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Retail Business Environment

Notes Improved product lifecycle management
Improved strategic sourcing and procurement Suppliers can differentiate themselves in a
number of ways as well as provide value, additional services and capabilities to their
customers.
The differentiating factors include:

Vendor Managed Inventory (VMI)
RFID
Labeling and packaging
Drop shipping

Collaboration Companies should not only look to their supply chain to drive cost
improvement, but should increase capabilities as a means for staying competitive.
Streamlining processes with better design, better collaboration across networks and new
services will help your company stay competitive and strengthen relationships with your
customers.

Trend 4 – Outsourcing: As many companies step back and examine their core competencies,
some realize that outsourcing parts or all of a supply chain can be advantageous. With market-
place improvements around (1) information media and systems (2) cost and quality of global
manufacturing and distribution, and (3) product design capabilities, companies are gaining
additional synergies by outsourcing all or parts of their supply chain. There can be significant
economic benefits from outsourcing all or part of your supply chain operation, but without the
right systems, processes, or organizational management structure the risk to success can increase
to frightening levels. In an outsource-heavy environment companies need to put more controls
and systems in place to compensate for the fact that their supply chain capabilities no longer
reside onsite. In an outsourced supply chain environment the need for information, controls and
excellence from the “information worker” becomes a high priority. The optimally outsourced
supply chain, either in its entirety or just a component, relies heavily on:
(1) Superior supply chain network design

(2) Inclusion of that outsource partner in the information chain
(3) Establishment of control mechanisms to proactively monitor the various components of
the supply chain, and

(4) Information systems to connect and coordinate the supply chain as seamlessly as possible.
A failure to excel at any one of these components can result in breakdowns affecting the entire
supply chain.

Figure 10.4: Supply Chain

Level of
Supply
Chain
Outsourcing

Investment in Supply Chain Systems Processes

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