2. Supply chain management
• Supply chain management is defined as the
systemic, strategic coordination of the
traditional business functions within a particular
company and across businesses within the
supply chain, for the purposes of improving the
long-term performance of the individual
companies and the supply chain as a whole.
3. • Excellent retail supply chain management
revolves around understanding and
balancing three key dimensions of
availability, inventory and cost. Managing
these trade-offs efficiently can result in
supply chains that improve business
performance and drive competitive
4. Goals of SCM
• Decrease inventory costs by matching production to
demand. This goal is consistent with the concept of
JIT8 inventory management.
• Reduce overall production costs by streamlining the
products flow within the production process and
improving information flow between business
• Improve customer satisfaction by offering increased
delivery speed and flexibility through the seamless
cooperation with the distributors and vendors.
5. Path to Retail management
• Convergence of macro economic and structural trends
created new pressures and new opportunities for
• Barriers to global trade have tumbled. Tectonic shifts in
demographics have created an aging population in North
America and Europe and a rising middle class in other
parts of the world.
• These trends create opportunities for market expansion
and cost advantages through the application of global
sourcing strategies, which also create unpredictable
consumer spending patterns and a complex supply chain
, difficult and costly to manage.
6. Merchandise Financial Planning
• As the retail industry evolves to adopt the
latest technological advances to meet the needs
of increasingly fickle consumers, and to manage
economic fluctuations, marketplace competition
has reached new heights.
• Success requires an easy-to-execute, closed-loop
advanced planning process that enables retailers
to realize sales and inventory improvements
while delivering a superior shopping experience
7. Buying and Assortment Management
Retailers must adhere to customer-centric
strategies to protect and grow market share.
Such strategies demand unprecedented
precision, speed, and coordination in
anticipating customer needs—down to the store
Success in executing customer-centric
merchandising strategies requires a new-
generation approach to buying and assortment
8. Allocation and Replenishment
Retailers must differentiate by providing a superior
shopping experience. Whether customers walk away
satisfied—or have to look elsewhere to make their
purchases—hinges directly on a retailer’s in-stock
A new-generation allocation and replenishment
management solution is necessary for retailers to
meet increasing expectations for in-stock levels and
9. Cycle Time Optimization
Cycle Time Optimization is designed to reduce
concept–to-store cycle time.
The solution can create capacity constrained
product plans to synchronize with in-store
assortment plans, pre-position key raw materials
and optimize inventory (finished and raw material)
throughout the value chain, and reduce distribution
and handling costs.
The entire value chain is connected through the
cycle time optimization solution using an integrated
retail and supply chain planning process.
10. Major challenges in retail management
• Lack of organization and cooperation means retailers and suppliers pay
higher shipping and handling costs than required. Even with industry
shipping standards, lack of compliance means managing shipments takes
extra handling and administrative work.
Ordering inefficiencies make shipping inefficient, which requires more
equipment, people, and time to meet demand. Rapid replenishment causes
smaller, more frequent shipments at higher per-pound rates.
• Although business-to-business e-commerce is available, lack of
standardized systems creates information-transfer inefficiencies. Many
suppliers manually re-enter retailers’ electronic orders or take orders by
phone or fax, increasing retailer and supplier administrative costs.
• Supplier-direct e-commerce hampers retailer receiving, requiring more in-
store handling and manual POS updates and transaction reconciliation and
• Inconsistent product-category code use and product information affect
sales reporting, ordering, warehouse operations and pick-and-pack, and
transaction reconciliation and payment—all wasting time, money, and
11. How do retailers take that first step to begin effective
• Be a good retailer-do retail well—the buying
and selling, financial and inventory management,
merchandising, training, etc.—then you can
effectively link and cooperate with trading partners
for added efficiency and cost reductions.
• Use your technology-Key supply-chain related
capabilities—such as cycle counting, core-inventory
tracking, returns, and electronic ordering and
receiving—are much quicker and more accurate with
12. • Computerize your inventory-.
Integrating inventory and ordering on
the computer ends manual phone and fax
ordering, and eventually will lead to totally
New standardized e-commerce initiatives
through Pubnet will mean electronic orders
eventually will be received with a bar-code
scan to update POS inventory, reconcile
purchase orders, and let retailers receive
and reconcile electronic invoices.
13. • Do cycle counting:
Cycle counting ensures data accuracy for accurate
ordering and inventory analysis and tells upstream
trading partners what customers are.
• Track core inventory:
Core inventory is first-level customer engagement,
the product your customers vote for.
Having core-inventory data for your store gives
upstream partners strategic information for
production and distribution.
Aggregated industry core-inventory data helps
retailers create better offerings for customers and
maximize inventory investment return.
Sharing inventory data among trading partners
also improves freight management.
14. • Minimize returns:
As sales data makes customer demand more
visible, production and distribution can be
better coordinated to meet demand and avoid
waste. Linking production more closely to
demand could reduce freight and returns costs.
• B2B E-Commerce:
EDI network for supply-chain services
means retailers and suppliers soon may enjoy
totally automated transactions—from purchase
order to invoice with automatic POS pricing
and inventory updates.
EDI has obstacles, but this robust
technology, in use for more than 20 years in
major industries, can significantly reduce order
processing and reconciliation time.
15. key decisions and activities areas in
the integrated supply chains
• Configuration of product and network, which
covers the decisions concerning the main rules
• Formation of the production network, mainly
the choice of production facility and
warehousing locations as well as their
• Product design with involvement the research
and development abilities of suppliers.
16. • Process optimization in order to reduce
cycle times and inventory level in the cost-
• Delivering raw - materials, parts or
modules for the final goods producers.
• Delivering customer goods to wholesalers
or selling small quantities of this goods to
the final customers.
17. • Providing transportation and forwarding
• Manufacturing goods and providing other
services for market niches
• Trading under well known brand name of large
distribution networks (franchising).
18. Scope of changes Hierarchical
Narrow in particular
Wide based on process
orientation, ability to
Flexibility Low or middle Middle or high
Role of small retailers Low and passive Increasing and active
Key intermediary Wholesaler or large
Brokers or third party
Self- or combined-
Public logistics service
Small truck companies Large number of
dependent on market
19. The Seven Principles of Supply Chain
• Segment customers based on service needs.
• Customize the logistics network.
• Listen to signals of market demand and plan
• Differentiate product closer to the customer.
• Source strategically.
21. • Translating Principles into Practice
:Companies that have achieved excellence in
supply chain management tend to approach
implementation of the guiding principles with
three precepts in mind.
Orchestrate improvement efforts
Recognize the difficulty of change
Reaping the Rewards of Excellent
Supply Chain Management
22. Role of Supply Chain in Indian
Organized Retail Sector
• The Indian Supply Chain Council have been
formed to explore the challenges that a retailer faces
and to find possible solutions for India.
• The role of supply chain in the organized retail
sector in India should be a shelf- centric partnership
between the retailer and the manufacture for this
will create supply chains that are loss free.
• It is the supply chain that ensures to the customer in
all the various offerings that a company decides for
its customers, be it cost, service, or the quickness in
responding to ever changing tastes of the customer.
23. • The infrastructure in India in terms of road, rail,
and air links are not sufficient. And so
warehousing plays a major role as an aspect of
supply chain operations.
• the Indian retailer is trying to reduce
transportation costs and is investing in logistics
through partnership or directly.
• There is also need for the supply chain to be
more cost efficient and collaborative to win the
immense competition in this sector
24. Effective SCM enables
• Realistic ordering lead-times:
Suppliers are not surprised by the next order.
Retailers respond better to demand spikes,
minimize forced markdowns and avoid obsolete-
• Averting problems:
Stores easily identify potential stock-outs and
request replenishment before the inventory drops to
zero. Deciding to de-list or replace a product is
25. • Facilitating resource planning and
Product forecasts and supply schedules are
easily converted to perform space planning,
establish staffing needs and organize
inbound/outbound shipments. Financial
experts can plan cash flow and analyze
margins into the future.
• Four R's of SCM:
4 `R's of SCM -Right time, Right place,
Right price, Right quantity .
26. • Cold Chain
The booming retail sector has set off growth in
the cold chain segment as well. It is a highly
specialized service and caters to time sensitive
and perishable items. The cold chain industry is
growing at 20-25 per cent. However, there is an
urgent need to establish the necessary
infrastructure for an effective cold chain.
27. In order to enable to grow in these
complex and highly competitive
environment retailers must focus on :
• Provide a high quality, differentiated customer
experience by carrying the right products, at
the right price and by reducing out of stocks
• Streamline and take cost out of the supply
chain to maintain margins and competitiveness
by improving asset utilization, inventory
visibility, and by ensuring that each division
and supply chain partner has access to a
uniform source of product and supply chain
28. • Identify ways to grow revenue beyond simply
opening more stores by providing assortments
that are tailored to specific stores
• Rapidly execute an advanced planning process
that enables a differentiated superior shopping
experience, customized to the store-level and
capable of enabling course corrections in-
season, while simultaneously driving inventory
29. • Optimize the structure of the supply chain
to support global sourcing and lean supply
chain strategies, and also execute these
strategies in the most cost efficient manner
in order to protect and grow margins