Why are competitor’s lagging behind?
• Made a substantial investment in developing its systems and has the scale economies.
• Through experience and learning, changes are always made to improve the system.
• Coordinated effort of employees and functional areas throughout the company.
Improved Product Availability
Benefits of Efficient Supply Chain Management to Customers:
• Reduced stockouts – merchandise will be available when the customer wants them
• Tailoring assortments the right merchandise is available at the right store
These benefits translate into greater sales, lower costs, higher inventory turnover, and lower markdowns for retailers
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
Same Sales Using Less Inventory
Information Flows
• When a customer purchases a toaster oven, sales associate scans UPC (universal product code) code on merchandise and customer credit card/loyalty card (Flow 1)
• Information about purchase is transmitted from POS terminal to the buyer/planner. The planner uses this information to monitor and analyze sales and decide to reorder more toaster ovens or reduce its prices if sales are below expectations (Flow 2)
• Sales transaction data are sent directly from the store to the vendor, and the vendor decides when to ship more toaster ovens to the distribution center and stores (Flow 3)
• When inventory drops to a specified level in the distribution center, buyer/planner communicates with vendor, and then places a purchase order to re-supply stores with toaster ovens (Flow 4)
• Buyer/planner notifies distribution center about incoming orders and how they are to be distributed to stores (Flow 5)
• Store managers inform distribution center about receipt of toaster ovens and coordinate deliveries (Flow 6)
• When the manufacturer ships the toaster ovens to the distribution center, it sends an advanced shipping notice to the distribution center (Flow 7)