Article Title: The new retail supply chain.
Publication Name and Date: Reed Business Information, Nov 2006
Relevant BUS 351 Topic: Supply Chain Management.
This article deals with the use of emerging technology for the efficient management of supply chain management. The movement of products into the retail outlet occurs in concurrence with the sales of products, ensuring proper availability and movement from the warehouse to the shop floor. Since the article deals with supply chain management, it is relevant to the present course.
Running out of stock of any product is dreaded by any retail outlet. This fear has driven retail outlets to turn to information technology in their supply chain management to ensure the efficient flow of goods.
An example of this is the use of RFID tagging and software to manage the flow of goods. Technology by itself does not provide a solution, and retail solution providers must know exactly the retail outlets’ needs. Retail outlets use the most efficient solution.
For retail outlets, it is the knowledge of when products have moved from their storage points to the shop floor that helps in preventing stock-outs, rather than the information of when a product has arrived and when it has been sold. This solution not only benefits in preventing stock-outs but also in preventing having excess of unnecessary inventory.
This calls for a new strategy in which there is greater responsiveness of the distribution centers to the stores’ activity. In other words, this means consumer demands at the stores is the driving force for replenishment activity at the distribution center.
This new strategy calls for using the wealth of information available at the store level to formulate the replenishment plans. Technology needs to provide the tools to correlate the stores’ information into execution plans for replenishment at the distribution centers. This is the new demand-driven supply plan strategy.
The demand-driven supply plan strategy makes the customer the focus of activity of the manufacturer and the retail outlet, thus providing a true picture of demand that needs to be satisfied by the supply plan.
Once the real-time demand is known, it is possible to utilize the integrated supply system components to provide for better utilization of the three pivots of the supply chain, consisting of quality, costs, and service by the retailer. In other words, the retailer can now balance inventory carrying costs, order fulfillment costs, and transportation costs based on the strategy that retail outlet operates on.
The benefit of providing extra space in the retail outlet for fast-moving products with immediate availability of products through the sales representative of the manufactures will ensue. Also, it becomes possible to match the labor supply to demand. The net result of using a demand-driven supply plan is that it becomes possible to optimize the inventory levels at the retail outlet and optimize labor, inventory, warehouse, and transportation resources at the warehouse.
This article provides an understanding of supply chain management issues at the retail outlet and how the use of demand-driven supply strategy and the requisite technological tools provides a means to address these issues efficiently.