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Retail Supply Chain

Management
Presented By :
Ashish Aggrawal (ID : 2010H149257P)
Govind Garg (ID :
2010H149242P)
Jigyasu Bhatnagar(ID :
 
2010H149243P)
L. SurajSingh (ID :
2010H149238P)
NiteshShah (ID :
2010H149233P)
Sumit Raj (ID :
(Course : Supply Chain Management)
2010H149236P)
Contents
 Introduction
 Difference between Manufacturing and Retail Supply
Chain
 Supply Chain and Logistics
 Retail Management & Retail Supply Chain
Management
 Elements of Retails Supply Chain
 Importance of Factors in Various Retail Supply Chain
 Category Management
o Processes
o Category Strategy
o Category Tactics
 Merchandising Management
o Forecasting Approaches
04/10/11 o Merchandising Budgeting
Nitesh, Sumit, Ashish, Suraj, Jigyasu, Govind 2
Introduction

S u p p ly C h a in M a n a g e m e n t is p rim a rily co n ce rn e d w ith


th e e fficie n t in te g ra tio n o f su p p lie rs, fa cto rie s,
w a re h o u se s a n d sto re s so th a t m e rch a n d ise is p ro d u ce d
a n d d istrib u te d in th e rig h t q u a n titie s, to th e rig h t
lo ca tio n s a n d a t th e rig h t tim e , a n d so a s to m in im ize
to ta l syste m co st su b je ct to sa tisfyin g se rvice
re q u ire m e n ts.

qTypes of Supply Chain

ØWholesale/Manufacturing Supply chain

ØRetail Supply Chain (e.g. WalMart)


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Ø
Difference between
Manufacturing & Retail
Manufacturing SC
SC Retail
SC
Warehousing
roduction Transport Category Management
n Process Quality Sourcing Assortment
lant Maintenance Quality Check Space Management
IP Inventory Import Document Private Label
Customer Service Store Clustering
Inventory Multi Channel
Management

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SUPPLY CHAIN AND
LOGISTICS
Product
Development
Packaging
Private Label LOGISTICS MANAGEMENT
Manufacturing Warehousing
Transport
Inventory
Order Management
Quality Management Reverse Logistics
Customer Service
Sourcing Distribution Channel
Loyalty
Plan

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RETAIL SUPPLY CHAIN
MANAGEMENT

Store Design
Store Format RETAIL Supply Chain Management
Planning Warehousing
Visual
Merchandising Transport
Inventory
Retail Order Management
Branding Reverse Logistics
Retail Customer Service
Marketing
Retail Distribution Channel
Finance
Legal Issues
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Merchandise Management Buy Move Sell

Category Merchandi Assortmen Price Product Replenis Logistics Customer


Managemen se t Manage - Manage - Design / h Manage - Service
t Managemen ment ment Source ment ment
t

Category Merchandis Assortment Promote Design Final Transport Reverse


Planning e Plan Planning Private Allocation Planning Logistics
Forecastin Labels / Plan for Planning
Pla n n in g

g Packaging Store
Category Merchandis Store Planning Manufactur Manage Planning Loyalty
Role e Clustering Markdowns e / Outsourc Replenish for Program
Definition Budgeting ing ment Warehouses Planning
Category Size and Planning Vendor Manage Inventory Return
Measures Pack Usage of Selection Direct Planning Policy
And Planning Trade Fund Deliveries
Strategies from
Category Space Plan , Promotion Global Plan for LSP / 3PL
Supplier Manage
Tactics Planogram Optimizati Sourcing CRP / VMI / CP Selection Customer
Design on FR Services

Open to Merchandis Promotiona Place Create Warehouse Order


buy e l direct Replenishm Management Management
Control Allocation execution Supplier ent Orders
orders
E xe cu tio

Plano gram Price Manage Transport Loyalty


execution Execution supplier Management Program
and Performanc Execution
n

Updates e
Merchandis Inventory
e Management
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Procuremen
t
Importance of Factors in Various
Retail Categories

8
Retail Formats

9
Decisions in Retail supply
chain
 Strategic Decisions:
 Decision influence Retailor’s long term profit and sales goals.
 Decisions include : where to locate store or warehouse, where to look
for global sourses of procurement of merchandise

 Tactical Decisions :
 Medium term decisions which are reviewed every month.
 Decisions include : Forecast, Budget, Pricing plan etc.

 Operational Decisions :
 Short term decisions which are reviewed every week
 Vendor shedules, Distribution plan, Transportation and Route plans
etc.

 Execution Decisions :
*
 Where to unload stocks, how to manage stockout,Inventory decisions
etc.
 10
DIFFERENT Supply chain
decisions need different
Horizons for Planning

11
Retail Supply chain process
maturity

12
Category
Management
Merchandising
Management
 

04/10/11 Nitesh, Sumit, Ashish, Suraj, Jigyasu, Govind


Category Management
qA retailer supplier process of managing
categories as strategic business units,
producing enhanced results by focusing on
delivering customer value
q3 parts of the definition.
1.“This is a retailer supplier
process”.
2.“Managing category as strategic
business units producing
enhanced result”.
3.“Focusing on customer value”.

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Category Management
Process
qE ig h t critica l b u sin e ss p ro ce sse s
Category Definition
q  C
A
T
E
Category Role
G
O
R
Y Category Assessment
R
E
V
I
Category Balanced Scorecard
E
W
Category Strategies

Category Tactics

Plan Implementation
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1.Category Definition
qA d istin ct, m a n a g e a b le g ro u p o f p ro d u cts/ se rvice s
th a t th e cu sto m e r p e rce ive s to b e in te rre la te d
a n d / o r su b stitu ta b le in m e e tin g cu sto m e r n e e d
qG u id e lin e s fo r d e fin in g a ca te g o ry:
i. A ca te g o ry is so m e th in g th e d e fin itio n o f w h ich
is co m m o n ly u n d e rsto o d b y th e su p p lie r a n d
th e re ta ile r.
ii. A ca te g o ry d e fin itio n is b a se d o n h o w th e
cu sto m e r b u ys a n d n o t o n h o w th e re ta ile r
th in ks.
iii. S u p p lie r’ s exp e rtise and co n su m e r
kn o w le d g e g e n e ra lly p la y a ke y ro le in
d e ve lo p in g th e d e fin itio n a n d stru ctu re o f a
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ca te g o ry.Nitesh, Sumit, Ashish, Suraj, Jigyasu, Govind 16
iv. T h e re is n o d e fin itio n o f ca te g o ry – it m a y b e
qDefining a Category – A Five Step Process
i . Define consumer need

ii. What provides similar solution to meet the need

iii. Interrelated or Substitute product for customer

iv. Interrelated and logistically manageable


product for retailer

v. Finalize group of products that comprise


the category

qProblems of defining a Category Too Narrowly


or Too Broadly.

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2.Category Role
ØA ssig n s th e ro le o f e a ch ca te g o ry in th e re ta ile r’ s
o ve ra ll p o rtfo lio .
ØD o n e fo r b u ild in g fo cu s in te rm s o f re so u rce
a llo ca tio n fo r b o th th e re ta ile r a s w e ll a s th e
su p p lie r, fo r a p a rticu la r ca te g o ry.
ØD e cid e s th e m o st im p o rta n t ca te g o rie s fo r th e
re ta ile r.
ØA lso im p o rta n t fo r su p p lie rs.
Ø
qFo u r ca te g o ry ro le s:-
i. D e stin a tio n ca te g o ry
ii. Pre fe rre d ca te g o ry
iii. O cca sio n a lca te g o ry
iv. C o n ve n ie n ce ca te g o ry
0 4 /1 0 /1 1 Nitesh, Sumit, Ashish, Suraj, Jigyasu, Govind 18
Category Role % of retailer’s Retailer’s positioning
Destination Category category
5–7% Retailer of choice, provide superior value,
help retailer to gain market share and
Preferred category 50 – 55 % Preferred source, provide retailer reasonable
turnover.
profit and sales.
Occasional category 15 – 20 % Provide competitive value, provide retailer
good profit.
Convenience category 15 – 20 % Place for one stop shopping, give retailer
good margin.

ØA ssig n m e n t o f a p a rticu la r ca te g o ry to a ro le is d o n e
b y cro ss ca te g o ry q u a n tita tive a n d q u a lita tive d a ta
a n a lysis.
Ø B a se d o n fo u r in p u ts :-
i. H o w im p o rta n t is th e ca te g o ry to th e re ta ile r’ s ta rg e t
cu sto m e r?
ii. H o w im p o rta n t is th e ca te g o ry to th e re ta ile r in te rm s o f
p ro fit?
04/10/11
iii. H o w im p o rta n t is th e ca te g o ry to th e re ta ile19
Nitesh, Sumit, Ashish, Suraj, Jigyasu, Govind
r’ s
3.Category
Assessment
ØU n d e rsta n d th e cu rre n t p e rfo rm a n ce o f th e
ca te g o ry.
ØA re a s o f o p p o rtu n ity fo r im p ro ve d tu rn o ve r, p ro fit
a n d R O I.
ØS u p p lie r – p ro vid e d a ta o n ca te g o ry sh a re a n d
co n su m e r d a ta like b u ye r p ro file , p u rch a se
b e h a vio r e tc ..
4. C a te g o ry Pe rfo rm a n ce
ØR e ta ile r – p ro vid e in fo rm a tio n o n th e ca te g o ry ’ s
M e a su re
co n trib u tio n , p ro fit e tc .
ØD e fin e th e ta rg e ts a n d se t th e ta rg e t va lu e s in
q u a n tita tive te rm .
ØS h o u ld b e co n siste n t w ith th e ca te g o ry ’ s ro le .
ØR ig h t b a la n ce b e tw e e n exte rn a l( e g . cu sto m e r
se rvice ) a n d in te rn a lm e a su re s( e g . in ve n to ry
tu rn o ve r)
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Category strategy
1.Traffic building
2.Transaction building
3.Turf defending
4.Profit generating
5.Cash generating
6.Excitement creating
7.Image creating
Category strategy
 Traffic building: focus here is to draw
consumer traffic to store
 Eg: big bazar
 Transaction building: focus here is to
increase size of market basket
 Eg: maggi extra large family pack
 Turf defending: aggressively positions
certain parts of category in order to
protect business from targeted
competitor
 Profit generating: focuses on using part
of category to generate profits

Category strategy
 Cash generating: focuses on using part
of a category to generate cash flow for
retailer
 Ex: fast moving product with efficient
supply and low inventory
 Excitement creating : Communicate
sense of urgency or opportunity to
customer
 Image creating: helps retailer to
communicate his desired image to
consumer
CATEGORY TACTICS
 Assortment:
ü Decrease number of SKUs
ü Increase number of SKUs
ü Swap
ü Uniform vs. tailored
 Pricing:
ü Decrease
ü Increase
ü Uniform vs. tailored
ü Private label
CATEGORY TACTICS
 Promotion:
üProducts
üFrequency
üLocation of promotion
üTool for promotion
 Self presentation
üLocation within store
üSpace allocation
üUniform or tailored


Merchandising and
its Benefits
 “Process of acquiring goods and/or services
and making them available at the right
place, at the right time, at the right price
and in the right quantity, to the target
customer.”
 Processes involved:
§ Sourcing
§ Assortment
§ Pricing Aim :
To maximize ROI

04/10/11 Nitesh, Sumit, Ashish, Suraj, Jigyasu, Govind 26


Merchandise
Types
Staple Merchandise
Seasonal Merchandise
Fashion Merchandise
Fed Merchandise

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Merchandise
Hierarchy
 Logical way of classifying or grouping
merchandise.
 Suppose a customer wants to buy a shirt:
Ty p e o f sto re to v isit: H y p e rm a rk e t

R ig h t D e p a rtm e n t: A p p a re l

S e ctio n : M e n ’ s w e a r se ctio n

C a te g o ry : F o rm a l

O p tio n s fo r co lo rs , size , sty le a n d p rice

C u sto m e r seNitesh,
04/10/11
le cts th e p a rticu la r S K U
Sumit, Ashish, Suraj, Jigyasu, Govind 28
Merchandise
Forecasting
 Qualitative 1 . T im e S e rie s M o d e ls
 Quantitative 2 . C a u sa l M o d e ls
 

 Attribute based
Forecasting/Characteristic based
Forecasting: Size, style, color,
geography, age, price
 Composite Forecasting: weighted avg. of
multiple forecast methods.
 Consensus Based Forecasting: Opinions
and insights of all the participants, with
shared accountability for the forecasting
process.
 New Product
04/10/11
Forecasting: On the basis
Nitesh, Sumit, Ashish, Suraj, Jigyasu, Govind 29
Forecasting
Approach

v e l o f F o re ca stin g

H isto rica l S a le s d a ta n e e d to b e cle a n e d

S e le ct th e rig h t fo re ca stin g to o l

F o re ca st p ro m o tio n s se p
04/10/11 Nitesh, Sumit, Ashish, Suraj, Jigyasu, Govind 30
Merchandise
Budgeting
cip a te d sa le s fo r th eW d he ap ta mrtme th
e notd/ dto
iv isio
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? r ca lcu la tin g E O M a n d

a n d w ill b e n e e d e d to a ch ie v e sa le s p la n ?

p u rch a se s to b e m a d e in th e se a so n ?
m a rg in sh o u ld th e Wsto
h are
t iscoth
n trib
e o putim
te to
u m o re
v edrau ll
ctio
p ro
n fita
p e rce
b ility
n taogfe th
to

0 4 /1 0 /1 1 31
Open to Buy Control
Planned Sales Actual SalesActual Stock
Open Purchase Orders / Contracts

Actual Adjustments

ed BOM and EOM inventory


Actual Shrinkage
Planned Reductions

Actual Goods Receipt


Planned P . O .

Planned Margin OTB OTB OTB Forecast Stock / Sales

04/10/11 Nitesh, Sumit, Ashish, Suraj, Jigyasu, Govind 32


Time Planning PhasePurchasing PhaseIn - Season Phase t
Summary
 Retail Management
 Retail Supply Chain
 Elements of Supply Chain
 Factors of Supply Chain
 Category Management
 Merchandising Management
 Forecasting and Budgeting

0 4 /1 0 /1 1 Nitesh, Sumit, Ashish, Suraj, Jigyasu, Govind 33


Thanks ,
Any Query ?

0 4 /1 0 /1 1 Nitesh, Sumit, Ashish, Suraj, Jigyasu, Govind 34