Page 202 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Unit 10: Logistics and Distribution

The demand-driven approach can help a company create a more customer-focused mindset, Notes
without sacrificing operational efficiency. Ultimately a demand-focused approach to planning
can significantly improve demand planning and management efforts and help overall costs and
customer service efforts.

Notes Advanced demand planning systems and proper strategies can also help uncover
data and identify trends buried in a company’s information systems.

Trend 2 – Globalization: The business landscape is rapidly becoming more global. Largely due
to improvements in communications, globalization is dramatically impacting the way business
is managed and transacted, even on the most local levels. No area of a business is affected more
by the trend to a global business environment than the supply chain. Manufacturing, distribution,
sourcing of materials, invoicing and returns have all been significantly impacted by the increased
integration of a global customer and supplier base, and many companies find that existing
processes and technology are not flexible enough for this new business environment. For example,
historically, many companies have brought in container shipments from Asia Pacific through
the ports in southern California. As the volume of container shipments has increased, all of
these ports have experienced capacity issues relating to customs clearance and transshipping. As
a result, some companies are contemplating rerouting these inbound shipments to alternate
ports. This change may seem subtle, but a shift in logistics of this magnitude has far-reaching
effects on the overall cost and efficiency of the supply chain network. Dynamically repositioning
the point of entry for inbound container shipments can have a positive impact on customs
clearance times and access to increased transportation capacity, however there can be a negative
impact as well. Better understanding the total landed cost and service implications of alternate
ports of entry can help improve supply chain costs and performance.

The right Supply Chain Design is critical to managing the changes brought about by rapid
globalization. A well thought-out Supply Chain Network Design can optimize the network and
the flow of materials through the network. In doing so, network design captures the costs of the
supply chain with a “total landed cost” perspective, and applies advanced mathematical
technology to determine optimal answers to both strategic and tactical questions.
Trend 3 – Increased Competition and Price Pressures: Historically, price, product features and
brand recognition were enough to differentiate many products in the marketplace. With the
continued commoditization of many products, companies need better ways to distinguish
themselves. In one case, a large global consumer goods manufacturer saw prices around some of
its commodity products drop as much as 60-80 percent. Product innovation and brand equity no
longer were allowing them to command a higher price in the market. In order to continue to
compete with that commoditized product they made significant cost improvements with supply
chain redesign and technology.

Did u know? Companies are looking to their supply chains in two ways to help offset this
trend. First, they are looking at ways to reduce cost and are creating a more efficient value
chain to remain cost competitive. Second, companies are looking at ways they can provide
value-added services to meet the demands of more sophisticated customers.

Cost improvements around inventory management, logistics operations, material management
and manufacturing costs, including raw material and component acquisition can be found with:
Sales and operations planning

Transportation/distribution management

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