2. Retail Supply Chain Management
• SCM in retail is an end to end process in merchandise planning and movement,
from planning the inventory (preparing the purchase order) to the point of
reaching the merchandise to the customer.
• It is an integrated process where every activity is interlinked with the system for
information throughout the cycle time of each step of the process so that timely
action can be taken.
• Managing continuous supply of right products, at right time from different entities
is the challenge of managing supply chain.
• Information technology tools has helped retailers in greatly reducing cycle times
and attaining efficiency.
3. Differentiating Factors of Retail Supply Chain
• Volume of product movement
• Fast moving nature of the products of the retail industry
• Cycle time is very low
• Supply chain has to be free from defects as the products are always on the
move
4.
5. Retail Supply Chain Optimization
The objective of the retail supply
chain is to make the right product
available at the right place and at the
right time. Too little product results
in lost sales opportunity, while too
much product locks cash and results
in lost opportunity for other
products at other locations.
6. Important factors for Optimization
• Good forecasting model
• accurate stock book-keeping
• accurate ordering and replenishment
• optimized logistics
• ability to quickly react to business situations
• system scalability and responsiveness
• Information Technology
7. Supply chain optimization includes-
• Maximizing gross margin return on inventory invested (GMROII)
(balancing the cost of inventory at all points in the supply chain with
availability to the customer)
• Minimizing total operating expenses (transportation, inventory and
manufacturing)
• Delivering products to customers at the lowest total cost and highest profit
• Trading off the costs of inventory
• Transportation
• Distributing and manufacturing. In addition
• Optimizing storage and transportation costs by means of product / package size
8. Supply chain optimization includes-
• Forecast future inventory demand as accurately as possible
• Applying statistical trending and "best fit" techniques based on historic demand
and predicted future events
• Requiring modest database sizes and small amounts of manipulation
• Setting safety stock levels
• Production Planning and distribution plan
• What transportation modes should be used for warehouse replenishment and
customer deliveries?
• Refinements at various stages of the product lifecycle, so that new, ongoing
and obsolete items are optimized in different ways
9. Supply chain optimization includes-
• Demand optimization
• To identify the best combination of price and promotion to achieve desired sales,
gross margin, inventory or market share objectives.
10. 1. Clusters based on similar demand trends
• Utilizing demand data gathered from similar purchasing patterns helps planners
create intelligent forecasts for specific products
• It organizations to make allocation and replenishment decisions, as well as reduce
uncertainty by having a flexible plan
2. Accurate and efficient assortment management
• Using demand insight to drive planning allows retailers to predict trends for new and
seasonal products, determine assortments, and calculate store and shelf placement.
• It also allows stores to localize assortments based on the demographic of shoppers.
Space & Category Management Strategies
11. 3. Creating floorplans that increase store productivity
• right space is allocated is critical to store productivity
• High-traffic areas can be used to sell the higher demand items or promote
seasonal products.
4. Efficiently develop planograms for improved space management
• to develop a replenishment strategy to avoid excess inventory and plan for a
rise in the purchasing of a product based on season or promotions.
• Maximizing the space available and reducing excess inventory can increase
revenue and efficiency.
Space & Category Management Strategies
12. 1. Omni-channel fulfilment
• Business Challenge :
• The retailer’s objective is to utilize a variety of fulfillment locations in order to
provide a smoother customer shopping experience, improved service time and
inventory levels and lowered overall cost.
• Solution:
• network optimization and greenfield analysis can help identify strategies for
improving store sourcing and inbound transportation costs based on required
service constraints.
• to optimally leverage e-commerce, brick and mortar and third-party channels
to minimize overall costs
Design Strategies to Optimize Supply Chain
13. 2. Supply chain segmentation
• Business Challenge:
• Many retailers offer as broad a variety of stock keeping units (SKUs) as possible
to ensure that their customers’ demands are met. However, customers’ buying
patterns vary greatly based on product size or color, geographic region, price,
season and availability.
• Design Solution:
• By examining key product characteristics, such as margin, velocity and
variability, you can spot trends and “clusters” of like-products, e.g., slow versus
fast movers or low margin/high demand products.
Design Strategies to Optimize Supply Chain
14. 3. Right-sizing inventory
• Business Challenge:
• Different products’ margins and velocity through the supply chain vary greatly.
This problem is complicated when the supply chain has multiple tiers and you
must decide how much inventory of each item to keep at each level.
• Design Solution:
• Define service requirements for each product and site, e.g., “I want 99 percent
availability for SKU #333 at my Chicago store.” The inventory optimization
technology then determines the minimum level of product to be stocked at each
echelon and location to meet these targets while minimizing the total inventory
holding costs.
Design Strategies to Optimize Supply Chain
15. 4. Product flow-path optimization
• Business Challenge:
• There are many variables that determine a product’s flow-path which include the
supplier, the quantity purchased, the frequency of purchases, the mode of
transportation, the distribution center, the transportation carrier, the transportation
route and the order/ship time.
• Design Solution:
• objective is to maximize margin and profit by determining the best flow-path for each
product that will yield the lowest total landed cost
• objective is to maximize margin and profit by determining the best flow-path for each
product that will yield the lowest total landed cost
Design Strategies to Optimize Supply Chain
16. Retail is one of the most mature users of information
technology.
• RFID
• E- technology-driven training programs
• Credit systems
• Data processing efforts with systems design, programming, computer operations,
and information systems (IS).
Role of Technology in Retail
17. RFID Tag
RFID in Retail Supply Chain-Automate the Supply chain process
