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— V Chapter — Information Systems and Supply Chain Management McGraw-Hill/Irwin
PPT—-— Retailing Management, 5/e Levy/Weitz: Copyright © 2 by The
McGraw-Hill Companies, Inc All rights reserved Supply Chain Management Supply
Chain Management is the integration of business processes from end user through
original suppliers that provides products, services, and information that add value for
customers PPT—-2 Strategic Importance of Supply Chain Management ‡
Opportunity to Reduce Costs ± Transportation Costs ± Inventory Holding Costs ‡
Provide Value to Customers by Making the Right Merchandise is in the Right Place at
the Right Time ± Fewer Stockouts ± Greater Assortment with Less Inventory ‡
Improved ROI PPT—-3
2 V Information Flow — When customer makes a purchase, sales associate scans UPC
code on merchandise and customer credit card/loyalty card 2 Information about
purchase is transmitted from POS terminal to the buyer/planner 3 Information about
purchases are aggregated by buyer/planner and sent to distribution center and vendor
PPT—- Information Flow  Buyer/planner communicates with vendor and places a
purchase order to re-supply stores 5 Buyer/planner notifies distribution center about
incoming orders and how they are to be distributed to stores 6 Store managers inform
distribution center about receipt of merchandise and coordinate deliveries PPT—-5
Physical Flow of Merchandise Merchandise is sent from vendor either to the retailer¶s
distribution center (— or directly to store (3 Retailer send merchandise from its
distribution center to its stores (2 PPT—-6
3 V When to Use Distribution Centers ‡ Unpredictable merchandise sales ± wide
fluctuations in demand ‡ Frequent replenishment required ± high number of units sold
per day ‡ Items shipped to store in less than full case quantities ‡ Many retail outlets
that are not concentrated in one area PPT—-7 When to Use Direct Store Delivery ‡
Retailer has only a few outlets ‡ Many retail outlets are concentrated in metro areas
yielding increased efficiency of direct store delivery ‡ Important to get merchandise in
store quickly ‡Fashion - first to have latest video game ‡Merchandise perishable -
produce PPT—-8 Activities Performed by Distribution Center ‡ Managing inbound
transportation ‡ Receiving and checking merchandise ‡ Storing or cross docking
merchandise ‡ Preparing merchandise for the sales floor ± Ticketing and marking ±
Putting on hangers ‡ Shipping merchandise to stores ‡ Managing outbound
transportation PPT—-9
 V Crossdocking Merchandise flows directly from the vendor¶s trucks through the
retailer¶s distribution center and is loaded on the trucks going to the retailer¶s stores
without being stored in the distribution center PPT—-— Logistics Strategy Pull Push
Merchandise shipped Merchandise shipped to to stores based on the stores based on
sales and inventory forecasted sales rate levels in the stores PPT—-—— Quick
Response Delivery System QR delivery systems are inventory management systems
designed to reduce the retailer¶s lead time for receiving merchandise, thereby
lowering inventory, improving customer service levels, and reducing logistics
expenses PPT—-—2
5 V Benefits of QR Systems Reduces lead time Increases product availability and lowers
inventory investment Reduces logistics expenses PPT—-—3 Outsourcing Supply
Chain Management Functions Transportation Warehousing Control Freight
Forwarders vs Cost Integrated Third Part Logistics Services PPT—-— Third-Party
Logistics Companies These firms facilitate the movement of merchandise from
manufacturer to retailer, but are independently owned ‡ Transportation ‡
Warehousing ‡ Freight forwarders ‡ Integrated third-party logistics services PPT—-—5