Retail Supply Chain

Management
Presented By:
Ashish Aggrawal (ID : 2010H149257P)
Govind Garg (ID : 2010H149242P)
Jigyasu Bhatnagar(ID : 2010H149243P)
  Singh (ID : 2010H149238P)
L. Suraj
Nitesh Shah (ID : 2010H149233P)
Sumit Raj (ID : 2010H149236P)

(Course : Supply Chain Management)

 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
o Merchandising Budgeting
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 Introduction
Supply Chain Management is primarily concerned with the efficient
integration of suppliers, factories, warehouses and stores so that
merchandise is produced and distributed in the right quantities, to the
right locations and at the right time, and so as to minimize total system
cost subject to satisfying service requirements.

 Types of Supply Chain

 Wholesale/Manufacturing Supply chain

 Retail Supply Chain (e.g. WalMart)

 Innovation Strategies(CRP, FRM)

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 Difference between Manufacturing & Retail
SC
Manufacturing
SC Retail SC

• Warehousing
• Production • • Category Management
Transport
• In Process Quality • • Assortment
Sourcing
• Plant Maintenance • • Space Management
Quality Check
• WIP Inventory • • Private Label
Import Document
• • Store Clustering
Customer Service
• • Multi Channel
Inventory
Management

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

• Store Design RETAIL Supply Chain

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

Assortment Price Product Logistics

Category Merchandise Manage- Manage- Design / Replenish Manage- Customer
Management Management ment ment Source ment ment Service

Design Final Reverse

Category Merchandise Assortment Promote Private Labels Allocation Transport Logistics
Planning

Planning Forecasting Plan Planning / Packaging Plan for Store Planning Planning
Manage Loyalty
Category Role Merchandise Store Planning Manufacture/ Replenish Planning for Program
Definition Budgeting Clustering Markdowns Outsourcing ment Warehouses Planning
Manage
Category Planning Direct
Measures And Size and Pack Usage of Trade Vendor Deliveries Inventory
Strategies Planning Fund Selection from Supplier Planning Return Policy
Space Plan, Plan for Manage
Category Planogram Promotion Global CRP/VMI/CPF LSP / 3PL Customer
Tactics Design Optimization Sourcing R Selection Services

Place direct Create

Open to buy Merchandise Promotional Supplier Replenishmen Warehouse Order
Control Allocation execution orders t Orders Management Management
Execution

Price Manage Loyalty

Plano gram Execution and supplier Transport Program
execution Updates Performance Management Execution
Merchandise Inventory
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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
 

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 Category Management
 A retailer supplier process of managing categories as
strategic business units, producing enhanced results by
focusing on delivering customer value
 3 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
 Eight critical business processes

Category Definition

Category Role

Category Assessment
 C
A
T
E Category Balanced
G
O Scorecard
R
Y
R
E Category Strategies
V
I
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Category Tactics
1. Category Definition
 A distinct, manageable group of products/services that the
customer perceives to be interrelated and/or substitutable in
meeting customer need
 Guidelines for defining a category:
i. A category is something the definition of which is
commonly understood by the supplier and the retailer.
ii. A category definition is based on how the customer buys
and not on how the retailer thinks.
iii. Supplier’s expertise and consumer knowledge generally
play a key role in developing the definition and structure of
a category.
iv. There is no definition of category – it may be defined
narrowly or very broadly.
v. Each product should
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 Defining 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

 Problems of defining a Category Too Narrowly or Too

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2. Category Role
 Assigns the role of each category in the retailer’s overall
portfolio.
 Done for building focus in terms of resource allocation for both
the retailer as well as the supplier, for a particular category.
 Decides the most important categories for the retailer.
 Also important for suppliers.

 Four category roles:-

i. Destination category
ii. Preferred category
iii. Occasional category
iv. Convenience category

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 Category Role % of retailer’s Retailer’s positioning
category
Destination Category 5–7% Retailer of choice, provide superior value,
help retailer to gain market share and
turnover.
Preferred category 50 – 55 % Preferred source, provide retailer
reasonable 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.

 Assignment of a particular category to a role is done by cross

category quantitative and qualitative data analysis.
 Based on four inputs :-
i. How important is the category to the retailer’s target customer?
ii. How important is the category to the retailer in terms of profit?
iii. How important is the category to the retailer’s competitors?
iv. How is the category’s outlook and future prospects within the retailer’s
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 3. Category Assessment
 Understand the current performance of the category.
 Areas of opportunity for improved turnover, profit and ROI.
 Supplier – provide data on category share and consumer data
like buyer profile, purchase behavior etc..
 Retailer – provide information on the category’s contribution,
profit etc.
4. Category Performance Measure
 Define the targets and set the target values in quantitative term.
 Should be consistent with the category’s role.
 Right balance between external(eg. customer service) and
internal measures(eg. inventory turnover)
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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:
 Decrease number of SKUs
 Increase number of SKUs
 Swap
 Uniform vs. tailored
 Pricing:
 Decrease
 Increase
 Uniform vs. tailored
 Private label
 CATEGORY TACTICS
 Promotion:
 Products
 Frequency
 Location of promotion
 Tool for promotion
 Self presentation
 Location within store
 Space allocation
 Uniform 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
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 Merchandise Types
StapleMerchandise
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:

Type of store to visit: Hypermarket

Right Department: Apparel

Section: Men’s wear section

Category: Formal

Options for colors, size, style and price

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Customer selects
Nitesh, Sumit,the particular
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 Merchandise Forecasting
Qualitative
1. Time Series Models
Quantitative
2. Causal Models
 
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 Forecasting: On the basis of sales figures of similar
products.

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 Forecasting Approach
Level of
Forecasting
Historical
Sales data
need to be
cleaned
Select the
right
forecasting
tool
Forecast
promotions
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 Merchandise Budgeting
What will be the What method to use for
anticipated sales for the calculating EOM and
department/division? BOM inventory?

How much stock on

hand will be needed
to achieve sales
plan?

What additional What gross margin should What is the optimum

purchases to be made in the store contribute to reduction percentage
the season? overall profitability of the to dispose stock in
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 Open to Buy Control
Open Purchase Actual
Planned Sales Sales Actual Stock
Orders/
Contracts
Actual
Planned BOM Adjustments
and EOM
inventory
Actual Shrinkage
Planned
Reductions
Actual Goods
Receipt
Planned P.O.

Planned Margin OTB OTB OTB Forecast Stock/Sales

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

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 Thanks,
Any Query ?

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