3 Organizational Structure and HR Management Retailing StrategyRetail Market StrategyFinancial StrategySite LocationInformation SystemsRetail LocationsOrganizational Structure and HR ManagementCustomer 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.
7 Strategic Importance of Supply Chain Management Opportunity to Reduce CostsTransportation CostsInventory Holding CostsProvide Value to Customers by Making the Right Merchandise is in the Right Place at the Right TimeFewer StockoutsGreater Assortment with Less InventoryImproved ROI
8 Improve Return on Investment Return on assets = Net profit margin x Asset turnoverNet profit = Net profit x Net salesTotal assets Net sales Total assetsEfficient Supply Chain Management Higher Asset TurnoverSame Sales Using Less Inventory
9 - - - - Merchandise flow Information flow The Flow of Information and MerchandiseCustomerSales infoBuyerStoresQuick response systemsDistribution centerVendorMerchandise flow Information flow
11 Information Flow1. When customer makes a purchase, sales associate scans UPC code on merchandise and customer credit card/loyalty card2. 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 Flow4. 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 stores6. Store managers inform distribution center about receipt of merchandise and coordinate deliveries
13 Data WarehousingData 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 processingWal-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
15 Electronic Data Interchange EDI is the computer-to-computer exchange of business documents between retailers and vendorsMerchandise salesInventory On HandOrdersAdvanced shipping noticesReceipt of merchandiseInvoices for payment
16 Networks for EDI Proprietary Systems – Network using special software Extranet – Public internet with access restricted to partnersIntranet – Internet with access restricted to people within a companyEase of accesssecurity
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 effectiveMore accurate sales forecastsLess 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 demandFrequent replenishment required – high number of units sold per dayItems shipped to store in less than full case quantitiesMany retail outlets that are not concentrated in one area
20 When to Use Direct Store Delivery Retailer has only a few outletsMany retail outlets are concentrated in metro areas yielding increased efficiency of direct store deliveryImportant to get merchandise in store quicklyFashion - first to have latest video gameMerchandise perishable - produce
21 Activities Performed by Distribution Center Managing inbound transportationReceiving and checking merchandiseStoring or cross docking merchandisePreparing merchandise for the sales floorTicketing and markingPutting on hangersShipping merchandise to storesManaging outbound transportation
22 CrossdockingMerchandise 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 StrategyPull Merchandise shipped to stores based on sales and inventory levels in the storesPush 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 investmentReduces logistics expenses
26 Costs of QR Systems Smaller orders - more expensive to transport Greater order frequency - deliveries and transportation more difficult to coordinateComputer hardware and software must be purchased by both parties.
27 Logistics Support for Electronic Channel Requires a different type of distribution centerPicking and packing individual items sent to customer vs.Receiving, storing, and cross docking cartons to storesMulti-channel retailers may outsource fulfillment of Internet orders to third partyTarget, Toys R Us Target
28 Outsourcing Supply Chain Management Functions TransportationWarehousingFreight ForwardersIntegrated Third Part Logistics ServicesControlvs.Cost
29 Third-Party Logistics Companies These firms facilitate the movement of merchandise from manufacturer to retailer, but are independently owned.TransportationWarehousingFreight forwardersIntegrated third-party logistics services