Information Systems and Supply Chain Management
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Transcript of Information Systems and Supply Chain Management
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Have you thought of how products are made
available to customers in department stores,
supermarkets, sari-sari stores and other
distribution channels? This is done through the process we call
supply chain management.
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The delivery of economic value to customers
through management of theflow of physical
goods and associated information from
vendors to customers
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Opportunity to reduce costs (transportation
and inventory)
Provide value to customers by making the
right merchandise is in the right place at theright time
Fewer stockouts (merchandise will be available
when the customer wants them)
Greater assortment with less inventory Improved ROI (increased sales due to
attractive assortments, improved net profit,
lesser inventory levels)
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1. Customer makes purchase, sales associate
scans UPC code or RFID chip on
merchandise and customer credit
card/loyalty card2. Information about purchase is transmitted
from POS terminal to the buyer/planner
3. Information about purchases are
aggregated by buyer/planner and sent todistribution center and vendor to ship
merchandise
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4. Buyer/planner communicates with vendor
and places a purchase order to re-supply
stores
5. Buyer/planner notifies distribution centerabout the incoming orders and how they
are to be distributed to stores
6. Store managers inform distribution center
about receipt of merchandise andcoordinate deliveries
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Purchase data collected at the point of sale
goes into a huge database know as data
warehouse.
The computer-to-computer exchange ofbusiness documents in a structured format is
called electronic data interchange or EDI
There are three main benefits of EDI namely
reduction of cycle time, improvement of overallquality of communication, and easier analysis of
data
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A supply chain in which orders for
merchandise are generated at the store level
on the basis of sales data captured by POS
terminals is called a PULL SUPPLY CHAIN.Merchandise is allocated to stores based on
forecasted demand is called a PUSH SUPPLY
CHAIN
Which do you think is better?
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The physical flow of merchandise or logistics
is the aspect of supply chain management
that refers to the planning, implementation,
and control of the efficient flow and storageof goods, services and related information
from the point of origin to the point of
consumption to meet customers
requirements
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There are two options retailers have in
managing the flow of merchandise: direct
store delivery or distribution centers
Advantages of distribution centers are: moreaccurate sales forecast is possible, less
merchandise to carry in stores, easier to
avoid out-of-stock situations and less rent
expense
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The types of retail stores and merchandise
that are most efficiently supplied through
distribution centers are: Non-persihable merchandise
Merchandise that has highly uncertain demand such as
fashionable apparel
Merchandise that needs to be replenished frequently such as
grocery items
Retailers that carry a relatively large number of items shipped
to stores like drug stores
Retailers with large number of outlets that are not
geographically concentrated
Retailers that do not require in-store servicing such as snacks,
soda, or non-store-made baked goods
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However, distribution centers are not
appropriate for all retailers or types of
merchandise. Thus direct store delivery is
more appropriate for the following: Retailer that has few outlets
Retailer with many outlets concentrated in
metropolitan areas
Perishable goods such as meat and produce
In cases where vendors prefer direct store
delivery
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A warehouse that receives merchandise from
multiple vendors and distributes it to
multiple stores
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Functions of Distribution Centers:
Inbound Transportation and Management
Receiving and Checking
Storing and Cross DockingGetting Merchandise Floor Ready
Ticketing and Marking
Preparing to Ship Merchandise to Store
Outbound Transportation
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The process of moving returned goods back
through the supply chain from the customer
to the stores, distribution centers and
vendors
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Orders from individual customers are shipped
in small packages with one or two items to a
large number of different places
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Third party logistics companies facilitate the
movement of merchandise from
manufacturer to retailer but are
independently owned
They provide transportation, warehousing,
consolidation of orders and/or
documentation
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Both have to make sure that merchandise is
available in the stores when customers want
it. This can be accomplished through shared
information using Electronic data
interchange (EDI),Vendor-Managed Inventory
(VMI) and Collaborative Planning,
Forecasting, and Replenishment (CPFR)
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The use of EDI reduces the time it takes for
retailers to place orders and vendors to
acknowledge the receipt of orders and
communicate delivery information about these
orders
VMI is an approach for improving supply chain
efficiency in which vendors are responsible for
maintaining the retailers inventory levels in
each of its stores CPFR is the sharing of forecast and related
business information between retailers and
vendors
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What happens when both do not collaborate?
Excess inventory builds up which is called the
bullwhip effect
The bullwhip effect can be due to thefollowing factors: delays in transmitting
orders and receiving merchandise,
overreacting to shortages, ordering in
batches
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A technology that allows an object or person
to be identified at a distance using radio
signals.
The electronic chips are inserted intooceangoing containers, on shipping cartons,
or even behind merchandise labels; they
then transmit data about the object in which
they are embedded
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The benefits of RFID include:
Reduced warehouse and distribution labor costs
Reduced point of sale labor costs
Inventory savings Eliminate counterfeit merchandise
Facilitates selling process
Reduced theft
Reduced out of stock conditions
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The disadvantages of RFID are:
High cost (15 cents per tag)
It generates more data than can be
efficiently processed Invasion of privacy
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Video