. The IT changes would empower employees while preserving Zara's decentralized decision-making structure.
This document provides a case study on the supply chain management of Zara, a global clothing retailer. It discusses Zara's vertically integrated supply chain model that allows it to design, manufacture, and distribute new clothing collections within 2 weeks. This rapid replenishment model has contributed greatly to Zara's success. The document also compares Zara's supply chain to those of other retailers like Myer, Dell, and Toyota, noting differences in their approaches to areas like production, inventory management, and responsiveness to customer demands.
Instantaneous Deteriorated Economic Order Quantity (EOQ) Model with Promotion...IJAEMSJORNAL
This model studies the problem by proposing a continuous review inventory model under promotion by assuming that the units do not lost due to deterioration of the items. In this model optimization has been studied for applying promotional effort cost with promotion constraint. The effect of deteriorating items on the instantaneous profit maximization replenishment model under promotion is considered in this model. The market demand may increase with the promotion of the product over time when the units do not lost due to deterioration. In this model, promotional effort and replenishment decision are adjusted arbitrarily upward or downward for profit maximization model in response to the change in market demand within the planning horizon with fixed ordering cost. The objective of this model is to determine the optimal time length, the promotional effort and the replenishment quantity with fixed ordering cost so that the net profit is maximized and the numerical analysis show that an appropriate promotion policy can benefit the retailer and that promotion policy is important, especially for deteriorating items. Finally, sensitivity analyses of the optimal solution with respect to the major parameters are also studied to draw the managerial implications.
Normative Model for B2C (Retail) ReplenishmentSteve Lewin
This document discusses replenishment processes for retailers. It describes two primary methods for developing supply requirements: customer managed replenishment, where the retailer determines requirements and communicates them to vendors; and vendor managed replenishment, where the vendor manages the supply chain. The document then outlines the steps involved in forecasting demand, including establishing store hierarchies, building historical demand, selecting forecast models, and reviewing/adjusting forecasts.
The theory-and-practice-of-space-and-assortment-optimization-finalHIEN NGUYEN SONG THANH
The document summarizes lessons learned from Walmart's "Project Impact" initiative in 2009 where they removed approximately 15,000 SKUs, or 10% of items, from stores in an effort to reduce clutter. While initial shopper research was positive on less cluttered stores, sales declines occurred in some test stores. The author notes that by removing smaller brands entirely, Walmart likely lost the exclusive purchases of loyal shoppers for those brands, estimated to be around 30% of the sales of the removed brand. As those shoppers could no longer find their preferred item, they would leave the store without purchasing anything else. Extrapolating this across the many categories and removed brands, the author estimated Walmart may lose at least 3
Operations management in apparel retailiing (ZARA)Humberto Galasso
This document provides an overview of operations management in the apparel retailing industry. It discusses the traditional design-to-market process used by many retailers and compares it to the faster process used by "fast fashion" retailers. It identifies three key operational decisions - design, production/purchasing, and distribution. The document focuses on distribution decisions, describing inventory models that have been used to optimize inventory allocation across a retail network during the selling season. Alternative solution approaches developed specifically for the apparel industry are also discussed.
Zara has become extremely successful due to its responsive supply chain management. It can design, produce, and distribute new fashion items to its stores within 2 weeks, allowing it to stay on top of changing fashion trends. Zara's vertically integrated supply chain with in-house production facilities near headquarters allows it to quickly make changes to designs based on customer demand feedback collected by store managers. This fast production cycle, along with twice-weekly deliveries to stores, means customers always find new inventory that reflects the latest trends, fueling Zara's success.
Steps to Undertake to Improve your Warehouse EfficiencyRack Source Inc
In the case of a warehouse, the most important thing is proper planning and management in order to avail maximum efficiency. There are several methods that one can adopt such as the use of a warehouse management system, a review of the racking layout and selection of right storage racks, which will help to increase occupancy. If you want to know more about what steps to undertake to improve your warehouse efficiency, see the following slides.
This document provides information on logistics and warehouse management. It defines logistics as planning and controlling the flow of materials and information from origin to consumption according to customer needs. Warehousing involves storing goods to be sold or distributed later. Effective warehouse management includes arranging inventory, receiving stock, picking and packing orders, and measuring performance metrics like receiving efficiency, return rate, picking accuracy, and order lead time. Choosing an optimal fulfillment strategy and warehouse management system is important for meeting customer expectations around delivery speed and cost.
This is the proposal to the imaginary food retailer about launching the 'hybrid' format, which would combine best of traditional format and e-commerce.
It is a result of my post-MBA efforts to discover opportunities in grocery retail, which I have been working on for the last two years.
Similar to Inventory Management of a Fast-Fashion Retail Network (20)
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The Future of E-commerce: first-hands insights.Solvd, Inc.
According to Statista, revenue in the e-commerce market is projected to reach US$4,117.00bn in 2024. New technologies and methodologies constantly influence how the e-commerce market develops and shapes itsthe future of e-commerce. The main questions are in the air: How can we stay aligned with e-commerce business owners and ensure our engineering services meet their evolving needs?
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