What is supply chain management?
A set of activities and techniques that firms employ to efficiently and effectively manage flows of merchandise from vendor to retailer’s customers.
It is the retailer’s responsibility to gauge customer’s wants and needs and work with other members of the supply chain to make sure the merchandise that customers want is available when they want it.
How to create a strategic advantage through supply chain management and information systems?
- Improved product availability
2. Higher return on assets
Improved product availability
- Means fewer stockouts
Stockouts would be reduced with efficient management. It is important as 17% would switch to another brand, 39% would go to another store to buy products and 44% will stop shopping. - Tailored assortment
Statistical methods can be used to analyze data and adjust store’s assortment on a wide range of merchandise based on characteristics of customers.
Higher return on assets
An efficient supply chain and information systems improve return on assets as it increases sales without increasing inventory.
Good inventory can allow the retailers to carry little backup inventory to stay in stock.
Effective forecasting can also reduce overstock.
- Net profit margin is improved by increasing the gross margin and lowering expenses.
- If retailers can obtain merchandise at a lower cost, it can improve their gross margin.
Global trends in supply chain management
- Big data analytics
- Blockchain roles
- Sustainability
- IoT sensors
- Robotics and automation in logistics
- Transportation management systems
System Design Issues
Warehouse design must accommodate omnichannel by
- outsourcing fulfillment of non-store sale
- micro-fulfillment center
- separate area for shipment for individual customers
Hence, retailers must have fast response, good delivery times and return policy.
- Also must maintain minimal inventory in their supply chain and prevent disruptions. This can be achieved with a micro fulfillment centre as they are closer to consumers who want 2-hour delivery.
Challenges with Omni Channel
- Cross channel Inventory management
- Pricing of delivery modes
- Return modes (pricing to return and options to return in store)
Dropshipping
Is a system where retailers receives order from customers and relay these orders to vendors, vendors will ship the merchandise directly to the customer. Pros: Reduces retailer supply chain costs as vendors assumes risks and costs of supplying merchandise to customers. Cons: Longer delivery times Increases costs(with multiple purchases) Loss of control Definining process of handling returns
Customer store pick up
Order online and pick up in stores.
Retailer must be able to locate item in stock to fulfill orders in timely manner
Can use mobile task management that is a wireless network that receives notification. Staff closest to item can pull it and verify availability.
