Information Systems and Supply Chain Management

McGraw-Hill/Irwin PPT10-1 Levy/Weitz: Retailing Management, 5/e

Copyright 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Retailing Strategy
Retail Market Strategy
Financial Strategy Site Location

Information Systems
Retail Locations
Organizational Structure and HR Management

Customer Relationship Management

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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.

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Illustration of Supply Chain

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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
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Information Flows

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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
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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
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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
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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

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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

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Crossdocking

Merchandise flows directly from the vendors trucks through the retailers distribution center and is loaded on the trucks going to the retailers stores without being stored in the distribution center
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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

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Quick Response Delivery System

QR delivery systems are inventory management systems designed to reduce the retailers lead time for receiving merchandise, thereby lowering inventory, improving customer service levels, and reducing logistics expenses.

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Benefits of QR Systems
Reduces lead time

Increases product availability and lowers inventory investment Reduces logistics expenses

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Outsourcing Supply Chain Management Functions

Transportation
Warehousing
Control

Freight Forwarders
Integrated Third Party Logistics Services

vs.
Cost

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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
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