RETAIL SUPPLY CHAIN MANAGEMENT

Vinay Kalakbandi

http://www.vkteaching.weebly.com/
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Session 1 – 2019.09.26

INTRODUCTION

What is retail supply chain?

In retail supply chain, availability is the key as when people want something, they want it now.
However, we don’t know what they want so we have to do a forecast. Retailers have to figure
out how to be profitable when offering the lower price. In retail, responsiveness is important,
but the main problem is the cost: retailers can’t be efficient. In order to be profitable, retailers
have to be efficient but if they are efficient, they can’t be responsive. That’s the challenge for
retailers.

Retailers have to face different problems as:

- People’s localization
- People’s behavior

For example, Walmart has to deal with 70 million SKU (Stock Keeping Unit), so they have to
find the right assortment and not focus on one product only.

Another challenge for retailers is to know how to face slow down. They may give discount to
sell their stock left.

What is the difference between supply chain and logistic?

Supply chain is a network of organizations that are having linkages, both upstream and
downstream in different processes and activities that produce and deliver value in the form
of products and services in the hands of ultimate consumer.

The key challenges of a supply chain manager is to integrate and coordinate the flow of
materials from multitude of suppliers, manage the distribution of finished product by way of
multitude of intermediaries, satisfy the customer by establishing linkages of people at all
levels in the organization directly or indirectly to the market place.

What is the reverse logistic?

It corresponds to the return of faulty/ damaged goods. We also have the green logistic that
corresponds to the fact to recycle products. We bring products back to the system.

What are the challenges of supply chain management?

 RETAIL SUPPLY CHAIN MANAGEMENT
Vinay Kalakbandi

- Product category management as more SKUs implies more problems: SKU explosion;
substitutivity, shelf space allocation
- Managing product lifestyles: perishability, obsolescence, seasonality
- Promotional planning: dynamic adjustments are tough, responsive supply chains are
not efficient
- External factors beyond control: infrastructural issues, IT systems and their integration
- More customer involvement: linking the customer to the supply chain planning
process, complicated customer needs
- Economics vulnerability as retail consumption drives economy: retail sector is directly
linked to development of the economy, wafer thin margins

Session 2 – 2019.09.27

What is the relationship between Walmart et Wall Street?

In order to maximize the share value (stock) in Wall Street, we have to minimize the inventory
(stock of Walmart).

Cf. Which retailer would you value the most?

Retailer C – sales are increasing but inventory is constant. We can suppose that might be a
forecast.
Inventory turnover ratio = gross sales buy average inventory

Inventory turns is when retailers sell their products out and order stocks again. The higher,
the better. But in short term, it can be good for a company to reduce its inventory.

What are the factors that impact the inventory turns?

Cf. How do you value a retailer when?

A good forecast is based on the past data. Investment helps to do better forecast (by managing
the warehouse or hiring a better management team for example).

If inventory is a part of the cash flow, what is its impact? Inventory is an operation metrics
which has an impact on the share value. Keeping a higher inventory means that sales will
increase. Demands only happen when a product is available.

Statement: Keeping higher inventory results in higher sales in retails.

Inventory turns = Cost of goods sold/ average inventory

 RETAIL SUPPLY CHAIN MANAGEMENT
Vinay Kalakbandi
Walmart / Amazon

Inventory turns can vary substantially from one organization to the other. It depends on a
variety of factors as:

- The gross margin: increase in gross margin warrants higher service level thus
decreasing inventory turns. Anything leads to a price increase results in a higher
turnover (product variety, product lifestyle).
- The capital intensity is the amount of non-inventory investment that a company makes.
A higher capital intensity increases inventory turnover.
- The sales surprise: If we have a sales surprise, demands will be higher so we may
increase our sales.

Amazon is more valued than Walmart even if they sell less (growth potential)

Session 3 – 2019.10.17

Domino’s Pizza Case

Franchise model: master franchise for other countries than USA and more than 9000 stores in
USA (supply by distribution center). Those franchises give loyalties to Dominos.

For USA:
Supplier -> Distribution center -> Franchises -> Customers
Everyone wants to maximize their profit, so it creates conflict of interest.

For International:
Dominos-> Master franchise -> Store -> Customer

What are the challenges in term of supply for Dominos?

- Stockage
- Uncertainty

Cf. https://economictimes.indiatimes.com/news/economy/agriculture/a-problem-of-plenty-
indias-onion-mess/articleshow/71546979.cms

Challenges for stores manager

- Innovation
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Vinay Kalakbandi

Session 4 – 2019.10.18

Yummy77 Case

Online grocery – Why do people sell things online?

Online Grocery
- More customers (niche market, no - Ordering lot size
operating time) - Warehouse with smaller retail shops
- Reduce cost (warehouse rent, no in different area
bricks and motors stores, no - Thin profit margins
intermediaries) - Perishability
- More variety - Low value density
- Better demand analytics (analyze - Labor intensive
customers’ clicks and do a forecast)
- Centralize warehouse

https://abcsupplychain.com/stock-de-securite/

Calcul stock de sécurité avec la loi normale (?)

Session 5 – 2019.10.31

6 models of online grocery

- Asset heavy/ Own your own inventory -> centralized & decentralized
- Zero asset player -> someone who buys upon demand
- Online & offline coexistence -> offline centrie & online centrie
- Product specific (Licious – online fresh meat grocery/ milk basket/ Supr Daily/ Cloud
Kitchen)

ASSIGNEMENT: create an online grocery “AMAMAS”

Farmers for fruits & vegetables – delivery within 12 hours, pick up products directly from
farmers who are based outside of the city
Retailers – delivery within 4 hours, pick up products in shops directly via scooters

What are operational costs?

- Scooters rental
- Fuels
- Bills
- Salary
- CRM/ GPS
 RETAIL SUPPLY CHAIN MANAGEMENT
Vinay Kalakbandi
Managerial thrust areas (“what keep the manager awake at night” = le problème le plus
important à résoudre pour le manager)?
- Fast delivery/ keep products fresh
- Networking
- Feedbacks
- Complains/ returns

Supply chain design diagram

Session 6 – 2019.11.01

Presentations of the 6 models

Session 7 – 2019.11.07

Mid-term exam 45min

Section matching
Section with justification
MCQ with justification
Short answer question

What is fast fashion?

Fast fashion can be defined as cheap, trendy clothing, that samples ideas from the catwalk or
celebrity culture and turns them into garments in high street stores at breakneck speed.

Retailers as Inditex try to change their range every 2 weeks for example.
Fast fashion company: Zara, Mango, H&M, Uniqlo, Jack & Jones etc.

Zara Case

How is Zara able to change its range so frequently to respond to the demand?

 Decentralized decision making: what to keep in stock and what to not to keep in stock?
 IT infra-unstructured
 No publicity?
 Upscale location
 Small batches
 Garment to be worn 10 times

Cf. Takt time

 RETAIL SUPPLY CHAIN MANAGEMENT
Vinay Kalakbandi
How much tech is tech enough?

 Wireless networks
 Inventory lookup (same store & other store)
 Ordering from POS

Session 8 – 2019.11.08

Technologies which transform the industry 4.0

 IOT (Internet of things) - is a system of interrelated computing devices, mechanical and

digital machines, objects, animals or people that are provided with unique identifiers
(UIDs) and the ability to transfer data over a network without requiring human-to-
human or human-to-computer interaction.

 IIOT (Industrial Internet of things) - refers to the extension and use of the internet of
things (IoT) in industrial sectors and applications. ... The IIoT encompasses industrial
applications, including robotics, medical devices, and software-defined production
processes.

 Robotics

 Big data

 AR (Augmented reality) / VR

 Artificial intelligence

 Deep learning

 Cloud computing

 NLP (Natural language processing) - is a subfield of linguistics, computer science,

information engineering, and artificial intelligence concerned with the interactions
between computers and human (natural) languages, in particular how to program
computers to process and analyze large amounts of natural language data.

 Block chain

 RFID (Radio-frequency identification) - uses electromagnetic fields to automatically

identify and track tags attached to objects.
 RETAIL SUPPLY CHAIN MANAGEMENT
Vinay Kalakbandi
ZARA’s supply chain

https://www.slideshare.net/PraneethPrabodhaDiss/supply-chain-of-zara-76817022

Distribution centers are very high-tech

Cf. Youtube – Zara’s organization and problems

 RETAIL SUPPLY CHAIN MANAGEMENT
Vinay Kalakbandi

Session 9 – 2019.11.15

Retail execution

It’s the link between people and technology.

Cf. Planogram compliance

Planogram compliance is used to describe the compliance of in-store execution,

merchandising, shelving, or displays with a planogram. A planogram is a diagram that directs
how shelvings and store displays should look and how products should be placed.

Session 10 – 2019.11.21

RFID at the Metro Group Case

Exhibit 7. Problem in the case

Can we solve it using these following: Pallet – Case – Product?

Products in backrooms but not on the selling area: not be able to place the entire stock on the
shelves so, have to put products on the shelves and bring the case back in the stock area.
Products can be visible by product type, batch number

Products in the wrong place in the selling area/ planogram noncompliance: we can track the
product

Promotion noncompliance: cf. p6 planogram and promotion compliance work together

Pallet Case Product

Products in backrooms but not on the selling area X ok ok
Products in the wrong place in the selling area X X ok
Promotion noncompliance X X ok
Checkout scanning problems X X X
Obsolete products not returned or removed from shelves X X ok
Merchandise receiving problems ok ok ok

How does the cost work out for the pallet? What is the cost saving?

Cf. exhibit 9 financial benefit of the pallet 15.7euros-cent/ pallet.

 RETAIL SUPPLY CHAIN MANAGEMENT
Vinay Kalakbandi

Session 11 – 2019.11.22

Retail execution

Cost driver of every store to make sure there is always availability:

- When store labor increase, this improves the replenishment, ambiance, customer
service so it increases the profitability.
- This is called the labor profitability.

Are there any way to improve labor profitability in a manufacture?

Lean manufacturing: just-in time, reduce wastage (5S), kaizen (continuous improvement of
processes of an organization through change), Kanban (visual system for managing work as it
moves through a process) …

Lean retailing
 RETAIL SUPPLY CHAIN MANAGEMENT
Vinay Kalakbandi

Assignment: choose an industry and look for their way of lean manufacturing -> Apparel/
footwear

 Make problems self-evidence

 Create pressure for resolution
 Provide tools for identifying and resolving problems
 Engage people in problem solving

https://www.cgsinc.com/blog/lean-manufacturing-garment-industry-apparel-business

pour un magasin

Kanban
Single piece flow
Control chart
Visual management
Smed - Single-Minute Exchange of Dies
5S waste reduction (sort, set, shine, standardize, sustain)
Heijunka - helps organizations meet demand while reducing while reducing wastes in
production and interpersonal processes

https://fr.slideshare.net/AmitGarg1/retail-lean-management

KERALA

28/11/2019

If you have a warehouse and you don’t have so much work, it is better to use labour work
because they are less expensive than robots and more flexible.
STORE WAREHOUSE
VISUALGreater visibility for customer Better track of inventory
ARRANGEMENT High margin in the front. Shelf space & sale use backroom Low material
mandling
Knowledge High product knowledge Low product knowledge

In a retail store the goal is to keep the customer to inside and make him walk to better sell.

We choose to take shoes product for this no ?

We will sell lots of different brands products ?

 RETAIL SUPPLY CHAIN MANAGEMENT
Vinay Kalakbandi
Session 1. – 2019.12.05

Henkel Ibérica Case

VMI: Vendor Managed Inventory is a business model where the buyer of a product provides
information to a vendor of that product and the vendor takes full responsibility for
maintaining an agreed inventory of the material, usually at the buyer's consumption location.

CRP: Continuous Replenishment Programs - In some cases the vendor keeps a track of the
customer's inventory levels and based on the real time data or forecasted data, the goods are
replenished. In other cases, the customer himself keeps in touch with the vendor and
continuously gets the replenishment.

EDLP: Everyday Low Price is a pricing strategy promising consumer a low price without the
need to wait for sale price events or comparison shopping.

CPFR: Collaborative Planning, Forecasting and Replenishment is a concept that aims to

enhance supply chain integration by supporting and assisting joint practices. CPFR seeks
cooperative management of inventory through joint visibility and replenishment of products
throughout the supply chain.

JIT: Just-in-time inventory is a strategy to increase efficiency and decrease waste by receiving
goods only as they are needed in the production process, thereby reducing inventory costs.

Sales promotion (high-low EDLP strategy

strategy)
Attract people who love Keep a price which reflects
coupons & promotion the real value of the product
The supplier can charge higher
or lower price sometimes
Sourcing Raw material no change Raw material no change
Manufacturing
Logistics
Marketing/ Sales
Post Sales

Cf. CPFR demo sheet Retailer (excel file) -> activité entre les offreurs et demandeurs
 Collaborative forecasting
 RETAIL SUPPLY CHAIN MANAGEMENT
Vinay Kalakbandi
Session – 2019.12.13

Simulation supplier/ buyer

IKEA Case

Issues: financial sustainability, environmental, social sustainability (child labor)

How to invest in CSR (social and environmental) to help financial?

 Branding

Social sustainability - Child labor in India

 First thing to do for a company is to terminate the contract with the company buuuut
they have to think about what will happen to these children after. What if they find
another work in a farm? Terminate a contract won’t stop child labor. Add landmark.
How to ensure that children have stop working?

8 questions sur les cases et choses qu’on a discuté en cours

Ecrire nos notes sur papiers