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CONTROL SYSTEM
FOR A RETAIL CHAIN
Department of Management Sciences (PUMBA)Executive MBA 2010-12
Presented by -Divakar Joshi (524)Anil Kumar (533)Sandip Patil(0540)
Walmik Shelke (0555)
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Retailing is defined as a conclusive set ofactivities or steps used to sell product orservice to consumer for their personal orfamily use.
A retailer is a person, agency, agent,company or organization which isinstrumental in reaching the goods,
merchandise or services to the ultimateconsumer.
RETAILING
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RETAILING FUNCTIONS
SORTING FUNCTION
Marketersrequirements
Large ordersMinimum
customersFew varietiesCash payment
Customers
requirements
Small quantityInformationguidance
large varietiescredit payment
Retailer
Small quantities,
variety andcustomer serviceand education
Bulk buying fromdifferent sources
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RETAILING
Types Of Retail Goods & Services
Durable Goods
Non-Durable Goods Personal Services
Repair services
Hotel Services
Professional Services
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RETAIL MANAGEMENT CONTROL OBJECTIVES
Sales Growth, Market Share
Profit Level, ROI, Efficiency
CUSTOMER satisfaction Total Retail Experience
Store Positioning Up-market, Mid-Priced, DiscountOriented, Mass Market, Niche
Store Value Scale-Quality, price
Store Fashion Scale-Fashion, Style, Assortment Target Market Customer Group To Be Attracted and
Satisfied
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OERVIEW OF RETAIL CHAIN MODEL
CD
ITTS
RSSSTC
SOR
SI
ITTDCRSSRSDC
DCORSTSDCI
PSRSS
RSFPITIIT
RSDCOF
TOFFOF
STDCFI
RSS RMRSDC
RMORMCRRSF
RMIT
CUSTOMER
STOREDISTRIBUTIONCENTER
FACTORY
PROCUREMENT
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CDconsumer demand ,STCsold to consumers
RMITraw material in transit , RSDCrequisition smoothed atdistribution centre
RMraw material (inventory), RMOraw material ordered,
FOFfrom over flow, RMCRraw material consumption rate
OFover flow ,TOFto over flow,IITimport in transit FIfactoryinventory
PITproduct in transit, RSFrequisition smoothed at factory
PSproduction schedule, STDCshipped to distribution centre
SIstore inventory, DCIdistribution centre inventory
STSshipped to store ,ITTDCin transit to distribution centre
SORstore order rate DCORdistribution centre order rate
ITTSin transit to store, RSSrequisition smoothed at store
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Holding Costs Processing costs Cost of products write offs and price reduction Stock out frequency
Delivery reliability Cycle Time Penalty costs Set Up costs
Transportation costs
PERFORMANCE INDICATORS
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Temporary promotion policy Expensive Surplus of stocks Falling retail sales Information Delays
Long lead items planning
COMMON SCENARIO AND PROBLEMS
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MCS Tools for Retail
TQM
ERP
JIT
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Minimum amount of information
Monitor meaningful activities
Reward meeting or exceedingstandards
Long-term and short-term
Pinpointing exceptions
Timely
EVALUATION AND CONTROL
GUIDELINES FOR PROPER CONTROL:
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ERPERP (Enterprise Resource Planning) systemstypically include the following characteristics:
Finance/AccountingGeneral ledger, payables, cash management,fixed assets, budgeting, consolidation
Human resourcespayroll, training, benefits, 401K, recruiting,diversity managementreceivables
ManufacturingEngineering, bill of materials, work orders,scheduling, capacity, workflow management,quality control, cost management, manufacturingprocess, manufacturing projects, manufacturingflow, activity based costing,product lifecycle management
http://en.wikipedia.org/wiki/Financehttp://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/General_ledgerhttp://en.wikipedia.org/wiki/Accounts_payablehttp://en.wikipedia.org/wiki/Cash_managementhttp://en.wikipedia.org/wiki/Fixed_assetshttp://en.wikipedia.org/wiki/Budgetinghttp://en.wikipedia.org/wiki/Consolidationhttp://en.wikipedia.org/wiki/Human_resourceshttp://en.wikipedia.org/wiki/Payrollhttp://en.wikipedia.org/wiki/Traininghttp://en.wikipedia.org/wiki/Employee_benefithttp://en.wikipedia.org/wiki/401Khttp://en.wikipedia.org/wiki/Recruitinghttp://en.wikipedia.org/wiki/Diversity_(business)http://en.wikipedia.org/wiki/Accounts_receivablehttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Engineeringhttp://en.wikipedia.org/wiki/Bill_of_materialshttp://en.wikipedia.org/wiki/Workflow_managementhttp://en.wikipedia.org/wiki/Quality_controlhttp://en.wikipedia.org/wiki/Activity_based_costinghttp://en.wikipedia.org/wiki/Product_lifecycle_managementhttp://en.wikipedia.org/wiki/Product_lifecycle_managementhttp://en.wikipedia.org/wiki/Activity_based_costinghttp://en.wikipedia.org/wiki/Quality_controlhttp://en.wikipedia.org/wiki/Workflow_managementhttp://en.wikipedia.org/wiki/Bill_of_materialshttp://en.wikipedia.org/wiki/Engineeringhttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Accounts_receivablehttp://en.wikipedia.org/wiki/Diversity_(business)http://en.wikipedia.org/wiki/Recruitinghttp://en.wikipedia.org/wiki/401Khttp://en.wikipedia.org/wiki/Employee_benefithttp://en.wikipedia.org/wiki/Traininghttp://en.wikipedia.org/wiki/Payrollhttp://en.wikipedia.org/wiki/Human_resourceshttp://en.wikipedia.org/wiki/Consolidationhttp://en.wikipedia.org/wiki/Budgetinghttp://en.wikipedia.org/wiki/Fixed_assetshttp://en.wikipedia.org/wiki/Cash_managementhttp://en.wikipedia.org/wiki/Accounts_payablehttp://en.wikipedia.org/wiki/General_ledgerhttp://en.wikipedia.org/wiki/Accountinghttp://en.wikipedia.org/wiki/Finance7/28/2019 MCS Presentation Retail Chain
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ERP
ERP (Enterprise Resource Planning) systems typicallyinclude the following characteristics:
Supply chain managementOrder to cash, inventory, order entry, purchasing,product configurator, supply chain planning, supplierscheduling, inspection of goods, claim processing,commissions
Project management
Costing, billing, time and expense, performance units,activity management
Customer relationship management
Sales and marketing, commissions, service, customer
contact, call center support
http://en.wikipedia.org/wiki/Supply_chain_managementhttp://en.wikipedia.org/wiki/Order_to_cashhttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Purchasinghttp://en.wikipedia.org/wiki/Product_configuratorhttp://en.wikipedia.org/wiki/Project_managementhttp://en.wikipedia.org/wiki/Billinghttp://en.wikipedia.org/wiki/Customer_relationship_managementhttp://en.wikipedia.org/wiki/Call_centerhttp://en.wikipedia.org/wiki/Call_centerhttp://en.wikipedia.org/wiki/Customer_relationship_managementhttp://en.wikipedia.org/wiki/Billinghttp://en.wikipedia.org/wiki/Project_managementhttp://en.wikipedia.org/wiki/Product_configuratorhttp://en.wikipedia.org/wiki/Purchasinghttp://en.wikipedia.org/wiki/Inventoryhttp://en.wikipedia.org/wiki/Order_to_cashhttp://en.wikipedia.org/wiki/Supply_chain_management7/28/2019 MCS Presentation Retail Chain
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ERP
ERP (Enterprise Resource Planning) systems typicallyinclude the following characteristics:
Data servicesVarious "selfservice" interfaces for customers,suppliers and/or employees
Access controlManagement of user privileges for various processes
http://en.wikipedia.org/wiki/Access_controlhttp://en.wikipedia.org/wiki/Access_control7/28/2019 MCS Presentation Retail Chain
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RETAIL LOSS PREVENTION CONTROL
Retail loss prevention (in some retailers known asasset protection) is a form of private investigationinto larceny or theft. The focus of such investigationsgenerally includes shoplifting, package pilferage,embezzlement, credit fraud, and check fraud. "Lossprevention" or "LP" is used to describe a number ofmethods used to reduce the amount of all losses andshrinkage often related to retail trade.
Store personnel that are hired for this task are knownas: loss prevention agents, loss prevention officers,asset protection agents, store detectives, storesecurity etc.
http://en.wikipedia.org/wiki/Larcenyhttp://en.wikipedia.org/wiki/Thefthttp://en.wikipedia.org/wiki/Shopliftinghttp://en.wikipedia.org/wiki/Package_pilferagehttp://en.wikipedia.org/wiki/Embezzlementhttp://en.wikipedia.org/wiki/Credit_card_fraudhttp://en.wikipedia.org/wiki/Check_fraudhttp://en.wikipedia.org/wiki/Shrinkage_(accounting)http://en.wikipedia.org/wiki/Store_detectivehttp://en.wikipedia.org/wiki/Store_detectivehttp://en.wikipedia.org/wiki/Shrinkage_(accounting)http://en.wikipedia.org/wiki/Check_fraudhttp://en.wikipedia.org/wiki/Credit_card_fraudhttp://en.wikipedia.org/wiki/Embezzlementhttp://en.wikipedia.org/wiki/Package_pilferagehttp://en.wikipedia.org/wiki/Shopliftinghttp://en.wikipedia.org/wiki/Thefthttp://en.wikipedia.org/wiki/Larceny7/28/2019 MCS Presentation Retail Chain
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RETAIL LOSS PREVENTION CONTROL
The objective is to maximize profits through reducinginventory shrinkage, essentially the value of missing
inventory. According to the 2006 National RetailSecurity Survey, retail operations suffered an averageannual inventory shrinkage percentage of 1.57% in2006.1
Although most retailers experience a shrink
percentage of less than 2%, some smaller retailersoften experience monthly and annual averageshrinkage percentages as high as 20%.
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RETAIL INVENTORY CONTROL
Stock management in the retail supply chainfollows the following sequence:
Request for new stock from stores to head office Head office issues purchase orders to the vendor
Vendor ships the goods Warehouse receives the goods Warehouse stocks and distributes to the stores Stores receive the goods
Goods are sold to customers at the stores The management of the inventory in the supplychain involves managing the physical quantitiesas well as the costing of the goods as it flowsthrough the supply chain.
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RETAIL INVENTORY CONTROL
In managing the cost prices of the goodsthroughout the supply chain, several costingmethods are employed:
Retail method Weighted Average Price method FIFO (First In First Out) method chillin LIFO (Last In First Out) method LPP (Last Purchase Price) method BNM (Bottle neck method)
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MONITORING SYSTEM
Daily Income Report Daily Expenditure Report Monthly Income Report Monthly Expenditure Report
Sales Payment Due Report Purchase Payment Due Report Sales Report Purchase Report
Stock Report Foot fall report Fast moving goods Slow moving goods Space utilization Report Counter utilization report
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MCS USED BY ZARA.
MANAGEMENTDECISION
PRODUCTION,INVENTORYCONTROL
DISTRIBUTIONS
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CASE STUDY ,INDITEX SA ZARA ,
FLAGSHIP OF SPANISHRETAIL
MARKET RESEARCH:Close Watch on trends andbuying behavior,Market Research on Univ. Campuses,Discos and organisations.Feedback from the stores,
Sales Report and quantitative comments. Significantinvestment in information technology andcommunication infrastructure for making product andbusiness decisions.
MANAGEMENT DECISION :At HO Regional Manageranalyses the feedback and takes decision regardingfabric cuts ,design, price etc.
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CASE STUDY ,INDITEX SA ZARA ,
FLAGSHIP OF SPANISHRETAIL
PRODUCTION,INVENTORY CONTROL:Owning capitalintensive manufacturing facilities,sourcing fabrics fromSpain,morocco,India Controls stitching through a
network of sub-contracted workshop.
DISTRIBUTION :State of art distribution facility with200 kms. of underground tracks.
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CASE STUDY ,INDITEX SA ZARA ,
FLAGSHIP OF SPANISHRETAIL
USE OF IT FOR MCS:Collecting information daily on consumer needstrends and is fed into a database
Designer use this information and sales number tomodify existing designsStandardization of product informationInventory management enables Zara design team to
design fabrics based on available stockFully automated distribution line distributing morethan 60000 products per hour.
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CASE STUDY ,INDITEX SA ZARA ,
FLAGSHIP OF SPANISHRETAIL
Zara which contributes 80% of the group salesconcentrates on three winning formulae:
1.Short lead time-More fashionable clothes.
2.Lower Quantity- Scarce supply
3.More styles= More choices and more
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PHARMACEUTICAL RETAIL CHAIN
Factory/production unit
Warehouse
Carrying and forwarding agents
Stockist/Distributor
Retailer
Consumer
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CONTROL PARAMETERS
Inventory LevelSales turnoverClosing Stock
PurchaseExpiry Date
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THANK YOU.....