WHY EFFICIENT SUPPLY CHAIN SOLUTIONS ARE FUNDAMENTAL TO THE SUCCESS OF ANY RETAIL BUSINESS

Doug Hunter “Manager Customer and Ecosystem Enablement” SYSPRO

Like people, warehouses are not all the same. Systems that enable them also vary in emphasis or areas of solutions. Pick and implement wisely to get the efficient supply chain you seek

There are factors affecting Solutions for retail and upstream suppliers. These differentiate the way your organisation will use supply chain solutions.

Key Factors

Relative Supply Chain Position

• A retailer supplying end-customers/consumers from a store/shop shelves or counters

• A supplier sending stock to a retail Distribution Centre (DC)

• A supplier sending KVI stock direct to a retailer’s store

The industry involved

• Grocery, food/beverage and pharmaceutical – where shelf life and traceability are factors Industrial/Automotive components – where original equipment (air conditioner, engine/motor, car etc) model, year and/or variants exist

• Fabricated metals (steel sheet/blocks, pipes etc) – where in-warehouse processing has to happen like cut to size

• Fashion and footwear – where product “structures” are more complex – the style/colour/size matrix – one product but a package of many variants

Scale

• Are you SPAR or a “mom and pop” organisation – both are complicated in different ways

Dealing with Differences

Factors lead to different IT Solutions, a combination of them, or one that flexes to cover appropriate Planning and Execution.

The closer your operation is to end- consumers (the last sale in the supply chain) the more responsive your operation must be to on-shelf-availability and rapidly changing buyer-behaviour. Planning the next few days fed frequently by today’s sales from retail outlets/shops. This leads to Responsive Replenishment solutions that start with a forecast but amend rapidly to drive correct order-volumes to correct stores – elapsed time is critical - this is an execution-focused solution

If you run large regional DCs to many stores, forecasts (planning) can be aggregated to identify what articles must be in stock in what volumes at what time. You can use historical Point-of-Sale (POS) data including independent variables like weather, disposable income changes, new-car sales (whatever fits) in a Demand Forecasting solution. Planning horizon is months/quarters (not days) driving the plan for buying supplier goods and sophisticated warehouse execution. The agreed-demand drives you Enterprise Resource Planning (ERP) solution to time-phase execution and optimise orders to suppliers. Emphasis here is planning.

Large suppliers to retail DCs also use Demand Forecasting solutions possibly collaborating with the retailers they service – this typically requires specialist Demand Forecasting tools integrated to an ERP system.

Making Supply Chain Solutions Efficient

For many organisations planning and execution can be handled by ERP alone. Efficiency comes from users’/managers’ ownership of their business process/activity making sure inputs are correct and on time. What does that mean?

• ERP planning – open-order accuracy - make sure the old Purchase and Sales orders that were not fully received or shipped are closed-off or the system will think they are still part of the plan. Ensure planning parameters like order-point, order-quantity, lead-time-to-supply, product structures (recipe/BOM) reflect reality checked regularly (KVIs most frequently)

• Inventory accuracy - is paramount - right place, right quantity, right time. Ensure receipts are checked and captured physically and on the system at the same time. Regular stock checking of key products ensuring that system and bin reflect the same quantity. Set you system to FIFO or FEFO (first-expiry-first-out) appropriately so dead stock is avoided.

• Space utilization/warehouse layout – space always restricted and usually zoned - make sure your zones are not over-using space. Optimise stock-mix so fast/valuable v slow/cheap are balanced to effectively use working-capital

• Picking optimization – optimise batch or wave-picks, sort picking-routes to minimise movement and time, include bin stock-counts in routes.

• There is much more we could include

Summary

For small organisations, an ERP system like SYSPRO ERP covers the whole supply chain – forecasting material/production planning and execution, fair warehouse picking. great product recall, and inventory management/optimization.

For large suppliers, ERP plus full Warehouse Management and Collaborative Demand Forecasting may be necessary.

For large retailers, solutions will be Forecasting and Replenishment, ERP plus specialised Warehousing and Transportation planning/routing software

Value-adding in warehouses include cutting steel to size, pre-labelling and hanging fashion items and more.

Efficiency comes from knowing where the opportunities for you are, picking the right IT tools, understanding them, and using them properly. Why - Do this to reap service and profit rewards.