Information Systems and Supply Chain Management

Supply chain management:
efficient and effective integration of suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless value chain
_______ is produced and distributed in the right quantities: to the right locations; and at the right time
merchandise
_______ of system wide costs, while satisfying the service levels their customers require.
minimization
Why important?
strategic advantage; improved product availability; higher return on investment
Why?
opportunity to increase sales my making the right merchandise is in the right place at the right time; fewer stock outs; greater assortment with less inventory; opp. to reduce costs with transporation and inventory holding; Improved ROI
Improved Product Availability:
benefits translate into greater sales, higher inventory turnover, lower markdowns
Efficient supply chain management leads to:
increased sales from more attractive assortments in stock; improved net profit margins from increased gross margin and lowered expenses; lowered inventory from less backup inventory in stock and higher asset (inventory) turnover
Data Warehousing:
coordinated and periodic copying from various sources, both inside and outside the enterprise into an environment ready for analytical and informational processing; Ex. Walmart
Electronic Data Interchange (EDI):
computer to computer exchange of business documents between retailers and vendors;merchandise sales, Inventory on Hand, orders, adv. shipping, receipt of merchandise, invoices of payment
EDI Security def:
implications of security failures (loss of data, loss of public confidence), but retailres have security objectives:
authentication:
system assures person on other send of session is who it claims to be
authorization:
that person has permission to carry out request
integrity:
info arriving is the same that was sent
Physical flow of merchandise: Logistics
aspect of supply chain that refers to planning, implementation , and control of the efficient flow and storage of goods, services, and related information from the point of origin to the point of consumption to meet customer’s requirements
Activities by Distribution center:
managing transportation, recieving and checking merchandise, get merch. floor ready, prepare to ship
Advantages using distribution center:
accurate sale forecasts, retailers carry less merch. in store, easier to avoid running out of stock; retail store space is expensive than space at the distribution center
Outsourcing logistics:
only if those functions can be performed better or less expensively by third party logistics companies; transportation, warehousing, freight forwarders, integrated third party logistic services
Push supply chain:
merchandise is allocated to stores on the basis of forecasted demand; less costly; less sophisicated information needed system to support it; efficient for merchandise that has steady, predictable demand
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; efficient; hard to forecast
Reverse logistics:
process of moving returned goods from their customer destination for the purpose of capturing value or proper disposal; retailers recover loss through on-line auctions; challenging b/c items may be damaged or require special handling; transportation costs are high
Drop shipping:
consumer direct fulfillment; system in which retailers receive orders from customers and relay these orders to vendors and then the vendors ship the merch. ordered directly to the customers
bullwhip effect:
the built up inventory in an uncoordinated channel where retailers and vendors do not coordinate their supply chain activities
Causes of bullwhip effect:
delays in transmitting orders and recieving merchandise; overreaacting shortages; ordering in batches rather than generating a number of small orders
Four approaches for coordinating supply chain activities to reduce the level of inventory in the chain and reduce the number of stock-outs:
use EDI, share info. to reduce need for backup inventory, improve sales forecasts and production efficiency; vendor manage inventory (VMI); collaborative planning, forecasting and replacement (CPFR)
(ECR) Efficient Consumer Response- Food Retailing
trade promotions => forward buying => extreme uneven production; motivation for packaged goods, motivation for supermarkets;
Quick Response (QR) Apparel:
Inherently unpredictable demand,old solution – overbuying and markdown; AFTER JIT provide initial assorment, forecast sales, monitor early sales, make final assortment
Vendor Managed Inventory (VMI)
manufacturer access to POS information; replenishment automatically triggered; enables demand based view of replenishment and production planning- reduce bull whip effect
(CPFR) Collaborative Planning, Forecasting, and Replenishment:
sharing of forecast and related business information and collaborative planning between retailers and vendors to improve supply chain efficiency and product replenishment; sharing business info.
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 with tracking, reduces out of stock conditions
Disadvantages of RFID:
expensive, generates more data than what can be currently processed; privacy invasion, only makes sense to put tags on pallets, cartons, expensive merchandise or high theft items