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    Information Systems & Supply Chain Management

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    dhiviraj
    This document discusses information systems and supply chain management in the retail industry. It provides three key benefits of an efficient supply chain: 1) Improved product availability through reduced stockouts and tailored store assortments, 2) Higher return on investment through increased sales, profits and asset utilization, and 3) Strategic advantage through a supply chain that is difficult for competitors to replicate. It also describes how information and merchandise flow between customers, retailers, distribution centers and vendors, and how technologies like EDI and data sharing can facilitate collaboration in the supply chain.

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    Information Systems & Supply Chain Management

    Uploaded by

    dhiviraj
    49 views25 pages
    This document discusses information systems and supply chain management in the retail industry. It provides three key benefits of an efficient supply chain: 1) Improved product availability through reduced stockouts and tailored store assortments, 2) Higher return on investment through increased sales, profits and asset utilization, and 3) Strategic advantage through a supply chain that is difficult for competitors to replicate. It also describes how information and merchandise flow between customers, retailers, distribution centers and vendors, and how technologies like EDI and data sharing can facilitate collaboration in the supply chain.

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    This document discusses information systems and supply chain management in the retail industry. It provides three key benefits of an efficient supply chain: 1) Improved product availability through reduced stockouts and tailored store assortments, 2) Higher return on investment through increased sales, profits and asset utilization, and 3) Strategic advantage through a supply chain that is difficult for competitors to replicate. It also describes how information and merchandise flow between customers, retailers, distribution centers and vendors, and how technologies like EDI and data sharing can facilitate collaboration in the supply chain.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    49 views25 pages

    Information Systems & Supply Chain Management

    Uploaded by

    dhiviraj
    This document discusses information systems and supply chain management in the retail industry. It provides three key benefits of an efficient supply chain: 1) Improved product availability through reduced stockouts and tailored store assortments, 2) Higher return on investment through increased sales, profits and asset utilization, and 3) Strategic advantage through a supply chain that is difficult for competitors to replicate. It also describes how information and merchandise flow between customers, retailers, distribution centers and vendors, and how technologies like EDI and data sharing can facilitate collaboration in the supply chain.

    Copyright:

    © All Rights Reserved
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    of 25

    Information systems & Supply

    Chain Management
    Objectives
    • Flow of merchandise and information from
    vendor to retailer to consumers
    • IT developments facilitating vendor-retailer
    communications
    • How do retailers and vendors collaborate to
    make sure that right merchandise is available
    when customers are ready to buy it
    • Benefits to vendors and retailers of collaborating
    on SCM
    • RFID and its effect on retailing
    Creating strategic advantage through
    SCM and IS
    • Retailers connect customers with vendors who want to
    provide merchandise
    • It is retailers responsibility to gauge customer needs
    and wants and work with other members of the supply
    chain- distributors, vendors and transportation
    companies
    • This is to make sure that merchandise is available to
    customers when they want it
    • SCM is a set of business activities that manages the
    movement of products to retail distribution centres
    and stores and the exchange of information between
    retailers and vendors
    • Retailers- increasingly assuming leadership role
    • Small retailers- large mfgs and vendors determined how
    when, and where the merchandise is to be delivered
    • With consolidation and emergence of larger national retail
    chains- retailers taking active interest in SCM
    • Size of retailers – give them more power over vendors and
    thus able to control their SCs
    • Addly, retailers are more knowledgeable about their
    customers
    • This info is being shared with suppliers to plan production,
    promotions,deliveries,assortment and inventory level
    Supply chain
    Three benefits of Supply chain
    • Improved product availability
    • Higher ROI
    • Strategic advantage
    Improved product availability

    • Stockout occurs when an SKU a customer wants is

    Reduced unavailable
    • Will help in customer retention
    Efficient SCM
    Stock outs leads to the
    following:
    -Greater sales
    - Lower costs
    • To make sure that right merchandise is available at -- Higher
    Tailored the right store
    • Stores adjust according to merchandise on basis of inventory
    season turnover
    assortments • Retailers use statistical methods- to analyse
    customer data and adjust assortments
    - Lower
    markdown
    for retailers
    Higher ROI
    • An efficient SCM and IS can improve ROI because it
    increases :
    - Sales: customers are offered more attractive assortments
    that are in stock
    - Net profit: Increase gross margin and lower expenses:
    special buying opportunities- products bought at low cost,-
    improving GM
    - Margins : lower operating expenses by coordination and
    reducing TC
    - Assets (Inventory turnover) : Efficient SC- leads to lower
    inventory levels- lower investment- total assets are lower-
    so assets and inventory turnover is also higher
    Strategic advantage
    • Is difficult to develop, once developed it is
    sustainable enough to give competitive
    advantage
    • Eg Walmart: high investment in SCM and also
    has large economies of scale
    • Efficient coordination within all areas of
    company
    Information and Merchandise Flows
    Customer

    Buyer/Planner Stores

    Distribution
    Vendor centre

    Information flow
    Merchandise flow
    Information Flows
    Customer

    2
    Buyer/Planner Stores
    3
    6
    4 5
    Distribution
    Vendor 7 centre

    Information flow
    Merchandise flow
    Information Flows
    • Step 1: Cashier scans the UPC- Universal Product Code and generates a
    sales receipt- no 1
    • Step 2: Info regarding the transaction is captured at POS terminal and
    sent to central computer system where it can be accessed by the planner
    of the product category- no 2
    • Step 3: Sales transaction data are sent to the distribution centre- no 6
    • Step 4: When store inventory drops to a specified level- more stock sent
    to the store and this info is sent to computer system no 5,so the planner
    knows the inventory level
    • Step 5: When inventory level drops to a specified level, no4,the planner
    places the order and informs the DC no 5
    • Step 6: When mfg ships the order sends an ASN – to the DC no 7
    • Step 7: When order is received the planner is notified and pays the
    vendor no 5
    • Certain situations – data sent from store directly to the vendor no 3
    Data warehouse
    • Purchase data collected at the point of sale
    collected in a huge database known as data
    warehouse
    • Information can be accessed at various levels:
    SKU, vendor, category, department,
    merchandise,store division,company
    • Used to collect info about customers so as to
    modify promotions and products
    Electronic data interchange (EDI)
    • Communications between vendors and retailers occur
    via EDI.
    • It is a computer to computer exchange of business
    documents in a structured format.
    • Specific symbols used
    • Benefits:
    - Reduces cycle time- or time to place order and receipt
    - Improves overall quality with better record keeping
    and less errors
    - data available in an easy to read format
    Push and Pull supply chains

    Pull SC Push SC

    • a SC where in orders for merchandise are • Here merchandise is allocated through


    generated at store level on basis of sales the store on basis of forecasted demand
    data captured by POS terminal • Forecast developed, inventory shipped at
    • Demand for an item pulls it through the regular intervals
    SC • Used for predictable demand
    • Less chances of stock out: since inventory • Thus retailers use a combination
    is based on consumer demand
    • Increases inventory turnover
    • Becomes useful when demand is erratic
    • requires sophisticated costly IT system
    • for some fashion merchandise, retailers
    cannot adjust ionventory according to
    demand
    Logistics
    • It is the physical flow of the merchandise within
    the supply chain
    • Is the aspect of SCM that refers to the planning,
    implementation, and control of efficient flow and
    storage of goods, services and related
    information from the point of origin to point of
    consumption to meet consumer requirements
    • Merchandise--- vendor to DC
    • Merchandise --- DC to store
    • Merchandise --- vendor to store
    Collaboration between vendors and
    retailers in SCM
    • Main objective for retailers and vendors is to make stock available
    in stores when customers want it and to achieve this task with
    minimum cost and investment
    • SC efficiency dramatically improves when vendors and retailers
    share information and work together
    • Vendors can make sure that inventory is available JIT when the
    retailer needs it without having excess inventory
    • When retailers and vendors do not coordinate their SCM activities,
    excess inventory builds up in the system even if the retail sales for
    that product is constant. This effect is called as “Bullwhip” effect
    • Occurs due to delay in transmitting orders and receiving
    merchandise, overreacting to shortages, and ordering in batches
    contd
    • Four approaches for coordinating SC activities
    are:
    1. Using EDI
    2. Sharing information
    3. using vendor managed inventory (VMI)
    4. employing collaborative planning,
    forecasting, and replenishment (CPFR)
    Using EDI
    • used to transmit the purchase order info
    reduces the time taken for retailers to place
    orders and for vendors to acknowledge the
    receipt and communicate delivery info
    Sharing Information
    • Excess inventory caused due to – inability of vendors
    to know what actual level of store retail sales are.
    • If they know they are increasing, production schedule
    can be planned accordingly
    • Walmart Retail Link : data warehouse and decision
    support system that provides vendors with two years
    sales history and inventory levels for products across
    5000 stores
    • With sharing, thus vendors can improve their sales
    forecast, production efficiency, and reduce excess
    inventory
    Vendor Managed Inventory (VMI)
    • VMI is an approach for improving supply chain efficiency in
    which the vendor is responsible for maintaining the
    retailers inventory level at each of these stores
    • Vendor determines a reorder point – a level of inventory at
    which more stock is reqd. The retailer shares data with
    vendor through the EDI.
    • When the inventory drops to the order point the vendor
    generates the order (reverse purchase order) and delivers
    the merchandise
    • Usually applied at the retailers DC
    • But difficult for the retailer to know the other actions of
    vendor: SP schemes for competitors brands
    • Eg TAL and JC Penney, frito Lay
    CPFR
    • collaborative planning, forecasting, and replenishment
    (CPFR) is the sharing of forecast and related business
    information and collaborative planning between retailers
    and vendors to improve SC efficiency and product
    replenishment
    • Here retailers share sales and inventory data when using
    VMI approach, whereas vendor is responsible for managing
    inventory
    • CPFR is an advanced form of retailer –vendor collaboration
    that involves sharing of proprietary info such as business
    strategies, promotion plans, new product development etc
    • Eg Walmart-Procter and Gamble
    RFID
    • Radio Frequency Data Identification- RFID
    • It is a technology that allows an object or person to be
    identified at a distance using radio waves.
    • These devices or tags are inserted into ocean going
    containers, on shipping cartons, behind merchandise
    labels. They transmit data about the object in which
    they are embedded.
    • Is more superior than a bar code – with ability to store
    more data and upload data on the device
    • Eg it can keep a track of where the item is in SC,where
    it is stored in a distribution centre
    • Data can be obtained even in harsh environments
    RFID
    • Enables real time tracking of the product
    from mfg to check out in the store
    • Eliminates the manual point and read
    operations needed to get data from UPC
    • Thus it can significantly decrease warehouse,
    distribution, inventory costs, increase margins
    and provide better in stock conditions
    Benefits of RFID
    • Reduces warehouse and distribution labor costs: reduces
    manual tracking and labor intensive sensors for point and
    read approach
    • Reduces point of sale labor costs: reduces costs for
    checking shelf inventory. Increases the use of self scan and
    reduces the incidence of employee fraud
    • Inventory savings: Reduces errors
    • Reduces theft
    • Reduced out of stock condition
    • Thus it helps to streamline SC
    • High costs of purchase, processing and implementation
    • Eg Pantaloons

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