CHAPTER 9

LOGISTICS.

Logistics.

Supply Chain Management.

Relationship.

Impact on Retail.

2.5 BILLION CUPS OF COFFEE PER DAY.

South-America

Europe

Packaged in China

Bangladesh

Japan USA

India

“SEAMLESS”

LOGISTICS. Planning & implementation of any physical movement of a product from the manufacturer to the consumer.

LOGISTICS. • Storage Facilities •  Inventory Management • Transport • Packaging • Communications

TRADITIONAL.

•  Push Strategy.

•  Production Orientated.

• Manufacturer allocates products.

•  Retailers became passive receivers of products.

INTERGRATION.

MARKET DRIVEN

Redesign the supply chain from the consumer backwards.

And NOT forwards from manufacturer to the consumer.

Management of backwards & forwards

relationship with suppliers and

consumers to create enhanced value in

the final marketplace at a lower cost for

the supply chain as a whole.

SUPPLY CHAINS.

RELATIONSHIP BETWEEN SUPPLY CHAINS & LOGISTICS?

Application of logistics is crucial for the effective management of the supply chain.

NETWORK OF ORGANISATIONS.

WORLD IS GETTING SMALLER.

DEFEND YOUR MARKET ON A LOCAL AND GLOVBAL SCALE.

WHY IS IT IMPORTANT? •  Relationships between firms are crucial for

the economy to function. •  No firm does everything any longer. Firms

focus on their core business and outsource the rest.

•  Dependent on other firms to ensure that your firm makes money.

SUPPLY CHAINS

Competition is NO longer between individual organisations.

Between the supply chains they are a part of.

IMPORTANT THEMES. •  Shift from push to pull strategies.

•  From manufacturer orientated to demand orientated planning.

•  Information systems play important role.

•  Eliminate unnecessary inventory.

•  Focus on core activities & increase in outsourcing of non-core activities.

CURRENTLY. Retailers: •  Involved in the design & control of product

supply in reaction to consumers’ demands..

•  Control, organise & manage the supply chain from manufacturer to consumer.

•  Channel captains: Set the logistics pace.

INVENTORY MANAGEMENT.

Slow inventory turnover VS

Fast inventory turnover.

INVENTORY MANAGEMENT: FASHION RETAIL.

Customers are becoming more informed & impatient (they don’t want to wait for European trends). Retailers have to adopt supply chain models accordingly.

INVENTORY MANAGEMENT: FASHION RETAIL.

•  Shorter product lead times & cycles. •  Regular new items. •  Customers will shop more often. •  Better placed to compete.

INVENTORY MANAGEMENT: FASHION RETAIL.

• ZARA

•  Truworths

• Woolworths

DISTRIBUTION CENTRES

Decentralised vs

Centralised

COMPLEX MODERN RETAIL.

1 HYPERMARK •  700 – 1500 suppliers •  100 – 150 orders per day •  Up to 50 000 sku’s

1 CONVENIENCE STORE •  150 – 450 suppliers •  40 – 100 orders per day •  Up to 10 000 sku’s

CENTRALISED DISTRIBUTION CENTRES

•  Forecasts can be done on a combination of all stores rather than individual stores.

•  Bulk buying & economies of scale.

•  Retailers carry less stock.

•  Cheaper to store stock in the warehouse than in the store.

R628 Million!

CENTRALISED DISTRIBUTION CENTRES – PICK N PAY

•  Product availablity increased with 20%

•  Storage space and non-trading spce absorb 50% of floor space -  Have to pay rent for the space but not earn from it.

•  Longmeadow now served 284 stores transports 1 million cases of groceries a week

CENTRALISED DISTRIBUTION CENTRES – MASSMART

•  Product can be in store within 48 hours of suppliers’ delivery.

•  24 stores in 11 countries.

•  5 containers to Zambia per week, containing goods from 2500 different suppliers.

CENTRALISED DISTRIBUTION CENTRES

“Selling used to be an art, now it is a science”

- Grant Pattison, CEO Massmart.

SUPPLY CHAIN & MARKETING. •  In store promotions can lead to a 400%

increase in demand.

•  If your supply chain is in place, you an supply what your consumers your consumers need, and want.

•  Create a demand you can fulfill.

WHAT IS THE SUPPLY CHAIN OBJECTIVE?

WHAT IS THE SUPPLY CHAIN OBJECTIVE?

CASE STUDY.