1. RETAILING
MANAGEMENT
RETAILING
MANAGEMENT
5th Edition

2. Information Systems and Supply Chain Management
Chapter 10
Information Systems and Supply Chain Management
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 5/e
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

3. Organizational Structure and HR Management
Retailing Strategy
Retail Market Strategy
Financial Strategy
Site Location
Information Systems
Retail Locations
Organizational Structure and HR Management
Customer Relationship Management

4. Supply Chain Management
Supply Chain Management is the integration of business processes from end user through original suppliers that provides products, services, and information that add value for customers.

5. What Supply Chain Management Entails

6. Illustration of Supply Chain

7. Strategic Importance of Supply Chain Management
Opportunity to Reduce Costs
Transportation Costs
Inventory Holding Costs
Provide Value to Customers by Making the Right Merchandise is in the Right Place at the Right Time
Fewer Stockouts
Greater Assortment with Less Inventory
Improved ROI

8. Improve 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  Higher Asset Turnover
Same Sales Using Less Inventory

9. - - - - Merchandise flow Information flow
The Flow of Information and Merchandise
Customer
Sales info
Buyer
Stores
Quick response systems
Distribution center
Vendor
Merchandise flow Information flow

10. Information Flows

11. Information Flow
1. When customer makes a purchase, sales associate scans UPC code on merchandise and customer credit card/loyalty card
2. Information about purchase is transmitted from POS terminal to the buyer/planner.
3. Information about purchases are aggregated by buyer/planner and sent to distribution center and vendor

12. Information Flow
4. Buyer/planner communicates with vendor and places a purchase order to re-supply stores.
5. Buyer/planner notifies distribution center about incoming orders and how they are to be distributed to stores
6. Store managers inform distribution center about receipt of merchandise and coordinate deliveries

13. 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
Wal-Mart makes good use of its data warehouse. It should. Experts estimate that it is second in size only to that of the U.S. government

14. Data Warehouse Structure

15. 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

16. Networks for EDI Proprietary Systems – Network using special software
Extranet – Public internet with access restricted to partners
Intranet – Internet with access restricted to people within a company
Ease of access
security

17. Physical Flow of Merchandise
Merchandise is sent from vendor either to the retailer’s distribution center (1) or directly to store (3).
Retailer send merchandise from its distribution center to its stores (2).

18. Advantages of Using a Distribution Center
More cost effective
More accurate sales forecasts
Less merchandise in the individual store, thus a lower inventory investment system-wide.
Less out-of-stock

19. When to Use Distribution Centers
Unpredictable merchandise sales – wide fluctuations in demand
Frequent replenishment required – high number of units sold per day
Items shipped to store in less than full case quantities
Many retail outlets that are not concentrated in one area

20. When to Use Direct Store Delivery
Retailer has only a few outlets
Many retail outlets are concentrated in metro areas yielding increased efficiency of direct store delivery
Important to get merchandise in store quickly
Fashion - first to have latest video game
Merchandise perishable - produce

21. Activities Performed by Distribution Center
Managing inbound transportation
Receiving and checking merchandise
Storing or cross docking merchandise
Preparing merchandise for the sales floor
Ticketing and marking
Putting on hangers
Shipping merchandise to stores
Managing outbound transportation

22. Crossdocking
Merchandise flows directly from the vendor’s trucks through the retailer’s distribution center and is loaded on the trucks going to the retailer’s stores without being stored in the distribution center

23. Logistics Strategy
Pull Merchandise shipped to stores based on sales and inventory levels in the stores
Push Merchandise shipped to the stores based on forecasted sales rate

24. Quick Response Delivery System
QR delivery systems are inventory management systems designed to reduce the retailer’s lead time for receiving merchandise, thereby lowering inventory, improving customer service levels, and reducing logistics expenses.

25. Benefits of QR Systems Reduces lead time
Increases product availability and lowers inventory investment
Reduces logistics expenses

26. Costs of QR Systems Smaller orders - more expensive to transport
Greater order frequency - deliveries and transportation more difficult to coordinate
Computer hardware and software must be purchased by both parties.

27. Logistics Support for Electronic Channel
Requires a different type of distribution center
Picking and packing individual items sent to customer vs.
Receiving, storing, and cross docking cartons to stores
Multi-channel retailers may outsource fulfillment of Internet orders to third party
Target, Toys R Us  Target

28. Outsourcing Supply Chain Management Functions
Transportation
Warehousing
Freight Forwarders
Integrated Third Part Logistics Services
Control
vs.
Cost

29. Third-Party Logistics Companies
These firms facilitate the movement of merchandise from manufacturer to retailer, but are independently owned.
Transportation
Warehousing
Freight forwarders
Integrated third-party logistics services