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8/3/2019 Retail Suppy Chain Management
1/23
PPT10-1
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