The new retail supply chain deals with the use of emerging technology for efficient management of supply chain management so that movement of products into the retail outlet occur in concurrence with the sales of products, ensuring proper availability and movement from the warehouse to the shop floor. The new retail supply chain 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, and it is this fear that 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 the software to manage the flow of goods. Technology by itself does not provide a solution and it is important that retail solution providers know exactly what the needs of the retail outlets are and the 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 activity in the stores. 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 information from the stores into execution plans for replenishment at the distribution centers. This is the new demand driven supply plan strategy.
Demand-driven supply plan strategy makes the customer the focus of activity of not just the manufacturer, but for the retail outlet too, 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 components of the integrated supply system 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 the 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. In addition, it becomes possible to match the labor supply to the demand. The net result of using a demand-driven supply plan is that there it becomes possible to optimize the inventory levels at the retail outlet, optimize labor, inventory, warehouse and transportation resources at the warehouse.
Read More: THE SMARTER SUPPLY CHAIN OF THE FUTURE
This article provides an understanding of the issues in supply chain management at the retail outlet and how the use of demand driven supply strategy along with the requisite technological tools provides a means to address these issues efficiently.
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