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.
• 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
• 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.
.
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.
• 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 volatilitydemand 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.
• The lead time gapthe 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 1reducing 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.
• 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.
• 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
• 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, 3entire process management.
• Reverse logistics- the process of planning implementing and
controlling the efficient ,cost effective flow of raw materials, inprocess 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.