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Supply Chain Management in
Retail
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The Basic Supply Chain
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RETAILER
Supplier
Raw/Pkg Matl
Warehouse
Stock Manufacturer
Manufacturer
Warehouse
Stock
Retailer
Warehouse
Stock
Retail
Store
Capacity CapacityStock Stock Stock Stock
Flow of orders
Flow of goods
Consumers
Feedback
Products
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Supply Chain Objectives
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Right
Deliver
Product
Place
Time
Price & Profit
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Typical Supply Chain
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Suppliers Manufacturing DistributionCenter(s)
Customers
Physical flows
Information flows
Financial flows
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Pressures
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Compet i t ion
Prices
Environm ental Concerns
Technology
Product Li fecycles
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Supply Chain Management
Three Key Links
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SupplyManagement
ResourceManagement
DemandManagement
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Benefits of Supply Chain Integration
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Cost Quality
Lead
Time Service
Levels
Value
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Need for SCM in Retail
Short Life Cycles
High Volatility
Low Predictability
High Impulse Purchase
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Lead Times
Time to Market
Time to Serve
Time to React
The Lead Time Gap
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Innovations in SCM
Cross docking
CPFR(Collaborative Planning,Forecasting and Replenishment)
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Retail Logistics
Logistics - the french word loger.
Retail logistics incorporates the following functions :
Thephysical movementof goods
The holdingof these goods at stock holding points The holding of goods in quantities required to meet
the demand from the end consumer
The management and administration of the
process.
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Retail operations
DC
Stores Consumers
New Product
Development/
Selection
Raw
Materials/
Components
Sourcing
Plants
Buyer/Planner
Forecast Demand
Set Inventory levels
Pricing & Promotion
Lead time
management e.g.
when to use air
freight
Buyer & Designer
Assortment planning
Store Manager
Execution e.g.
product display,
customer service
POS price
changes
Accuracy of
inventory data
Goal = Max Profit = revenue variable cost (cost
of goods, inventory holding and obsolescence)
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Scientific retailing
DC
Stores Consumers
New Product
Development/
Selection
Raw
Materials/
Components
Sourcing
Plants
Sales & Inventory by
SKU/Store
Loyalty Card Information
Determine
Optimal Inventory,
Price and
Promotion over
Time for Season
Estimate
Demand Density
Track Data Accuracy
Data Warehouse for model calibration
-seasonality, price elasticity,
size mix, store differences
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Product Life Cycle PlanningMerchandise
TestRead & React
PeriodReplenishment / Model
Stock Setting
Phase Down / End
of Life / Markdown
RetirementPregnancy Middle ageYouth
Forecast initial
demand
Survey experts
Mall intercepts
Prior products
Merchandise test
Initial buy
Prepositionmaterials
Traditional
long life cycle
replenishment
set target
stock levels
for each sku-
store
Read early sales,
update forecast
and reorder as
needed
Expedite
resupply?
Rollout to more
stores or drop
stores?
Manage down
replenishment
flow
Drop product in
selected stores
Markdown price
or transfer to
outlet stores
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Good logistics cuts costs, speedswork and improves customer
service.
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Logistics management
The core of SCM is in logistics management.
Logistics strategy can either be pull strategy or a
push strategy.
At the heart of logistics is the distribution centre.Itserves several functions from co-ordinating inbound
transportation ,receiving ,checking , storing ,cross
docking and coordinating outbound transportation.
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Reverse Logistics
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