PRESENTED BY:- Jasleen Chaudhary PRESENTATION ON SCM IN RETAIL INDUSTRY.
S 18 SCM and IT in Retail
-
Upload
shawn-partrido -
Category
Documents
-
view
214 -
download
0
Transcript of S 18 SCM and IT in Retail
SCM and IT in Retail
Session 18
2
Session Objectives
SCM in RetailIts importance, evolution and innovationsRetail LogisticsReverse LogisticsIT in RetailThe Internet as a retail opportunity
The Basic Supply Chain
SCM process is a value chain where bottlenecks, valueadding factors are addressed, thus enabling retailers todeliver value to the end customers efficiently.Retailer is the link between the customers and the rest ofthe supply chain
3
RETAILER
Supplier
Raw/Packing MaterialWarehouse
Stock Manufacturer
ManufacturerWarehouse
Stock
RetailerWarehouse
StockRetailStore
Capacity CapacityStock Stock Stock Stock
Flow of orders
Flow of goods
Consumers
Feedback
Products
Supply Chain Objectives
4
Right
Deliver
Product
Place
Time
Price & Profit
Factors for Successful SCM
A systems approach
Role of IT and decisions on outsourcing
Strategic decision making
With top management involvement
Inventory perspective
Leaner and cleaner
Single entity to reduce administrative delaysRetailers control it in developed economies while manufacturers control it in
urban India and wholesalers in mofussil areas
5
6
Typical Supply Chain
Suppliers Manufacturing DistributionCenter(s)
Customers
Physical flows
Information flows
Financial flows
… Complexity
7
Physical flows (100+ SKUs)
Information flows (GRNs, POs, GPs ……)
Financial flows (CNs, DNs, cheques … …)
Suppliers
100 +
Manufacturers3 +
DistributionCentre 20 +
Customers???
8
… Pressures
Competition
Prices
Environmental Concerns
Technology
Product Lifecycles
Seven Principles of SCM
1. Segment customers based on service needs and adaptsupply chain to serve segments profitably.
2. Customise the logistics network to the servicerequirements and profitability of customers.
3. Ensure consistent forecasts and optimum resourceallocation.
4. Differentiate product closer to the customer and speedconversion across the supply chain.
5. Manage sources of supply strategically to reduce thetotal cost of owning materials and services.
6. Develop strategy that supports multiple levels ofdecision making.
7. Adopt channel spanning performance measures foreffectiveness and efficiency
9
Drivers of SCM
• From suppliers, processes and demandMinimisinguncertainty
• Mapping critical activities and managing toincrease efficienciesReducing lead times
• Business process reengineeringMinimising thenumber of stages
• Integrated process integration and flatterorganisations
Improved processquality
• Proper forecasting and smoothening of demandManaging demand
• For transportation and warehousingTaking initiatives atan industry level
10
11
SCM Framework
CustomerService
STRATEGIC
Channel DesignNetwork Strategy
STRUCTURAL
Warehouse design and operationsTransportation Management
Materials ManagementFUNCTIONAL
Information SystemsPolicies and ProceduresFacilities and Equipment
Organisation and Change Management
IMPLEMENTATION
SCM -- Underlying Philosophy
12
Integration !!!Marketing team which analyses sales data and workingout how to meet targets
Merchandising team for understanding customer needs
Materials team getting the best price for the merchandise
Supply Chain Network Structure
Network of channel membersRetailers gauge the wants and needs of customers andshare information with suppliers to plan production andinventory levelsBenefit to customers
Wider range and low stock outsBenefits to retailers
Lower markdowns and enhanced profitability
13
Channel Structure
Channels are designed around service output demandsof:
Lot sizeDelivery timeSpatial convenience
Costs in the channels can be reduced by postponingchanges in the form to the last possible pointChannel structure is affected by technological, cultural,physical, social and behavioural variables.
14
Channel Structure
The three primary decisions that influence networkstructure:
Identifying the members of the supply chain Primary – Provide operational and managerial activities Secondary – Banks, warehouse owners, transporters,
advertising agenciesDetermining the structural dimensions of the network Vertical Horizontal Retailer’s position from source of supply
Managing the process links
15
16
ZARA
Products move from sketch pad to store shelf in threeweeksInvestment into production and warehousing facilitiesOwns 60% of production and 40% of fabric200 designers responding to feedback from 47 countries5 million sq. ft. warehouse connected to 14 factoriesthrough underground tunnelsShipping of material to Zara stores in floor readymerchandise
17
Innovations in SCM
Vendor Managed Inventory through EDICollaborative Planning Forecasting andReplenishmentCross docking
18
Vendor Managed Inventory
19
Collaborative Planning Forecasting andReplenishment
Alignment of forecasts of retailer and suppliersManaging them on exception basisSharing of forecasts, results and data on the internet
20
Ryan McVay/Getty Images
Cross Docking
Wal-mart’s Bentonville warehouse has 19 conveyor belts;can ship 360 cartons a minute264 dock doors take goods from suppliers’ trucks and shipthem through 116 shipping lanes to 125 stores
Merchandise flows directlyfrom the vendor’s trucksthrough the retailer’sdistribution center and isloaded on the trucks going tothe retailer’s stores withoutbeing stored in the distributioncenter
21
Benefits of Efficient Supply Chain Management
Fewer stockouts – merchandise will beavailable when the customer wants them
Tailoring assortments – the right merchandiseis available at the right store
Customers respond to the convenience asevidenced by increased sales
Ryan McVay/Getty Images
22
Minimizing Stockouts
Royalty-Free/CORBIS
Forecast demand accurately
Make sure merchandisein stockrooms is on theshelves
Buyers placeorders at the righttime with vendors
Stores need to placeorders with distributioncenters in a timely fashion
DistributionCenters need tosend rightquantities
Managers need to provideenough lead time for deliveries
23
Wal-Mart’s Sustainable Advantage
Wal-Mart’s success is its information and supply chainmanagement systems. Why are competitor’s laggingbehind?
Ryan McVay/Getty Images
The software is unavailableelsewhere and is constantlyupdated and improved
Wal-Mart made a substantialinvestment in developing itssystems and has the scaleeconomies to justify it.
24
Food and Grocery Supply Chain
Farmer Farmer Farmer
Consolidator Commission Agent
Traders
Wholesalers
Retailers
Consumers
25
Food and Grocery Supply Chain
35 to 40% wastage in supply chainOrganised retail procuring straight from farmers andconsolidatorsAlso investing in cold storage and refrigerated vansHub and spoke approach at state levelMay even have two or three hubs in bigger states
26
Retail Logistics
Retail logistics incorporates the following functions :The physical movement of goodsThe holding of these goods at stock holding pointsThe holding of goods in quantities required to meet thedemand from the end consumerThe management and administration of the process
27
Logistics management
The core of SCM is in logistics management.Logistics strategy can either be – pull strategy or a pushstrategy.At the heart of logistics is the distribution centre. Itserves several functions from co-ordinating inboundtransportation ,receiving ,checking , storing ,crossdocking and coordinating outbound transportation.
28
Logistics StrategyPull Supply ChainMerchandise shippedto stores based onsales and inventorylevels in the stores
Push Supply ChainMerchandise shippedto the stores basedon forecasted salesrate
(c) Brand X Pictures/PunchStock
29
Activities Performed by DistributionCenter
Managing inbound transportationReceiving and checking merchandiseStoring or cross docking merchandisePreparing merchandise for the sales floor
Ticketing and markingPutting on hangers
Shipping merchandise tostoresManaging outboundtransportation
Ryan McVay/Getty Images
30
Advantages of Using a Distribution Center
Effects of forecast error forindividual stores are minimizedEnables retailers to carry lessmerchandise in the storeEasier to avoid running out of stockRetail store space is moreexpensive than space at thedistribution center
Ryan McVay/Getty Images
31
Logistics in India
Size $ 50 billion per yearGrowth rate 40% per annum60% through road15% of the business comes from organized players
32
Reverse Logistics
Disposition of returned goods through:Putting back into inventorySold through liquidation centresBroken down to component parts
The basic approach is how to recapture value in this flow
Customer Retailer DistributionCentre
Vendor
33
OrganisationalStructure and HR
Management
Retail Marketing Strategy
Retailing Strategy
Financial Strategy Site Location
Information Systems
Retail Locations
Customer RelationshipManagement
Technology in Retail
Product identificationQuick billingCredit card and other paymentsLogisticsTrend analysis and forecastingLoyalty programmesInteractive kiosksVirtual display casesElectronic point of sale and signageE commerce
34
35
The effect of a single customer transaction
CustomerTransaction
Warehouse
Marketing&
Promotions
CustomerDatabase
CreditCard
Payments
SalesAnalysis
ReorderingMerchandise Inventory
Management
36
The Need for Product Identification
Thousands of products handled led to Universal ProductCode in the 50sIn 1972 European countries formed European ArticleNumbering which is followed in India13 digit code:
First three digits – Country CodeNext four digits – Company CodeNext five digits – Product CodeLast digit – Check digit
Information and Merchandise Flow
37
38
Information Flow
2. Information about purchase is transmittedfrom POS terminal to the buyer/planner
3. Information about purchases areaggregated by buyer/planner and sent todistribution center and vendor to shipmerchandise
1. When customer makes apurchase, sales associatescans UPC code or RFID chipon merchandise and customercredit card/loyalty card Steve Cole/Getty Images
StockTrek/Getty Images
39
Information Flow
6. Store managers informdistribution center aboutreceipt of merchandise andcoordinate deliveries
4. Buyer/planner communicates withvendor and places a purchase orderto re-supply stores.
5. Buyer/planner notifies distributioncenter about incoming orders andhow they are to be distributed tostores
David Buffington/Getty Images
PhotoLink/Getty Images
40
Database Management
Database Management is the use of systems toorganise, retrieve, search and manage dataElements are:
Data Warehousing - the coordinated and periodic copyingof data from various sources, both inside and outside theenterprise, into an environment ready for analytical andinformational processingData Mining – the extraction of data for specificapplications
41Royalty-Free/CORBIS
Electronic Data Interchange
EDI is the computer-to-computer exchange ofbusiness documents between retailers andvendorsMerchandise salesInventory On HandOrdersAdvanced shipping noticesReceipt of merchandiseInvoices for payment
EDI saves time, eliminates manual errors,strengthens relationships and saves costs
42
Factors affecting the use of technology
The Scale and scope of operationsThe financial resources available to the organisationThe nature of the businessHuman Resources available
43
Radio Frequency Identification
Radio Frequency Identification (RFID) allows anobject or a person to be identified at a distanceusing radio waves.
Reduces warehouse and distribution labor costsReduces point of sale labor costsInventory savings by reducing inventory errorsReduces theft – products can be trackedReduces out of stock conditions
(c) Digital Vision/PunchStock
44
Why the Hesitation with RFID?
RFID is expensive – the returnon investment is lowIt still only makes sense to puttags on pallets, cartons,expensive merchandise or hightheft itemsRFID generates more data thanwhat can be currently processed
Jeff Maloney/Getty Images
45