Page 205 - DMGT551_RETAIL_BUSINESS_ENVIRONMENT

Retail Business Environment

Notes have greater visibility across their owner enterprise and respective value chain, gain the agility
necessary to improve the Product Lifecycle Management (PLM) process, improve promotional
planning, minimize unnecessary buildups of inventory, increase revenue predictability and
execute customer service expectations. The S&OP activity enables information systems to connect
the value chain participants around key demand information, such as customer forecasts, and
around key supply information, such as supplier inventories and capacities. Another recent
example of collaboration is seen in the increased focus around RFID (Radio Frequency
Identification). Value chain leaders are looking at functional areas to better integrate the supply
chains of their partners with themselves. RFID can serve as a means to quickly and efficiently
ensure that critical product information is communicated as products flow through the value
chain and ultimately to the consumer. Recent estimates show that major retailers can lose 3-4
percent of revenue per year due to shelf stock outs, while inventory is available somewhere in
the value chain. Better coordination of store-level product availability would have a significant
impact to the entire value chain for these retailers. Additionally, better visibility of retailer
product availability can reduce overall logistics costs as products move through the value chain
to fulfill safe stock levels and ultimately consumer demand.

Self Assessment

Fill in the blanks:
13. The ultimate goal of ……………………….is to increase visibility throughout the value
chain in an effort to make better management decisions and to ultimately decrease value
chain costs.
14. The right Supply Chain ………………….is critical to managing the changes brought about
by rapid globalization.

15. VMI stands for ………………………..
10.7 Summary

The process of strategically managing the movement and storage of materials, parts and finished
goods inventory from supplier to producer to the end customer is called logistics management.
Logistics management involves physical supply or material handling and physical distribution.
Physical supply covers the material handling and management process. Physical distribution of
goods and services is an important element of distribution strategy of any firm. Logistics
management plays a strategic role in the form of collecting customer information, arranging
transportation and warehousing and shifting mass production processes to batch production
processes. Logistics can be classified as supplier logistics, corporate logistics and customer
logistics. Managers can set up real time production systems by using Market Linkage Production
Systems (MLPS). This system consists of replenishment production system and purchase support
system.

10.8 Keywords

Logistics: The process of strategically managing the movement and storage of materials, parts
and finished inventory from supplier through the firm and on to customers.
Physical Distribution: It refers to the movement of goods from producers to customers
encompassing order processing, inventory management, warehousing and transportation.

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