Fashion

Merchandising
Ranjan Kumar Saha
Associate Professor
NIFT Mumbai
ranjan777in@yahoo.com
(For Class room Presentation)
A supply chain is a system of organizations,
people, technology, activities, information and
resources involved in moving a product or
service from supplier to customer.

Supply chain activities transform natural

resources, raw materials and components into a
finished product that is delivered to the end
customer.

2
 Customer
Supplier of Manufacturer/ Designer Distributor Retailer
Raw materials

Upstream
Downstream

3
SUPPLY SIDE DEMAND SIDE

4
 Bythe mid 1990s, Retail Link had emerged into
an Internet-enabled SCM system whose
functions were not confined to inventory
management alone, but also covered
collaborative planning, forecasting and
replenishment (CPFR).

6
A business practice that combines the
intelligence of multiple trading partners in the
planning & fulfillment of customer demands.

Links sales & marketing best practices, such as

category management, to supply chain
planning processes to increase availability
while reducing inventory, transportation &
logistics costs.

2009 South-Western, a division of Cengage Learning 7

 InCPFR, Wal-Mart worked together with
its key suppliers on a real-time basis by
using the Internet to jointly determine
product-wise demand forecast.

CPFR is defined as a business practice for

business partners to share forecasts and
results data through the Internet, in
order to reduce inventory costs while at
the same time, enhancing product
availability across the supply chain.

8
 Though CPFR was a promising supply
chain initiative aimed at a mutually
beneficial collaboration between Wal-
Mart and its suppliers, its actual
implementation required huge
investments in time and money.

A few suppliers with whom Wal-Mart tried

to implement CPFR complained that a
significant amount of time had to be
spent on developing forecasts and
analyzing sales data.

9
10
 In
efforts to implement new technologies to
reduce costs and increase the efficiency, in
July 2003, Wal-Mart asked its top 100
suppliers to be RFID compliant by January,
2005.

Wal-Martplanned to replace bar-code

technology with RFID technology.

Thecompany believed that this

replacement would reduce its supply chain
management costs and enhance efficiency.

11
 Because of the implementation of RFID,
employees were no longer required to
physically scan the bar codes of goods
entering the stores and distribution
centers, saving labor cost and time.

Wal-Martexpected that RFID would

reduce the instances of stock-outs at the
stores.

12
 Electronic
Data Interchange (EDI) is the
computer-to-computer exchange of standard
business documents over a network
 Consumer Price Index
120%
Labor

100% Telco
Computer
80%

1985 1990 1995 2000 2005

 RFQ
PO

Quote
ASN
Price Ack
Invoice
 RFQ
PO

Quote
Price Change
Advance Ship Notice
Invoice
 Electronic data interchange (EDI) is the structured transmission of data between
organizations by electronic means. It is used to transfer electronic documents or
business data from one computer system to another computer system, i.e. from one
trading partner to another trading partner without human intervention.
It is more than mere e-mail; for instance, organizations might replace bills of lading
and even cheques with appropriate EDI messages. It also refers specifically to a
family of standards.
In 1996, the National Institute of Standards and Technology defined electronic data
interchange as "the computer-to-computer interchange of strictly formatted
messages that represent documents other than monetary instruments. EDI implies a
sequence of messages between two parties, either of whom may serve as originator
or recipient. The formatted data representing the documents may be transmitted
from originator to recipient via telecommunications or physically transported on
electronic storage media.". It distinguishes mere electronic communication or data
exchange, specifying that "in EDI, the usual processing of received messages is by
computer only. Human intervention in the processing of a received message is
typically intended only for error conditions, for quality review, and for special
situations. For example, the transmission of binary or textual data is not EDI as
defined here unless the data are treated as one or more data elements of an EDI
message and are not normally intended for human interpretation as part of online
data processing." [1]
EDI can be formally defined as the transfer of structured data, by agreed message
standards, from one computer system to another without human intervention.
 Definition
Document used in soliciting price and delivery
quotations that meet minimum quality
specifications for a specific quantity of specific
goods and/or services. RFQ are usually not
advertised publicly.

advance shipping note/Notice (ASN)

Definition
Message that informs a consignee of the actual
dispatch of a shipment and indicates its
expected arrival date and other particulars.
 Customer
Min. Preparation PO Satisfaction
Better Terms Order
Order Turnaround Turnaround
Reduce Inventory No data entry
Fewer Errors Purchasing Fewer Errors
Order Tracking Order Order Tracking
Processing

Receiving Shipping
ASN
No data entry
Fewer Errors Invoice Customer
Staff Planning Satisfaction
Price Updates Faster Payment
PO Reconciliation
 Vendor-managed inventory (VMI) is a family of business models in which the buyer of a product provides
certain information to a supplier of that product and the supplier takes full responsibility for maintaining
an agreed inventory of the material, usually at the buyer's consumption location (usually a store). A third-
party logistics provider can also be involved to make sure that the buyer has the required level of
inventory by adjusting the demand and supply gaps.
As a symbiotic relationship, VMI makes it less likely that a business will unintentionally become out of stock
of a good and reduces inventory in the supply chain. Furthermore, vendor (supplier) representatives in a
store benefit the vendor by ensuring the product is properly displayed and store staff are familiar with the
features of the product line, all the while helping to clean and organize their product lines for the store.

One of the keys to making VMI work is shared risk. Often if the inventory does not sell, the vendor
(supplier) will repurchase the product from the buyer (retailer). In other cases, the product may be in the
possession of the retailer but is not owned by the retailer until the sale takes place, meaning that the
retailer simply houses (and assists with the sale of) the product in exchange for a predetermined
commission or profit (sometimes referred to as consignment stock). A special form of this commission
business is scan-based trading whereas VMI is usually applied but not mandatory to be used.
This is one of the successful business models used by Wal-Mart and many other big box retailers. Oil
companies often use technology to manage the gasoline inventories at the service stations that they supply
(see Petrolsoft Corporation). Home Depot uses the technique with larger suppliers of manufactured goods
(i.e. Moen, Delta, RIDGID, Paulin). VMI helps foster a closer understanding between the supplier and
manufacturer by using Electronic Data Interchange formats, EDI software and statistical methodologies to
forecast and maintain correct inventory in the supply chain.

Vendors benefit from more control of displays and more contact to impart knowledge on employees;
retailers benefit from reduced risk, better store staff knowledge (which builds brand loyalty for both the
vendor and the retailer), and reduced display maintenance outlays
Consumers benefit from knowledgeable store staff who are in frequent and familiar contact with
manufacturer (vendor) representatives when parts or service are required, store staff with good knowledge
of most product lines offered by the entire range of vendors and therefore the ability to help the customer
choose amongst competing products for items most suited to them, manufacturer-direct selection and
service support being offered by the store.
 Vendor Managed Inventory (VMI):JITD
VMI Projects at Dillard Department Stores, J.C.
Penney, and Wal-Mart have shown sales increases
of 20 to 25 percent, and 30 percent inventory
turnover improvements.