LOGISTICS. Planning & implementation of any physical movement of a product from the manufacturer to the consumer.
TRADITIONAL.
• Push Strategy.
• Production Orientated.
• Manufacturer allocates products.
• Retailers became passive receivers of products.
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.
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: 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.
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.
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.