Session8handout - Supply Chain Modeling...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
Supply Chain Modeling Session 8: Retail Supply Chains Atalay Atasu
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Objective of Today’s Class Explore the challenges of retail supply chains  Why is retailing so tough? Introduce RFID and shortly discuss its  potential benefits to supply chain management  (video) Remind you of the Bullwhip effect  (Beergame) and Vendor Managed Inventory  (Barilla)  Explore Wal-Mart’s sources of competitive  advantage from operations perspective
Background image of page 2
Some Statistics In consumer packaged goods (CPG), between 1985 and 1992, while product variety increased by 16%, total shelf space increased only by 1.5%. In the grocery industry, out-of-stock rates hover around 6.5% of sales with half going to competitors and half representing a loss for the industry.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Example Net margins in grocery retailing are around 2% Out of stock rate is ~6% What is the impact of stock-outs on the retailers and manufacturers? What is the impact of 1% reduction in costs on the retailer’s profit? It is therefore no surprise that some of the innovative supply chain initiatives have started in the grocery industry, where margins are razor thin and customer service is crucial.
Background image of page 4
Stock outs and RFID Technology If Supermarket Shelves Could Talk , Mar 31, 2003 It's Saturday night, and you're getting ready for that blind date. But you realize at the last minute that you're out of Mach3 Turbo blades. You make a mad dash to the drugstore, only to find the racks empty. Frustrating? You bet. But take heart: There's someone even more irritated than you -- the brand manager at Gillette Co. whose job hinges on keeping store shelves full, even as items fly off them. Relief is on the horizon. Advances tying together wireless technology, tiny chips, and Web-based supply chains promise -- at least in theory -- to track every single razor blade from the production line to the checkout counter. And as supplies dwindle, whether in the warehouse or in stores, automatic alerts to stock up will be triggered. "We'll have a world where shelves are always full ," says Dick Cantwell, a vice-president for global business management at Gillette.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
RFID What is RFID? How it is different than barcode  technology? What are the potential benefits of RFID? How can RFID help avoid out of stock situations?  (e.g., Gillette) How can you use RFID to market the products? RFID Video:  http://www.youtube.com/watch?v=4Zj7txoDxbE
Background image of page 6
Retailing: why so tough?
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The Bullwhip Effect Amplification of variability as you move up in the supply chain Customer Retailer Distributor Factory Suppliers Demand variability increases as we move away from market towards supply Pervasive across most industries Increases costs and degrades service
Background image of page 8
Causes of the Bullwhip Effect in the Beergame Over-reaction to backlogs Lack of communication Delay times for information  and delivery of goods
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 01/25/2011 for the course MGT 4803 taught by Professor Staff during the Spring '08 term at Georgia Institute of Technology.

Page1 / 30

Session8handout - Supply Chain Modeling...

This preview shows document pages 1 - 10. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online