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Lecture 8-Information and Supply Chain Management

This document discusses supply chain management and information systems important to retailers. It covers key topics like the supply chain, improving availability and return on investment. Specific systems and technologies are explained like the universal product code, data warehousing, electronic data interchange, and radio frequency identification. The goals of an efficient supply chain are to have the right inventory in the right place at the right time through seamless information and product flows.

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Alfred John Tolentino
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71 views

Lecture 8-Information and Supply Chain Management

This document discusses supply chain management and information systems important to retailers. It covers key topics like the supply chain, improving availability and return on investment. Specific systems and technologies are explained like the universal product code, data warehousing, electronic data interchange, and radio frequency identification. The goals of an efficient supply chain are to have the right inventory in the right place at the right time through seamless information and product flows.

Uploaded by

Alfred John Tolentino
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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RETAIL MANAGEMENT

LECTURE 8: Information Systems and Supply Chain Management

SUPPLY CHAIN MANAGEMENT


• Set of activities and techniques firms employ to efficiently and effectively manage the flow of merchandise from the
vendors to the retailer’s customers.
• These activities ensure that the customers are able to purchase merchandise in the desired quantities at a preferred
location and appropriate time.
• Efficient and effective integration of suppliers, manufacturers, warehouses, stores, and transportation intermediaries into
a seamless value chain.
• Merchandise is produced and distributed in the right quantities; to the right locations; and at the right time.
• Minimization of system wide costs, while satisfying the service levels their customers require.
Illustration of Supply Chain

WHY IS EFFICIENT SUPPLY CHAIN MANAGEMENT SO IMPORTANT TO RETAILERS?


• Strategic advantage
• Improved product availability
• Higher return on investment

• STRATEGIC ADVANTAGE
• The unique and sustainable advantage that enables retailers to realize a higher-than-average return on their
assets.
• STRATEGIC IMPORTANCE OF SUPPLY CHAIN MANAGEMENT
• Opportunity to Increase Sales by Making the Right Merchandise is in the Right Place at the Right Time
• Fewer Stock-outs
• Greater Assortment with Less Inventory
• Opportunity to Reduce Costs
• Transportation Costs
• Inventory Holding Costs
• Improved ROI
• IMPROVED PRODUCT AVAILABILITY
• STOCKOUT occurs when an SKU that a customer wants is not available.
• Benefits of Efficient Supply Chain Management to Customers:
• Reduced Stockouts – merchandise will be available when the customer wants them
• Tailoring Assortments – the right merchandise is available at the right store
• HIGHER RETURN ON INVESTMENT
• Return on assets = Net profit margin x Asset turnover
Net profit = Net profit x Net sales
Total assets Net sales Total assets

• Efficient Supply Chain Management leads to:


• Increased Sales from more attractive assortments in stock
• Improved Net Profit Margins from increased gross margin and lowered expenses
RETAIL MANAGEMENT
LECTURE 8: Information Systems and Supply Chain Management

• Lowered inventory from less backup inventory in stock and higher asset (inventory) turnover
• Information and Merchandise Flows
• Information Flows

UNIVERSAL PRODUCT CODE (UPC)


• A black-and-white bar code containing a 13-digit code that indicates the manufacturer of the item, a description of the
item, information about special packaging, and special promotions.

ADVANCE SHIPPING NOTICE (ASN)


• A document that tells the distribution center what specifically is being shipped and when it will be delivered.

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.
• Collected at the point of sale goes into a database known as a data warehouse.
• Also contain detailed information about customers, which is used to target promotions and group products together in
stores.

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
• Standards:
• UCS (Uniform Communication Standard)
• VICS (Voluntary Interindustry Commerce Solutions)
• Transmission system:
• Intranet: local area network (LAN) that employs Internet technology
• Extranet: collaborative network that uses Internet technology to link businesses with
suppliers, customers, etc.
• EDI SECURITY
• There are implications of security failures (loss of data, loss of public confidence), but retailers have security
policy objectives:

THE PHYSICAL FLOW OF MERCHANDISE - LOGISTICS


• Logistics: The aspect of supply chain that refers to the planning, implementation, and control of the efficient flow and
storage of goods, services, and related information from the point of origin to the point of consumption to meet
customers’ requirements

MERCHANDISE FLOW
• Retailers can have merchandise shipped directly to
their stores (path 3) or to their distribution centers (paths 1 and 2)

Activities Performed by Distribution Center


• Managing inbound transportation
• Receiving and checking merchandise
• Storing or cross docking merchandise
• Getting merchandise floor ready
• Ticketing and marking
RETAIL MANAGEMENT
LECTURE 8: Information Systems and Supply Chain Management

• Putting on hangers
• Preparing to ship merchandise to a store
• Managing outbound transportation

Advantages of Using a Distribution Center


• More accurate sales forecasts are possible when retailers combine forecasts for many stores serviced by one distributor
• Enables retailers to carry less merchandise in the store
• Easier to avoid running out of stock
• Retail store space is more expensive than space at the distribution center

Outsourcing Logistics
• Retailers consider outsourcing logistical functions if those functions can be performed better or less expensively by third-
party logistics companies
• Transportation
• Warehousing
• Freight Forwarders
• Integrated Third-Party Logistics Services

Pull and Push Supply Chain

Advantages of Direct Store Delivery


• Gets merchandise faster, and is thus used for perishable goods (meat and produce)
• Helps the retailer’s image of being the first to sell the latest product (video games) or fads
• Some vendors provide direct store delivery for retailers to ensure that their products are on the store’s shelves, properly
displayed, and fresh

Reverse Logistics
• The process of moving returned goods from their customer destination for the purpose of capturing value or proper
disposal
• Retailers recover loss through on-line auctions
• Reverse-logistics systems are challenging
• Items may be damaged or require special handling
• Transportation costs are high

Collaboration between Retailers and Vendors in Supply Chain Management


• Bullwhip Effect - The built up inventory in an uncoordinated channel where retailers and vendors do not coordinate
their supply chain activities

What Causes a Bullwhip Effect?


• Delays in transmitting orders and receiving merchandise
• Over-reacting to shortages
RETAIL MANAGEMENT
LECTURE 8: Information Systems and Supply Chain Management

• Ordering in batches rather than generating a number of small orders

Vendor Managed Inventory (VMI)


• Manufacturer access to POS information
• Replenishment automatically triggered
• Enables demand-based view of replenishment & production planning – reduce bull whip effect

Radio Frequency Identification (RFID)


• Radio Frequency Identification (RFID) allows an object or a person to be identified at a distance using radio waves.
• Reduces warehouse and distribution labor costs
• Reduces point of sale labor costs
• Inventory savings by reducing inventory errors
• Reduces theft – products can be tracked
• Reduces out of stock conditions

Impediments to the Adoption of RFID


• RFID is expensive – the return on investment is low
• It still only makes sense to put tags on pallets, cartons, expensive merchandise or high theft items
• RFID generates more data than what can be currently processed
• Consumers worry about privacy invasion

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