Retail Mgmt Ch 10

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  1. Supply chain management
    Efficient and effective integration of suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless value chain
  2. Why is efficient supply chain management so important to retailers?
    • Strategic advantage
    • Improved product availability
    • Higher return on investment
  3. Strategic advantage of supply chain management
    • Opportunity to increase sales by making RIGHT merch in RIGHT place at RIGHT time = fewer stock-outs, greater assortment with less inventory
    • Opportunity to reduce costs in transportation and inventory holding
    • Improved ROI
  4. Zara's strategic advantage
    • Handheld devices = timely share of information from store managers to corporate office
    • Shorter cycle time from design to production to delivery
    • Shorter lead times
    • No discounts necessary
  5. Wal-Mart's strategic advantage
    • Efficient information and supply chain management systems
    • Made substantial investment in developing their systems, which are always improving
    • Coordinated effort of employees throughout the company
  6. Benefits of efficient supply chain management to consumers
    • Improved product availability
    • Reduced stock-outs
    • Assortments tailored to specific stores
    • These benefits = greater sales, lower costs, higher turnover, lower markdowns
  7. Information Flows
    • Flow 1: UPC code scan
    • Flow 2: Info is transmitted from POS to buyer/planner
    • Flow 3: Sales transaction data sent directly from store to vendor
    • Flow 4: Buyer/planner communicates with vendor when inventory drops to specified level in the distribution center
    • Flow 5: Buyer/planner notifies distribution center about incoming orders
    • Flow 6: Store managers inform distribution center about receipt of order
    • Flow 7: Manufacturer sends advanced shipping notice to distribution center once product is shipped
  8. Data warehousing
    • The coordinated and periodic copying of data from various sources, both inside and outside the enterprise, into an environment ready for analytiacl and informational processing
    • *Wal-Mart makes good use of this
  9. Electronic Data Interchange (EDI)
    • The computer-to-computer exchange of business documents between retailers and vendors
    • Includes merchandise sales, inventory on hand, orders, advanced shipping notices, receipt of merchandise, and invoices for payment
  10. EDI Security
    • Authentication: system assures person on other end of session is who he claims to be
    • Authorization: that person has permission to carry out request
    • Integrity: info arriving in the same way it was sent
  11. Logistics
    • The physical flow of merchandise
    • The aspect of supply chain that refers to the planning, implementation, and control of the efficient flow and storage of goods, services, and related info from the point of origin to the point of consumption to meet customers' requirements
  12. Activities performed by distribution center
    • Managing inbound transportation
    • Receiving and checking merchandise
    • Storing or cross-docking merchandise
    • Getting merchandise floor-ready (tagged, hung)
    • Preparing to ship merchandise to a store
    • Managing outbound transportation
  13. Advantages of using a distribution center
    • More accurate sales forecasts - retailers combine forecasts for many stores serviced by one distributer
    • Enables retailers to carry less merchandise in the store
    • Easier to avoid running out of stock
    • Retail store space is more expensive than space at the distribution center
  14. Push supply chain
    • Merchandise is allocated to stores on the basis of forecasted demand
    • Less costly
    • Less sophisticated info system needed
    • Efficient for merchandise with steady, predictable demand
  15. Pull supply chain
    • Orders for merchandise are generated at the store level on the basis of POS sales data
    • Less likely to be overstocked or out of stock
    • Increases inventory turnover
    • Responsive to changes in customer demand
    • Efficient when demand is uncertain or hard to forecast
  16. Advantages of direct store delivery
    • Gets merchandise faster - good for perishable goods
    • Helps the retailer's image of being the first to sell the latest product
    • Some vendors provide direct store delivery for retailers to ensure that their products are on the store's shelves and fresh
  17. Reverse logistics
    • The process of moving returned goods from their customer destination for the purpose of capturing value or proper disposal
    • Can be challenging, as items may be damaged, and transportation costs are high
    • Ex: Online auctions
  18. Drop-shipping
    • Aka "consumer direct fulfillment"
    • A system in which retailres receive orders from customers which they then relay to vendors, who ship the merchandise ordered directly to the customer
    • Often used by companies that sell bulky products as well as catalog and mail-order companies
  19. Collaboration between retailers and vendors in SCM: four approaches (in order of the level of collaboration)
    • 1) Use EDI
    • 2) Share info to reduce need for backup inventory, improve sales forecasts and production efficiency
    • 3) Vendor manage inventory (VMI)
    • 4) Collaborative planning, forecasting, and replacement (CPFR)
  20. Vendor Managed Inventory (VMI)
    • Manufacturer access to POS information
    • Replenishment automatically triggered
    • Enables demand-based view of replenishment and production planning
  21. Collaborative Planning, Forecasting, and Replenishment (CPFR)
    • The sharing of forecast information and collaborative planning between retailers and vendors to improve supply chain efficiency and product replenishment
    • Most advanced form of retailer/vendor collaboration
    • Involves sharing proprietary info such as business strategies, new product developments, etc.
  22. Advantages of CPFR
    • Common goals
    • A single demand forecast developed collaboratively
    • A single, shared data source
    • Improved inventory management across supply chain
    • Optimized replenishment strategies with joint ownership
    • Simplicity of process creates optimal framework for success
  23. Radio Frequency Identification (RFID)
    • Allows an object or person to be identified at a distance using radio waves
    • Reduces warehouse and distribution labor costs
    • Reduces point of sale labor costs
    • Inventory savings by reducing inventory errors
    • Reduces theft (products can be tracked)
    • Reduces out of stock conditions
  24. Problems with adopting RFID technology
    • Expensive (low ROI)
    • Still only makes sense to upt on expensive or high-theft items
    • Generates more data than what can be currently processed
    • Consumers worry about privacy invasion
Card Set
Retail Mgmt Ch 10
FIT Retail Management Final
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