Retail  Supply  Chain  Essen1als  II  David  Gonsalvez  

Agenda ...

• Retail  Supply  Chain  Essen1als  (session  1)    • Retail  Supply  Chain  Essen1als  (session  2)    •  E  Commerce  and  Omni  Channels  (session  3)  

•  Focus  is  on  Supply  Chain  aspects  •  Marke5ng,  Pricing,  Adver5sing,  Talent,  etc.  are  not  discussed  •  There  is  no  generic  op5mal  solu5on  or  theory  that  fits  all  situa5ons    

Retail Supply Chain Execution

EFFICIENTLY  DELIVER  

THE  RIGHT  PRODUCT  

IN  THE  RIGHT  PLACE  

AT  THE  RIGHT  TIME  

IN  THE  RIGHT  QUANTITY  &  QUALITY  

The Retail Supply Chain Flow...

ZARA: Process Flow Overview

Source:  Inditex  Presenta5on  –  Jesus  Vega    

Retail Supply Chain Execution ...

•  Inventory  Management  &  Visibility    • Order  Fulfillment    • Cost  Reduc1on    And      •  Informa1on  &  Data  Analy1cs        

Inventory Integration

VENDOR  INVENTORY  

DISTN  CTR  INVENTORY  

STORE  INVENTORY  

PIPELINE  INVENTORY  

PIPELINE  INVENTORY  

CUSTOMER  

Can  you  sa1sfy  orders  from  the  cheapest  inventory  source?                    Real-­‐1me  visibility  of  all  inventory                    Real  1me  evalua1on  of  op1mal  service  point  

Ideal Order and Inventory Visibility...

Source:  Big  Data  Analy5cs  in  Retail  -­‐  Intel  

Current Visibility in the Retail Supply Chain

Source:  Big  Data  Analy5cs  in  Retail  -­‐  Intel  

ZARA Managing Inventory ...

•  Limited  Batch  Sizes    •  Fast  introduc1on,  Fast  withdrawal    •  Speed  of  Delivery    •  Store  Informa1on    

Retail Supply Chain Execution ...

•  Inventory  Management  &  Visibility    • Order  Fulfillment    • Cost  Reduc1on    And      •  Informa1on  &  Data  Analy1cs        

Logistics Role in Order Fulfillment

• Availability  •  Stockout  frequency  (product  unavailable)  •  Fill  Rate  (%  of  items  in  order  available)  • Orders  shipped  complete  

• Opera1onal  Performance  •  Speed    (Cycle  speed  order  to  delivery)  • Consistency  (Actual  speed  =  Planned  speed)  •  Flexibility    (Accommodate  special  requests)  • Malfunc1on  Recovery  (efficient  con1ngency  plans)  

15  

Logistics Role in Order Fulfillment

•  Service  Reliability  • Damage  Free  and  exact  quan1ty  ordered  • Complete  and  correct  paperwork  • Accurate  order  status  informa1on  

•  The  Perfect  Order  • Correct  items,  right  quan1ty,  damage  free  • On  1me  delivery  • Correct  documenta1on  with  right  informa1on  • Right  mode,  loading,  and  des1na1on  

16  

Zara: Delivery Process

Source:  Inditex  Presenta5on  –  Jesus  Vega    

Source:  Inditex  Presenta5on  –  Jesus  Vega    

Customer Segmentation Matrix

19  

 LOW    

 HIGH  

 HIGH  

 Protect  

 Cost  Engineer  

 LOW  

 Build  

 Danger  Zone  

COST  TO  SERVE  

NET  SAL

ES  VAL

UE  

OF  CU

STOMER

 

Examples in Airline Industry

1.  Segment  customer  base  by  profitability  •  Frequent  flier  points  based  on  5cket  price  (not  miles  flown)  •  Silver,  Gold,  Pla5num  frequent  flier  cards    

2.  Iden1fy  the  Product/Service  Package  for  Each  Customer  Segment  •  Business  lounge  access  for  top  frequent  flyers  even  when  flying  

economy  class    

3.  Develop  and  Execute  the  Best  Processes  •  Offer  faster  transfer  5mes,  priority  rescheduling,  hotel  linkups    

4.  Measure  Performance  and  Con1nuously  Improve  •  Measure  “net  capture”  rate  of  frequent  fliers  of  other  airlines    

20  

Retail Supply Chain Execution ...

•  Inventory  Management  &  Visibility    • Order  Fulfillment    • Cost  Reduc1on    And      •  Informa1on  &  Data  Analy1cs        

Cost reduction in the supply chain...

• Op1mal  Sourcing  Mix  (Local,  Near,  Far)    • Op1mized  network  design      

ZARA Sourcing Mix

19-­‐Sep

-­‐07  

Network Redesign Close  Spokane  

Move  Silver  Bow  east?  

Split  Mira  Loma  1  ð  3  

Move  Santa  Rosa  west?  

Add    El  Paso,  TX  

Close  Janesville  Move  Dayton  west?  

Close  Shreveport  Move  Memphis  west?  

Move  Port  Allen  east?  

Add    Rochester,  NY  

Close  Selkirk  

Close  Petersburg  

Add    Winston-­‐Salem,  NC  

No  Change  Consider  Moving  Close  /  Add  

Retail Supply Chain Execution ...

•  Inventory  Management  &  Visibility    • Order  Fulfillment    • Cost  Reduc1on    And    •  Informa1on  &  Data  Analy1cs        

Thank  You  !