Supply Chain Management For Retailing PDF
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SSuuppppllyy CChhaaiinn MMaannaaggeemmeenntt ffoorr RReettaaiilliinngg About the Author Rajesh Ray is an Engineer and an M.B.A., and currently leads the supply chain management product area in IBM India. Prior to joining IBM, Rajesh had spent six years with SAP Consulting and a year with HP Consulting. During the twelve years of his consulting career he has worked with several leading retail clients like Tesco, Best Buy, Staples etc. in the capacity of Business Consultant, Business Analyst, Implementation Consultant and Solution architect. His core areas of expertise are supply chain management, process design, ERP implantation and deployment of supply chain best practices. He has contributed many articles in leading international journals of supply chain manage- ment and has been a regular speaker in different supply chain forums. He has been given honorary membership in CII (Confederation of Indian Industry) Logistics Council. His recent areas of interest are: Industry supply chain and Supply chain optimisation. He can be reached at [email protected] SSuuppppllyy CChhaaiinn MMaannaaggeemmeenntt ffoorr RReettaaiilliinngg Rajesh Ray Managing Consultant & Product Lead (Supply Chain Management) IBM India, Kolkata Tata McGraw Hill Education Private Limited NEW DELHI McGraw-Hill Offices New Delhi New York St Louis San Francisco Auckland Bogotá Caracas Kuala Lumpur Lisbon London Madrid Mexico City Milan Montreal San Juan Santiago Singapore Sydney Tokyo Toronto Tata McGraw Hill Published by the Tata McGraw Hill Education Private Limited, 7 West Patel Nagar, New Delhi 110 008. Supply Chain Management for Retailing Copyright © 2010, by Tata McGraw Hill Education Private Limited. No part of this publication may be reproduced or distributed in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise or stored in a database or retrieval system without the prior written permission of the publishers. The program listings (if any) may be entered, stored and executed in a computer system, but they may not be reproduced for publication. This edition can be exported from India only by the publishers, Tata McGraw Hill Education Private Limited ISBN-13: 978-0-07-014504-7 ISBN-10: 0-07-014504-0 Managing Director: Ajay Shukla HeadHigher Education Publishing: Vibha Mahajan Publishing ManagerB&E/HSSL: Tapas K Maji Assistant Sponsoring Editor: Piyali Ganguly Editorial Executive: Hemant K Jha Development Editor: Shalini Negi Assistant Manager (Editorial Services): Anubha Srivastava Senior Production Manager: Manohar Lal Production Executive: Atul Gupta General ManagerMarketing (Higher Ed & School): Michael J Cruz Product Manager: Vijay S Jagannathan General ManagerProduction: Rajender P Ghansela Assistant General ManagerProduction: B L Dogra Information contained in this work has been obtained by Tata McGraw Hill, from sources believed to be reliable. However, neither Tata McGraw Hill nor its authors guarantee the accuracy or completeness of any information published herein, and neither Tata McGraw Hill nor its authors shall be responsible for any errors, omissions, or damages arising out of use of this information. This work is published with the understanding that Tata McGraw Hill and its authors are supplying information but are not attempting to render engineering or other professional services. If such services are required, the assistance of an appropriate professional should be sought. Typeset at The Composers, 260, C.A. Apt., Paschim Vihar, New Delhi 110 063 and printed at Anand Book Binding House, 1036, Reghubarpura No. 1, Gandhi Nagar, Delhi 110 031 Cover Design: K Anoop Cover Printer: Rashtriya Printers RALCRRBFRBDYX Preface Retail is one of the largest industries in the world in terms of both size and the number of people employed globally. It is also one of the classic industries from the supply chain management perspec- tive and for every facet of supply chainbe it sourcing, contract manufacturing, product develop- ment, inventory management, logistics or using technologyit is a trend setter in many cases. The retail industry has pioneered many breakthrough supply chain concepts like cross docking or vendor managed inventory and has been using these practices much before they became fashionable in the supply chain world. Leading retailers like Walmart, Zara and Amazon bring in supply chain inno- vations regularly to challenge those age old supply chain beliefs that you need a distributor to distribute the goods or you need to receive materials in warehouse days ahead before issuing from there. However modern retail is a recent phenomenon in India. The first phase of retail revolution in the country had seen a mad rush for occupying premium space in cities, efforts to experiment with different store formats and big investment plans from everyone. Very few really talked about quick ROI. As things are settling down in the country, few retailers have already experienced what works and what does not and, much like B2C revolution, most of them discovered that success in this business is largely driven by how effective you are in putting together a strong supply chain at the back end to deliver goods of right quality and at right price on timeevery time. That is easier said then doneas there are things beyond a particular retailer’s efficiencysince the country has acute shortage of infrastructure, cold chain and a host of other things. In this book we will discuss different aspects of retail supply chain along with a special focus on different retail categories and retail formats. I wrote this book as there is no similar text on retail supply chain, especially from Indian perspective. However, there is growing interest in this subject, both in the world of academics and among professionals. The book is written to serve as: l A text book for certificate, diploma, and post graduate diploma courses in retail management l A reference book for logistics and supply chain management courses, specifically covering retail supply chain l A reference book for teachers, consultants and practitioners involved in any one of the processes that make up the retail supply chain. The book has been written in simple manner and each chapter uses examples for easy explanation of the theories and concepts introduced in the chapter. I have attempted to cover every aspect of retail supply chain with reasonable depth in this book. I would like to thank Ms Mamta Mohan, Program Director (MBA Retail), Amity Business School, Noida, Ms Surbhi Jain, Program Leader (DRM), Indian Retail School, New Delhi, and Mr S L Gupta, Professor (Retail Management), Birla Institute of Technology, Noida for their valuable feed- back on the contents of the book. I sincerely request comments and inputs from readers to improve the content of this book further in its future editions. RAJESH RAY Contents Preface v Introduction 1. Introducing Retail Supply Chain 3 Introducing Retail Supply Chain 4 How Retail Supply Chain is Different from Manufacturing Supply Chain 5 Supply Chain and Logistics 9 Retail Supply Chain Management is a Subset of Retail Management 13 Retail Supply Chain Elements 14 Retail is Not One Supply Chain—Category and Format Specific Chain 17 Strategic, Tactical, Operational and Execution View of Retail Supply Chain 18 Retail Supply Chain Maturity 20 Conclusion 21 Review Questions 22 Assignments 22 PART 1: Merchandise Planning 2. Category Management and Merchandise Budgeting 25 Category Management Defined 26 Category Management Process 26 Enabling Components of Category Management 36 Category Captain 38 Challenges in Category Management 38 What is Merchandising and What are its Benefits 42 Merchandise Types 42 Merchandise Hierarchy 43 Merchandise Forecasting 44 Forecasting Methods 44 Merchandise Budgeting 49 Six Months Merchandise Budgeting 51 Open to Buy Control 53 Conclusion 55 Review Questions 56 Assignments 56 viii Contents 3. Assortment and Space Management 57 The Concept of Assortment Management 58 Assortment Management Framework 59 Assortment Objectives 60 Assortment Selection 61 Assortment Plan 64 Role of Data and Information Technology in Assortment 66 Store Clustering 67 The Concept of Space Management and its Benefits 69 Different Stages of Space Planning 69 The Concept of Planograms 70 Issues in Space Management 72 Role of Information Technology in Space Management 74 Conclusion 74 Review Questions 75 Assignment 75 4. Retail Pricing 76 Retail Pricing Challenges 77 Managing the Retail Pricing Life Cycle 81 Managing Retail Promotions 81 Managing Retail Markdowns 90 Promotion Management Maturity Model 91 Personalised Pricing/One to One Pricing 91 IT for Managing Price, Promotion and Markdown 92 Conclusion 96 Review Questions 96 Assignments 96 PART 2: Retail Product 5. Retail Product Lifecycle Management 99 Product Design 99 Private Labels 101 Retail Packaging 105 Shelf Ready Packaging 107 Green Design and Packaging 111 IT for Retail Product Life Cycle Management 112 Conclusion 116 Review Questions 117 Objective Type Questions 117 Assignments 117 PART 3: Managing Retail Logistics 6. Retail Distribution and Replenishment 121 Retail Distribution 121 Retail Replenishment 123
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