SUPPLY CHAIN MANAGEMENT IN RETAILING

 Supply Chain Management (SCM) is an end-to-end process in merchandise planning and movement, from planning the inventory to the point of reaching the merchandise to the customers.  SCM is and integrated process where every activity is interlinked with the system for information throughout the cycle time of each step of the process so that timely action can be taken.

 Integrated Supply Chain:

                                        The end – to end integration of all supply chain elements and functions are achieved by applying interlinked packages for perfect information management.  The integrated supply chain starts from the design stage at the vendor level to the time when there is consumer response at the retail stage.  The benefits of having an integrated supply chain are many, including achieving the best delivery  performance, reduction in inventory, faster fulfillment of cycle time, accuracy in forecasts, lower supply chain costs, improvement in overall productivity, improvement in capacity utilization, and so on.

 VENDOR MANAGEMENT:

                                              Efficient Vendor Management involves selecting  the right vendors capable of giving the right quality of merchandise and meeting delivery deadlines.  Besides , they should be able to deliver the right quantities as well, so that the retailer can get the right  ‘hit ratio’.  The right hit ratio measures the gap between delivery and purchase orders and helps eliminate backlog in deliveries.  In a chain store scenario, vendors directly delivering to stores are an important element in attaining good supply chain efficiency.  The vendors directly manage inventories in a few retail organizations.  Vendor Managed Inventory (VMI) is ideal for retail organizations as it totally eliminates inventory-carrying costs.  Here, vendors manage the inventory at every store, monitoring the flow of information and ensuring just-in-time deliveries.  The vendors are able to take slow-selling and non-moving merchandise, thus reducing the scope for mark-down losses for the store.

 ELECTRONIC DATA INTERCHANGE (EDI):

                                                                             It helps in establishing an efficient information flow on stock movement, and the vendors get to know of sales and inventories instantaneously.  Reorder supplies are immediately planned and executed by the vendors following acceptable norms.  This process eliminates the time taken to exchange documents for placing orders, thus achieving just-in-time inventory management.  EDI is done through web-enabled servers or with the help of the organization’s Enterprise Resource Planning package that interacts with the vendor’s systems. 

WAREHOUSE MANAGEMENT:

                                            The retail warehouse or the distribution centre performs the functions of receiving the ordered stocks; checking for the right quality, quantity and price; temporary storing and docking; tagging the merchandise with both the MRP and security tags; preparing and readying the merchandise; transporting the merchandise; receiving goods returned from retail stores,  if any; and sending returned merchandise to vendors back as returns or for refinishing. 

GOODS RECEIVED NOTE (GRN):

                                                It is prepared when the merchandise received  at the warehouse from suppliers /vendors is checked and matched with the relevant purchase order(po) after certifying all the elements of quality, quantity, etc.  The GRN is then automatically recognized  by the system after authorization for payment to the vendor by the accounts department.  The merchandise is then docked and tagged with bar codes and price tags if applicable.  If the bar coding for MRP has already been done by the vendor, it saves a great deal of time for the retail organization.  Then , only the security tagging needs to be done at the warehouse. 

INTER-TRANSFER NOTE (ITN):

                                                   This is made when the prepared and readied merchandise is supplied to the retail stores.  The reverse ITN (ITN out) is prepared when goods are sent back to the warehouse by the retail store.  Goods that are returned to the warehouse are then sent back to the suppliers and vendors.  The system recognizes the same and raises a debit note to the vendors. 

TRANSPORTATION:

                                     It is done according to timely delivery schedules so that replenishments are delivered as per the plan.  Cost efficiency and reduction in delivery time are critical success factors in transportation. 

EFFICIENT DOCKING:

                                This plan ensures the best utilization of space.  Docking also ensures that the First In First Out(FIFO) delivery plan is followed  so that ageing of merchandise  in the warehouse is kept to the minimum. 

MATERIAL HANDLING EQUIPMENT:

                                                               Material Handling Equipment in the warehouse should be tailored for specific varieties  of merchandise.  At a micro level of handling , most of the time garments are delivered by hangers and sometimes by the browser  itself in a ready-to –sell state.

About Author

WILJOY.P.W

P.W.Wiljoy
Lecturer
Karpagam Institute of Technology