supply chain management,scm in retail

1. Supply Chain ManagementSupply Chain Management
In RetailIn Retail
Presented byPresented by
-Hareesh.M-Hareesh.M
ID.No-2014600120ID.No-2014600120

2. Contents
 Definition
 Flows in SCM
 Conflicting objectives in SCM
 Supply-Demand-SCM
 Need of SCM
 Integrated SCM
 Pull-Push view of SCM
 Functions of SCM
 SCM-Strategies
 Global SCM-Issues
 Outsourcing

3. Supply Chain Management
• SCM is primarily concerned with the efficient
integration of suppliers, factories, warehouses
and stores so that merchandise is produced and
distributed in the right quantities, to the right
locations and at the right time, and so as to
minimize total system cost subject to
satisfying service requirements.

5. Conflicting Objectives in SC
• Purchasing
– stable volume requirements
– flexible delivery time
– little variation in mix
– large quantities
• Manufacturing
– long run production
– high quality
– high productivity
– low production cost

6. Conflicting Objectives in SC
• Warehousing
– low inventory
– reduced transportation costs
– quick replenishment capability
• Customers
– short order lead time
– high in stock
– enormous variety in products
– low prices

7. Supply Chain
Supplier Manufacturer Distributor Retailer Customers

8. Supply Chain Management
Supply Chain Management is
the design and management of processes
across organizational boundaries
with the goal of matching supply and demand
in the most cost effective way.
Supply Demand
Mission impossible: Matching Supply and Demand

9. Why so Difficult
to Match Supply and Demand?
• Uncertainty in demand and/or supply
• Changing customer requirements
• Decreasing product life cycles
• Fragmentation of supply chain ownership
• Conflicting objectives in the supply chain
• Conflicting objectives even within a single firm
– Marketing/Sales wants: more FGI inventory, fast delivery, many package
types, special wishes/promotions
– Production wants: bigger batch size, depots at factory, latest ship date,
decrease changeovers, stable production plan
– Distribution wants: full truckload, low depot costs, low distribution costs,
small # of SKUs, stable distribution plan

10. Need of SCM in Retail
 Cost Cutting
 Time Saving
 Customer Satisfaction
 Increase Profit Margins
 Physical Flows
 Information Flows
 Financial Flows

11. Integrated Supply Chain
Management
• SCM is an integrated process where every
activity is interrelated with the system for
efficient flow of material from supplier to
the end users.
Supplier Manufacturer Distributor Retailer Customer

12. Benefits of Integrated Supply
Chain
• Achieving the best delivery performance.
• Reduction in inventory
• Lower supply chain cost
• Improvement in overall productivity
• Accuracy in forecast

13. Module 1:Supply Chain Management
A push-based SCM takes longer to react to the
changing market place
In a push-based supply chain, production decisions
are usually based on long-term forecasts
In push-based strategies, SCM experience
increased transportation costs, high inventory
levels and high manufacturing costs
In a pull-based supply chain, manufacturing is demand driven
so that it is coordinated with actual external customer
demand rather than a forecast
Push View of SCM
Pull View of SCM
Lead-time reduction occurs as the variabilities
are better monitored in pull-based SCM
Pull-based systems are often difficult to implement when lead times
are so long that it is impractical to react to demand information

14. SCM-Modern Approach
• Just In Time (JIT) Inventory Management
Model
• Total Quality Management (TQM) Model
• Efficient Consumer Response (Ecr) Working
Group.

15. Functions of Retail Supply Chain
• Physically movement of goods from one outlet
to another.
• Stocking the good at the outlets where needed.
• Management of the entire process.

16. Supply-Chain Strategies
• Negotiate with many suppliers; play one supplier
against another
• Develop long-term “partnering” arrangements
with a few suppliers who will work with you to
satisfy the end customer
• Vertically integrate; buy the actual supplier
• Create a virtual company that uses suppliers on an
as-needed basis.

17. • Company
– Financial stability
– Management
– Location
• Product
– Quality
– Price
• Service
– Delivery on time
– Condition on arrival
– Technical support
– Training
Supplier Selection Criteria

18. Managing the Supply-Chain -
Options
• Establishing lines of credit for suppliers
• Reducing bank “float”
• Coordinating production and shipping
schedules with suppliers and distributors
• Sharing market research
• Making optimal use of warehouse space

19. Materials Management
• Integrates all materials functions
– Purchasing
– Inventory management
– Production control
– Inbound traffic
– Warehousing and stores
– Incoming quality control
• Objective: Efficient, low cost operations

20. Outsourcing
Supplier
Question: When should the
firm outsource activities?
Outsourcing: moving some of the firms internal activities
and decisions to outside providers
Firm

21. Examples of outsourcing
• Many firms outsource problem solving to McKinsey & Co.
• Advertising is often outsourced completely.
• Many companies outsource logistics and transportation.

22. Why do firms outsource?
• Organizational reasons
- Focus on service
- Focus on core capabilities
- Transform the organization
- Increase flexibility
• Operational reasons
- Improve performance (quality, productivity, etc.)
- Obtain expertise, skill, and technology
- Risk management

23. Why do firms outsource?
• Financial reasons
- Transfer assets to the outsourcing partner.
- Free up resources for investment in other purposes.
• Cost driven reasons
- Transform fixed costs into variable costs.
- Reduce costs through outsourcing partner efficiencies.
• Revenue driven reasons
- Expand and grow with the help of another organization.
- Obtain access to outsourcing partner’s network.

24. Global Supply-Chain Issues
Supply chains in a global environment must be:
– flexible enough to react to sudden changes in parts
availability, distribution, or shipping channels, import
duties, and currency rates
– able to use the latest computer and transmission
technologies to manage the shipment of parts in and
finished products out
– staffed with local specialists to handle duties, trade,
freight, customs and political issues

25. Global SCM FACTORS
• Costs
– Local labor rates
– International freight tariffs
– Currency exchange rates
• Customs Duty
– Duty rates differ by commodity and level of assembly
– Impact of GATT/WTO: Changes over time
• Taxes on Corporate Income
– Different markups by country
– Tax havens and not havens
– Make vs. buy effect

26. Global SCM FACTORS
Continued…..
• Offset Trade and Local Content
– Local content requirement for government purchases
– Content for preferential duty rates
• Export Regulations
• Denied parties list
• Export licenses
• Time
• Lead time
• Cycle time
• Transit time
• Export license approval cycle
• Customs clearance

27. Key Issues in Supply Chain
Management
• Distribution Network Configuration
• Inventory Control
• Supply contract
• Distribution Strategies
• Supply Chain Integration & Strategic Partnering
• Outsourcing & Procurement Strategies
• Product Design
• Information Technology & Decision Support System
• Customer Value

28. Thank youThank you