Description
During the past few decades, retailers have been facing increasing competitive pressures from a number of sources. In a bid to improve profitability and efficiency, retailers are seeking ways to reduce costs, improve efficiency and enhance customer service through efficient supply chain management.
A Retailer’s Guide to
Supply Chain
Management
w o r k i n g i n p a r t n e r s h i p w i t h
IBM Business Consulting Services
Supply Chain
Management
Retail Council of Canada
Founded in 1963, Retail Council of Canada is the Voice of Retail. It is a not-for-profit association whose more
than 9,000 members represent all retail formats, including national and regional department stores, mass mer-
chants, specialty chains, independent stores and online merchants.
RCC speaks for an industry that touches the daily lives of Canadians in every corner of the country
– by providing jobs; consumer value; world-class product selection; and the colour, sizzle and
entertainment of the marketplace.
Canadian retailers take pride in their industry and the contribution it makes to the country’s well-being. And
whenever the opportunity presents itself, RCC is there promoting retail as a career; as a portal to
the world of work; as an economic driver; and as a barometer of consumer tastes and confidence.
Retail Council of Canada
1255 Bay Street, Suite 800
Toronto, Ontario, M5R 2A9
Tel: 1-888-373-8245
E-mail: [email protected]
www.retailcouncil.org
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A Retailer’s Guide to Supply Chain Management
3
Table of Contents
Executive Summary 3
Introduction
What i s Suppl y Chai n Management and
why i s i t i mportant for retai l ers? 4
What are the typical Supply Chain
issues faced by Canadian retailers? 6
What are some of the current Supply Chain
initiatives retailers are working on? 7
What tools are available to enable
improvements in Supply Chain Management? 8
Where is Supply Chain Management
heading in the future? 10
What steps should retailers be taking
now to improve their Supply Chain? 11
Glossary of terms 12
Online Resources 14
About the author 15
Executive Summary
During the past few decades, retailers have been facing increasing
competitive pressures from a number of sources. In a bid to improve
profitability and efficiency, retailers are seeking ways to reduce costs,
improve efficiency and enhance customer service through efficient
supply chain management. However, to manage the supply chain
most effectively, retailers must understand exactly what the supply
chain encompasses, its key concepts, and common issues and
challenges they may face as they implement a workable strategy.
With prevalent issues such as high inventory levels and low service
levels, Canadian retailers are embarking on numerous initiatives to
improve their supply chains. These initiatives are wide-ranging. On
one end of the spectrum, retailers are still struggling with the basics
– manual processes, data inaccuracies, and disparate systems.
On the other end, retailers are investigating the use of emerging
practices and technologies aimed at delivering substantial
improvements in performance.
Many retailers are turning to technology to improve their supply
chain. Technology alone will not drive optimization; however, it can
be a performance enabler. Typically, retailers have implemented best-
of-breed solutions or have custom-developed their own applications.
Supply chain planning, event management and procurement tools
are some of the many popular “off the shelf” software tools available
for retail enablement. Understanding what these tools offer and how
they can enable retail processes is the first step in choosing the right
software for their business. However, initiatives in these areas must
have strong business sponsorship and an associated business case.
Even with the right tools in place, a retailer will have to implement a
variety of strategies to obtain a competitive supply chain. Some of
these strategies include developing an innovative supply chain vision,
focusing on differentiating competencies, utilizing dynamic global
sourcing and implementing demand synchronization. With the
appropriate roadmap in place, supply chain excellence can be a key
competitive differentiator for any retailer.
With these factors in mind, this paper provides an overview of
supply chain management in a retail setting, trends and business
issues that surround it, current initiatives, available tools, and
strategies for successful implementation as retailers move forward.
4
Introduction:
What is Supply Chain Management
and why is it important for retailers?
Supply chain management is a well-known term that has been
highly publicized throughout the business community during the
past decade. In its most generic sense, it is a term that refers to the
flow of products and services from suppliers to manufacturers and
retailers through to the ultimate destination – the consumer. It also
refers to the flow of information backwards and forward through the
supply chain between the consumer, retailers, manufacturers and
suppliers, enabling the rapid replenishment of existing products or
the development of new products to meet changing market demands.
But how is supply chain management defined for retailers?
Supply chain management functions within a retail environment
include the planning, execution, optimization and measurement of
the following: sourcing/procurement, Collaborative Planning
Forecasting and Replenishment (CPFR), demand forecasting (as it
pertains to product quantities and time requirements), inventory
replenishment, inbound and outbound transportation, store logistics
and warehouse management. While each of these functions are
processes unto themselves, they are all related and should, in effect,
be integrated and considered holistically rather than in isolation.
Further, supply chain management should be tightly integrated
with merchandising, assortment planning, marketing (new product
introduction), information technology, finance, and human
resource management.
Supply chain management’s importance has been gaining momen-
tum and focus from retailers. There are numerous reasons for this.
During the past two decades, major changes in supply chain
management have been driven across a variety of industries by
some common trends:
• Consumers have become increasingly demanding in terms
of their expectations of price, selection, availability and quality
of both products and services. They are seeking higher degrees
of product and service customization. Empowered customers
expect on-time delivery, self-service with real-time order
configuration and status information, and optimally priced
product/service bundles.
• Product lifecycles have shrunk dramatically, and as a result, speed-
to-market and product innovation have become critical to corpo-
rate success.
• The development of new technology solutions and the increasing
utilization of the Web have enabled optimization and connectivity
between trading partners. This is evidenced by collaborative hubs,
e-procurement solutions, optimization algorithms and event
management solutions.
• Supply chains have become increasingly global and complex,
presenting greater challenges in managing supply and demand.
New customer and distribution channels are being developed,
then enhanced by technological innovations and geographical
expansion. Existing channels are under pressure and require
constant change to retain market position.
Figure 1. On-demand Maturity Model
A Retailer’s Guide to Supply Chain Management
A Retailer’s Guide to Supply Chain Management
5
• Retailers are the last node prior to the consumer in
the supply chain. Why does this matter and why does this
create added complexity for the retailer? Most suppliers and
manufacturers will ship in pallet quantities. The retailer must take
these pallet quantities and break them down into store-required
quantities of cases and units. While a manufacturer will typically
ship a relatively small number of SKUs to the retailer, the retailer
must receive a high number of SKUs and sort these SKUs
into store shipments. Depending on the type of retailer, the store
shipments could include vastly different products – soaps, shoes,
bottles, electronics, glassware and shirts – all requiring different
types of handling. The in-store logistics process must then take
these box/unit shipments and place the units on the shelves before
they are purchased by the consumer.
• Retail is multi-channel. Consumers purchase product from
retail stores, Web sites, kiosks, mail order and catalogues. Some
product is picked off the shelf directly. Some product is shipped
to consumer households. Some product is ordered via the Web
and then picked up at the retail outlet. The variety of logistical
scenarios must be carefully planned and executed so that product
is shipped with optimal service to the consumer and minimal cost
to the retail organization.
In this context, effective supply chain management becomes
important for retailers as it can help them balance supply and
demand. It can assist retailers by ensuring the right product is
available for consumers, thereby reducing out-of-stock merchandise
and providing optimal service levels. It can provide a mechanism
for establishing stronger relationships with suppliers and business
partners. Finally, the supply chain functions in a retail environment
tend to account for a high percentage of the costs and assets
associated with operating a retail environment. Therefore, retailers
who have connected their supply chain processes, implemented
enabling technologies, and streamlined their asset base will likely
be higher performers than retailers who have loosely implemented
disparate systems.
• Companies have dramatically increased their use of global
sourcing partners for cost and capability reasons, extending the
number of players involved in delivering value to a customer.
• Cost reduction continues to be a major corporate agenda item, and
the costs inherent in the supply chain management functions tend
to be significant in terms of overall corporate spend. Current mar-
gin pressures are severe, and supply chain performance is focused
increasingly on the overall business impact and shareholder value.
These trends have moved industries from the static and functional
view of the 1980s through to the horizontal process view
and eventually the external collaboration view of the early 2000s.
The future of supply chain management will be one of on-demand
– an environment where communities of suppliers, manufacturers
and retailers are linked by a supply chain Web – communicating in a
real-time, sense-and-respond environment. This will be enabled by
technologies such as Radio Frequency Identification (RFID), wire-
less, and mobility infrastructures. We will discuss the outlook for
supply chain management in later sections.
The retail industry has faced tremendous change and challenge
when it comes to supply chain management. In fact, there are some
unique characteristics of retailing that increase the complexity of the
retail supply chain:
• Retail is a highly variable business. Whether it is the time
of year, the weather outside, the relative confidence of consumers
or product promotions, retail demand for products and services
fluctuates throughout the year. This fluctuation has a tremendous
impact – not only for retailers who must ensure that products arrive
on their shelves in the most cost-effective manner, but for all
members of the supply chain who deal with the complexities of
product lead times and production dependencies.
• Retail complexity is high. Retailers typically carry tens of
thousands of stock keeping units (SKUs), further proliferated in
complexity by the number of permutations and combinations
associated with store-specific assortments. Canada’s vast geo-
graphical area, which forces retailers to deal with the requirements
of both rural and urban locations, also adds to the complexity.
A Retailer’s Guide to Supply Chain Management
6
What are the typical Supply Chain
issues faced by Canadian retailers?
As Canadian retailers continue to look at their operations to identify
opportunities for improvement, many are dealing with issues in their
supply chain, including:
• High inventory levels. As discussed earlier, inventory reduction
is viewed as a key opportunity for Canadian retailers. In fact, retail
inventory is seen, globally, as the single most important lever for
retailers to control costs, particularly during weak economic times.
In the IBM/Executive Technology Retail CIO Outlook published in
April 2003, the inventory management category was identified by
35 per cent of global CIOs as the greatest opportunity to cut costs
through investment in technology.
• Low service levels to retail stores. In some cases, retailers
struggle to ensure that the right product is available in the
right quantities at store level. Some retailers have targeted
specific growth categories, but have been unable to translate their
growth plans into improved category performance, largely due to
operational inefficiencies. Others suffered as a result of consumer
feedback, an indication that the retail outlets seemed to have
frequent out-of-stocks, affecting consumer brand image for
the retailer and increasing lost sales due to out-of-stocks.
Out-of-stocks could represent 2 per cent to 3 per cent of additional
sales, rather than lost sales.
• High transportation and logistics costs. Delivering to
hundreds of locations across Canada can represent a high cost for
many Canadian retailers. Further, managing in-bound product that
arrives from all over the world adds to the complexity (such as
lengthy lead times) and cost. Retail logistics costs, including
distribution centre operations and transportation costs, can
typically range from 3.5 per cent to 4.5 per cent of sales.
• Complexities associated with global sourcing. Offering an
assortment of products to the consumer that is competitive and
of value often means retailers must search the globe for the best
possible product at the lowest cost. This means sourcing from
around the world, which carries the added complexity of lengthy
product lead-times and supplier labour management. Supplier
product costs could be as high as 70 per cent of revenues,
depending on the product category.
• Outdated and/or non-integrated technologies. Retail is
an industry populated by a wide variety of solutions areas such as
point-of-sale (POS), merchandising and assortment management,
business intelligence, financial management, and labour
scheduling. In most cases, retailers are running legacy
applications or a myriad packaged software applications that need
to be interfaced. Retailers typically spend less than 2 per cent of
revenues on information technology.
• Innovation is diffused throughout the industry. The retail
industry will benefit from accelerating the spread and implemen-
tation of innovative technology and business practices. Many of
the innovations will bring limited benefits – even for companies
implementing them – unless the innovations are widely and
quickly adopted within the industry. (Source: Retail Supply Chain
Industry Innovation Panel Report, Retail Council of Canada,
October 2002.)
While many retailers do not fully understand their true supply chain
process costs, estimates range from 11 per cent to 15 per cent
of sales, representing a very significant cost base for any retailer
operating in today’s difficult environment. At the root of all these
issues is data. For many Canadian retailers, data management
continues to be a major thrust – whether it is product, inventory level
or price accuracy. For this reason and many others already
discussed, supply chain management has been a key priority
for Canadian retailers.
It is expected that supply chain management will continue to be a key
priority for Canadian retailers as a result of the following:
• Wal-Mart continues to define operational excellence in the area of
supply chain management and retailers are taking lessons from
the world’s largest retailer. Canadian retailers also acknowledge
that to become a player of world-class status and to compete in the
global retail economy, they must come equipped with world-class
supply chain operations and know-how.
• With the ongoing global instability, uncertainty over the direction
of interest rates and fluctuating oil prices, Canadian retailers have
dealt with a level of consumer confidence and spending which in
the past 12 months amounted to slow (or in some retail segments
negative) same-store sales growth. This slow growth left many
retailers with more inventory in their stores and distribution
centres than there was demand for, thereby forcing retailers to
look at cost reduction opportunities as a means to improve
corporate profitability.
A Retailer’s Guide to Supply Chain Management
7
• The proliferation of technological advancement and communica-
tion standards such as RFID, Global Trade Item Number (GTIN),
ECCnet and others are forcing retailers to understand these glob-
al/local initiatives and how they can potentially apply them to opti-
mize the supply chain in their own environments. For instance, the
Uniform Code Council, Inc. (UCC) has announced the 2005
Sunrise date initiative. This initiative requires U.S. and Canadian
retailers to have the capability to scan and process EAN-8 and
EAN-13 symbols, in addition to 12-digit UPC symbols, at the POS
by January 1, 2005.
What are some of the current
Supply Chain initiatives retailers
are working on?
Companies today are placing more emphasis on the supply chain
to transform their business model. They are radically changing the
way an organization senses, thinks, interprets and reacts. More and
more, successful companies are organizing their supply chains
horizontally (as opposed to the traditional vertical functional silos)
and orchestrating end-to-end extended supply chains, or value chain
networks. They are extending the “four walls” inside their enterprises
by integrating more with the “outside” – through sharing knowledge
and innovation with suppliers.
Retailers are reviewing their supply chain practices and defining
visions for the future; but at the same time, they are fixing the basics
– cleansing data, defining improved metrics, standardizing business
processes and practices, training staff, and integrating technology
– all in hopes of developing a low-cost supply chain that
competitively positions the organization for the future.
Let us examine what Canadian retailers are currently doing to
improve their supply chain, focusing on current initiatives.
(Future initiatives and trends will be explored in a later section.)
Collaborative Planning, Forecasting and Replenishment
(CPFR). Retailers are interested in finding ways to reduce invento-
ries and improve their ability to both anticipate and fulfill consumer
demand. They are improving their forecasting and merchandise
planning activities and finding ways to work with manufacturers and
suppliers to reduce cycle times and inventories throughout the entire
supply chain. They are also looking at ways to replenish inventory
rapidly through auto-replenishment tools and ways to improve
working capital such as Scan-Based Trading.
Radio Frequency Identification (RFID) assessment. Canadian
retailers are assessing – and in some cases piloting – RFID
technology. They are closely watching Wal-Mart and other key
retailers, including Metro AG, to determine the readiness of the
technology and the success of rollout efforts. More importantly, they
are developing their own business cases to link the use of RFID
technology to business benefits and implementation costs. Metro
AG’s “Future Store Initiative” has delivered very strong results to date
– results that will increase the visibility and popularity of retail
technologies such as RFID. Concerns, while minor, are mostly asso-
ciated with privacy issues – for example, the extent to which retailers
have knowledge about the products consumers have in their homes.
Buying optimization. Retail organizations are performing strategic
sourcing reviews, streamlining their buying practices and policies
and investigating the potential for e-procurement technologies,
particularly for non-merchandise spend. These projects tend to
be low-risk but are associated with high returns: reduction in
uncontrolled, unapproved spending from 5 per cent to 30 per cent;
bulk discount savings of up to 20 per cent; and, significant reduction
in administrative costs. They are also continuing to review their
merchandise buying practices and looking for ways to reduce costs,
improve inventory levels and better manage their base of suppliers.
This is particularly important for Canadian retailers who are sourcing
products from around the globe.
Data synchronization. Retailers are also looking at ways to
synchronize their data with that of their trading partners. It has
been shown that inaccuracies in the supply chain contribute to
approximately 10 to 15 per cent of total out-of-stocks. In addition,
standards in data synchronization such as UCCnet and ECCnet have
created a common way for retailers and manufacturers to define
product and pricing information. Data synchronization enables rapid
purchase order and invoice reconciliation, eliminates data re-entry
and reduces catalogue errors. For example, the Hardlines
E-Collaborative Commerce Committees in the U.S. and Canada are
bringing together buyers and sellers to implement e-commerce
solutions that improve consumer value in the overall hardlines
supply chain.
Reviewing supply chain network infrastructure. Revisiting the
supply chain network is no small feat. Few retailers are
interested in reviewing the cost-effectiveness and service levels
supplied by distribution centres to retailers across Canada.
This process normally involves utilization of sophisticated
algorithms that take large amounts of data and determine costs
and benefits of alternative network designs. There are other retailers
who are constructing new distribution centres to support their
growth and productivity objectives.
A Retailer’s Guide to Supply Chain Management
8
Outsourcing non-core functions. At a macro level, the retail
industry has not yet, unlike other industries, outsourced core
business processes such as human resources. However, retailers
have outsourced supply chain functions and continue to outsource
application management services (not complete outsourcing
of information technology, but rather outsourcing of selected
application support functions, such as help desk).
Legacy application replacement. Some Canadian retailers
are running portions of their supply chain with custom-developed
applications, but more and more of these custom applications are
being replaced with packaged software applications. For example, a
number of Canadian retailers are replacing their legacy warehouse
management solutions with off-the-shelf packaged software. These
projects tend not to focus on the technology alone but involve
changes to business processes, people, the organization, and
metrics in order to improve service levels from the distribution
centre and/or lower service costs.
Supply chain visibility / information flow. Canadian retailers are
looking for ways to improve supply chain visibility across the entire
pipeline. Supply chain event management tools have provided the
capability to view end-to-end processes across the supply chain.
This end-to-end view can help identify bottlenecks for both product
and information flow, allowing appropriate resolutions to take place.
Supply chain processes automation. Many supply chain automa-
tion applications now exist in retail. Automated data collection is a
common application, due to the increased use of data collection
devices and the high penetration of data warehouses. Also, many
technologies in the logistics space – such as robotics – have improved
productivity dramatically, justifying their initial capital expenditure.
While some of these initiatives involve the implementation of tech-
nology, retailers are developing business cases to support changes
to their supply chain environment. The technology initiatives are
usually preceded by a business process improvement initiative
and subsequent business case linking the identified process and
organizational changes with the technology implementation.
What tools are available to
enable improvements in
Supply Chain Management?
There are a number of tools available to enable effective retail supply
chain management. These tools span a variety of purposes – some
are used to manage planning; some are used for transaction-level
processing; some are used as optimization algorithms; others are
integration tools that link suppliers to manufacturers to retailers.
The retail industry is characterized by a plethora of different systems.
In fact, most retailers have taken a best-of-breed approach to their
information technology architecture, as opposed to implementing
Enterprise Resource Planning (ERP),(which is more widespread in
the consumer packaged goods industry).
Listed below are examples of off-the-shelf software systems that
impact and enable supply chain management in a retail environment.
This is not meant to be an exhaustive list of tools, nor is it meant to
represent a rating of available products. It is simply representative of
the potential tools available in each category.
• Merchandise and assortment planning systems. While
some would argue that merchandising and assortment planning
functions are not supply chain functions, they do have an
impact on a retailer’s supply chain as they impact store service
levels and inventory levels. Tools from GERS, JDA, Retek, SAP
and STS can be used to assist in the merchandising and
assortment planning process. More broadly, these tools offer
additional capabilities in supply chain management from both
a planning and execution perspective.
• Supply chain planning and optimization. In terms of CPFR
and/or any other type of retailer/supplier collaboration, there is a
variety of tools available to retailers. Some of the aforementioned
tools (from JDA, Retek and SAP, plus tools offered by PeopleSoft
and Oracle) offer Web-based collaboration functionality. There are
also other specialized tools from i2, Manugistics and Synchra
Systems. In addition to CPFR and Web-based collaboration, both
i2 and Manugistics offer transportation optimization functionality
as well as supply chain network optimization tools. They utilize
alert-type functionality and exception-based management to high-
light issues in the supply chain that require management attention.
A Retailer’s Guide to Supply Chain Management
• Warehouse Management Systems (WMS). There are a wide
variety of WMS products in the marketplace to support the needs
of the retail industry, such as Catalyst, EXE and Manhattan. WMS
products tend to focus on optimizing the flow of goods within
the four walls of the distribution centre, but also offer some
functionality aimed at inbound and outbound transportation
planning and execution.
• Event management. There are a number of products, including
some listed above, which offer event management functionality.
These products enable detailed tracking of supply chain events
such as product movement or equipment breakdown (i.e., supplier
downtime) and provide mechanisms to identify alternatives.
Products include i2, Manugistics, Red Prairie, SAP and Viewlocity.
• Marketplaces and exchanges. There are a number of market-
places that can be utilized to improve supply chain management
performance. Transportation organizations such as the National
Transportation Exchange (NTE) and Freightwise provide a mecha-
nism for retailers and manufacturers to buy and auction
transportation space. Simple auction marketplaces such as
eBay are being used to sell close-out or defective but saleable
inventory and supplies no longer required by retailers. The World
Wide Retail Exchange (WWRE) offers members functionality such
as collaboration, data synchronization, negotiations and auctions,
demand aggregation, and order management.
• Procurement tools. While some of the broader off-the-shelf
products from JDA, Retek and SAP offer procurement functionality
and Web tools to assist in the procurement process, other more
specialized e-procurement tools exist (e.g., Ariba, which is being
used by STAPLES Business Depot, Target and Hallmark).
• Data synchronization. As is the case with other areas, some
of the broader application solutions such as SAP, JDA, Synchra
and i2 offer solutions for data synchronization. ECCnet offers
Canadian retailers a standardized online forum for data, images
and bar code communication. Other marketplace tools are
offered by Trigo, Lansa and IBM (Websphere Business Integrator
and Crossworlds).
• RFID. Radio Frequency Identification is a highly popular topic for
supply chain professionals. The concept of tagging pallets, cases
and items with a radio frequency-enabled tag that can be read
immediately and enable real-time tracking of product throughout
the supply chain is a concept that is expected to transform supply
chain management as we know it today.
Third-party logistics is not a tool in terms of application software
but is worth mentioning because it can enable improvements in
supply chain. A number of retailers have already outsourced a portion
of their supply chain to a third-party logistics organization. An
outsourcing relationship, if properly managed, can benefit a retailer
in terms of improving service levels while reducing overall costs.
9
A Retailer’s Guide to Supply Chain Management
10
Innovative supply chain vision. The winners in today’s
competitive landscape will deploy smart supply chain models that
deliver game-changing standards of service at competitive cost.
They will connect the end-to-end value chain and differentiate
supply chain approaches based on product/customer segments.
Successful innovation is the key driver for revenue growth,
competitive margins and, in some cases, even survival. Increasingly,
this innovation has to be delivered through a virtual network of
partners working together in a collaborative environment to bring
product and services to market faster, smarter and cheaper. Retailers
such as Wal-Mart and Zara have developed game-changing supply
chains that provide their organizations with a competitive advantage.
Focus on differentiating competencies. The trend toward
global sourcing and increasing use of partners for supply chain
activity is set to continue, fueling the growth of networked value
chains. Retailers are already sourcing global products and increasing
their use of partners for areas such as logistics, transportation and
distribution. Driving this trend is the imperative to not only seek unit
cost advantage and secure best market capabilities, but also to share
risks with partners and create a pay-as-you-use variable supply
chain model. Operations excellence in managing all supply chain
functions remains a foundation for any world-class supply chain.
However, a new perspective on operations excellence is required, not
only in what a company does but also in what a company’s supply
chain partners do and how a business orchestrates them.
Where is Supply Chain Management
heading in the future?
A number of retailers are taking the necessary steps to simplify their
supply chain, reduce overall costs, reduce stock-out occurrences
and reduce inventory levels. They are looking at the implications of
technologies such as wireless and RFID on the supply chain. But how
would one describe the characteristics of the future supply chain?
Based on knowledge of what supply chain leaders in various
industries are planning and doing – both within and outside of the
retail industry – we have identified the strategies that successfully
competitive supply chains are utilizing. They include:
• Innovative supply chain vision
• A focus on differentiating competencies
• Dynamic global sourcing and demand synchronization
• Use of emerging technologies
Figure 2. Integrated Retail Supply Chain Model
Source: IBM Business Consulting Services 2004
A Retailer’s Guide to Supply Chain Management
11
Dynamic global sourcing and demand synchronization.
Global sourcing patterns will continue to shift dynamically in search of
lower-cost sources. In addition, retailers will continue to rationalize and
harmonize their own global value chain resources in search of more
efficient and effective means of satisfying global customer demands.
Fast, flexible, efficient and transparent response to changing customer
demands and supply shocks remains the goal for supply chain
management and will be essential to compete in this new world.
Use of emerging technologies. Innovative new technologies
(such as RFID) continue to emerge that enhance and transform
supply chain capabilities and afford new ways to deliver and finance
technology infrastructure on a pay-as-you-use basis. This type of
model will be a critical enabler that delivers new capabilities, enhances
ROI and supports fast, modular implementation of supply chain
concepts across multiple value chain partners. For example, a major
retailer created a supply chain that is driven by customer demand
and supply chain events. The first to implement supplier electronic
collaboration, which was extended to Vendor Managed Inventory
(VMI), this company is now using RFID tags and scanners for inven-
tory management, auto-replenishment and loss prevention.
What steps should retailers be taking
now to improve their Supply Chain?
1. Assess where you are now
Transformation of the retail supply chain is a journey and requires a
roadmap, or structured approach, on how to get there. The journey
should begin with a diagnostic assessment of your company’s
current supply chain performance, and comparing it to a future end
state. The assessment should also analyze how your company is
positioned relative to leading practices of other companies both
within and outside of the retail industry.
As a company matures through the various stages of a static
enterprise model – functional optimization, horizontal process
integration, external collaboration, on-demand supply chain – certain
characteristics are evident. A diagnostic assessment will help you
determine where you are on the maturity model and help you
prioritize initiatives that will have the greatest impact on shareholder
value and ROI. Based on this assessment of your supply chain
maturity in terms of processes, organizational aptitude and enabling
technologies, you can begin to formulate a supply chain vision
and strategy.
2. Develop a strategy for making change
Your strategy should include the following key steps:
• Identify the company’s core supply chain differentiators and
capabilities, and assess current performance.
• Determine which functions could be better performed by a
partner, and begin to identify these partners.
• Define the supply chain process components and needs for
organizational reconstruction.
• Define the measurement framework, which is aligned with
business objectives and goals. Set targets and thresholds for the
key supply chain performance indicators.
• Evaluate the financial and operational value to be achieved
in terms of financial performance and operational performance
characteristics such as cycle time, quality and service level
attainment. Use modeling tools to simulate end-state financial
statements and operational performance criteria.
• Define the real-time information and connectivity vision, including
an open and services-based technology architecture, required to
support the vision.
• Prioritize which initiatives will have the greatest impact on growth,
operational excellence, ROI and shareholder value.
3. Create a roadmap to achieve transformation
Transformation requires a roadmap that establishes the steps
required to achieve the vision. Each supply chain component has
associated performance criteria – both financial (e.g., costs, revenue
influence) and operational (e.g., cycle time, quality, service level
attainment). The initiatives with the greatest business impact, both
financially and operationally, can be prioritized and implemented
with speed to bring value to the organization. A transformation port-
folio should be created which focuses on these prioritized initiatives.
4. Achieve the benefits of a new approach
A new mindset is required for implementing the strategy. The old
model of fixed strategy and long implementation times is dead. In its
place, companies are demanding either rapid ROI or an ROI that is
self-funding, with a modular approach to implementation, often
involving pilots followed by a scale-up.
More scrutiny is now being placed on the delivery and tracking of
benefits, helping to ensure that benefits flow through to the bottom
line and that multiple supply chain initiatives do not “double
account” for benefits and overstate the business case, especially in
inventory and process cost reductions. On-demand implementation
approaches (e.g., gain sharing, pay-as-you-use) can provide the
impetus to kick-start major transformation programs and generate
the change momentum required to build a longer-term vision.
GLOSSARY OF TERMS
3PL (Third Party Logistics): The use of an outside party to perform
some part of the logistics function, typically trucking or warehousing.
It is appropriate if there are economies of scale in logistics function.
ABC (Activity Based Costing): An accounting method that
attempts to closely associate costs, particularly indirect costs, with
the activities that generate the costs.
ASN (Advance Shipping Notice): An electronic message from
the shipper (or supplier or sender) to the customer that the product
has been shipped and is expected to arrive during a specified
time interval.
ASP (Application Service Provider): A firm that provides both
computing power and business software to businesses via the Web.
A business that uses an ASP can be billed per transaction, so that
a small firm might be able to use a powerful piece of software
without having to pay a high fixed license fee for it.
APS (Advanced Planning & Scheduling): A computerized system
that extracts real-time information from the supply chain, with
which to calculate a feasible schedule, resulting in a fast, reliable
response to the customer. APS utilizes planning and scheduling
techniques that consider a wide range of constraints to produce
an optimized plan.
Assortment Planning: A process to define a retailer’s selection of
merchandise. Includes both the depth and breadth of products carried.
Best of Breed: Systems or functions that exhibit the highest level
of performance in their class. Tradeoffs occur in multiple-function
systems when the costs of integrating several systems offset the
benefits of having the best system in each individual area.
CPFR (Collaborative Planning, Forecasting and Replenishment): A
set of guidelines for how participants in a supply chain share
information, mainly forecasts and plans for promotions.
Seehttp://www.cpfr.org
Client/Server ERP: A networked information processing architec-
ture in which information and the ERP program are stored on
both servers and clients, and processed cooperatively as the client
processor interacts with the server. Tasks may be local, shared,
or centralized.
Collaborative Hubs: An information technology solution that
transparently handles the transfer of information between
trading partners.
Cross Docking: A system for operating a distribution centre
in which product from inbound vehicles move almost immediately
to outbound vehicles without being put into storage. The supplier
of the inbound product may be a completely different firm from
the receiver of the outbound product. The major purpose of a
cross-docking distribution centre may be to “break bulk” at some
level (e.g. down to the skid level).
Demand Forecasting: The process of calculating and predicting
future demand events usually based on extrapolation from past
experience, and with varying degrees of uncertainty.
Demand Synchronization: The timely and accurate updating of
any item (i.e., product) information within and across enterprises to
ensure a consistent match of data between the owner/originator of
the product data and all users of the data.
ECCnet: Canada’s online, standardized product registry for
synchronized data exchange. Product listing through the ECCnet
registry is already a standard term and condition of trade in the
Canadian grocery, pharmacy and foodservice sectors.
E-Procurement Solutions: Software solutions that allow the
purchase and sale of supplies and services over electronic
networks such as the Internet.
ERP (Enterprise Resource Planning): A comprehensive software
system that has coordinated modules to perform all the standard
business data processing functions such as: general ledger,
accounts receivable, accounts payable, asset management,
HR/payroll, forecasting, purchasing, inventory, materials
requirements planning (MRP), production planning, warehouse
management, sales, order management, and distribution.
A Retailer’s Guide to Supply Chain Management
12
A Retailer’s Guide to Supply Chain Management
Event Management Solutions: Information technology
that allows extraction and analysis of real-time information from
the supply chain. These solutions can monitor the status and
promote the execution of events throughout the production and
distribution process — from sourcing to ordering to delivery.
GTIN (Global Trade Item Number): A code, similar to UPC, for
identifying products or SKUs.
Lost Sales: An analysis of actual/potential unsatisfied demand due
to lack of inventory.
Marketplaces and Exchanges: Virtual medium that allows
common groups of entities to undertake business transactions. They
can focus on either indirect or specific direct goods and services,
and may be built around vertical (industry specific) or horizontal
(cross industry) lines.
Maverick Spending: Refers to purchases made with non-preferred
or non-contracted service providers and may mean higher prices are
paid for goods and services, service level agreements with contracted
service providers are not honoured and potential probity issues.
Merchandise and Assortment Planning Systems: Information
systems that allow an organization to effectively advertise, promote,
and organize the sales of a particular product. Generally involves both
in-store and outside store activities that promote a product, including
pricing, assortment, product placement, signage, displays, etc.
Merchandising: The activities associated with selling products,
such as identification of the market, advertising at the right time
in the right media, and creating attractive packaging and displays.
Optimization Algorithms: An unambiguous formula or set of
rules for solving a problem in a finite number of steps resulting in
an optimal solution.
Outsourcing: The hiring by firm X of an outside firm Y to perform
some activity Z that might otherwise be performed by X.
POS (Point-of-Sale): Data typically accumulated by retail
scanners. Users of these data have up to the minute information
on how much of what product was sold when and at which outlet.
Postponement: A modification to a production and distribution
process, so that some operation on the product is done later in time
and closer to the final customer. Typically, there are two motivations:
a) less inventory needs to be carried earlier in the process because
of risk pooling, and b) transportation costs may be reduced because
the not-quite-complete product is easier to transport.
Procurement: The process of acquiring supplies or services from
external sources, beginning with the determination of a need for sup-
plies of services and ending with contract completion or closeout.
RFID (Radio Frequency Identification): A type of label or badge
that is read electronically rather than optically. The reader need
not touch the label in order to read it. Typical storage content is 126
bits of information.
SKU (Stock Keeping Unit): A distinguishable product. e.g.,
mushroom soup/10oz, mushroom soup/20oz constitute two
different SKUs.
Supply Chain Planning & Optimization: The set of supply chain
activities that focus on evaluating demand for material and capacity
and formulate plans and schedules based on meeting that demand
and company goals. System functions often involved in the planning
cycle include Master Production Schedule (MPS), Materials
Requirements Planning (MRP), Rough Cut Capacity, Capacity
Requirements Planning (CRP), Distribution Requirements/Resource
Planning (DRP) and Advanced Planning and Scheduling (APS).
UCC (Uniform Commercial Code): A standard set of laws governing
commercial transactions (bills of lading, letters of credit, bank
deposits, etc.) adopted by all states in the U.S. except Louisiana
(it uses a variant of the Napoleonic code).
13
A Retailer’s Guide to Supply Chain Management
14
UCC (Uniform Code Council): An industry group to promote
multi-industry standards for product identification or bar codes.
Seehttp://www.uc-council.org
UPC (Universal Product Code): A 10 to 12-digit machine-readable
numeric product code that originated in the food industry. The first
several digits represent the manufacturer, the remaining digits
the product.
VMI (Vendor Managed Inventory): An inventory management
policy whereby the supplier decides when to restock product at his
customer’s site based on up-to-the minute usage information from
the customer. These agreements typically include a penalty to be
paid by the supplier if there is a stock out, and an upper limit on how
much inventory can be carried at the customer. The payment
arrangement may allow the customer to pay for product only when
the customer uses it. The customer must provide the supplier with
up-to-date information on stock level and perhaps even forecasts of
future usage.
WMS (Warehouse Management System): A software system for
tracking where product is stored in a warehouse, generating pick
lists, and prompting the proper outbound shipments.
RETAIL COUNCIL OF CANADA
Founded in 1963, Retail Council of Canada is the Voice of Retail. It is a
not-for-profit association whose more than 9,000 members represent all
retail formats, including national and regional department stores, mass
merchants, specialty chains, independent stores and online merchants.
www.retailcouncil.org
IBM CANADA BUSINESS
CONSULTING SERVICES
IBM is the world’s largest information technology company,
with over 80 years of leadership in helping businesses innovate.
With consultants and professional staff in more than 160 countries
globally, IBM Business Consulting Services provides clients
with business process and industry expertise, a deep understanding
of technology solutions that address specific industry issues, and
the ability to design, build and run those solutions in a way that
delivers bottom line value for Canadian businesses.
www.ibm.com/bcs/retail
ECCnet - Canada’s National Product Registry
Provides retailers and distributors with clean, standardized data.
www.eccnet.org
Global Commerce Initiative
A voluntary body created to improve the performance of the
international supply chain for consumer goods through the
collaborative development and endorsement of recommended
standards and key business processes.
www.gci-net.org
ONLINE RESOURCES
IBM and the IBM logo are trademarks or registered trademarks of International Business Machines Corporation and are used under license by IBM Canada Ltd.
Other company, product and service names may be trademarks or service marks of others. ©Copyright IBM Corporation 2004. All rights reserved.
ABOUT THE AUTHOR
Lino Casalino, Canadian Retail Leader
IBM Business Consulting Services
Lino Casalino leads the retail industry practice in Canada for IBM
Business Consulting Services. With more than 15 years of consult-
ing experience, Lino specializes in helping companies solve complex
business problems through the application of both business and
technology solutions. Lino has assisted more than 40 leading con-
sumer packaged goods and retail companies over the course of his
consulting services career. Designated a Certified Management
Consultant (CMC) and Professional Engineer of Ontario (PEO), Lino
holds a Bachelor of Applied Science and Engineering from the
University of Toronto, and a Master of Business Administration from
the University of Georgia. Lino can be reached at:
Tel: 416-549-3116
E-mail: [email protected]
ABOUT IBM
IBM is the world’s largest information technology company, with over
80 years of leadership in helping businesses innovate. With consult-
ants and professional staff in more than 160 countries globally,
IBM Business Consulting Services provides clients with business
process and industry expertise, a deep understanding of technology
solutions that address specific industry issues, and the ability to
design, build and run those solutions in a way that delivers bottom-
line value for Canadian businesses. For more information, contact:
IBM Canada Business Consulting Services
Retail Practice
10 York Mills Road, Suite 400
Toronto, Ontario, M2P 2G7
Attention: Lino Casalino, Canadian Retail Leader
Visit www.ibm.com/bcs/retail
w o r k i n g i n p a r t n e r s h i p w i t h
IBM Business Consulting Services
RETAIL COUNCIL OF CANADA
1255 Bay Street, Suite 800
Toronto, Ontario M5R 2A9
1-888-373-8245
[email protected]
www.retailcouncil.org
IBM CANADA BUSINESS
CONSULTING SERVICES
Retail Practice
10 York Mills Road, Suite 400
Toronto, Ontario, M2P 2G7
1-800-IBM-7080 ext. BCS
www.ibm.com/bcs/retail
doc_424713163.pdf
During the past few decades, retailers have been facing increasing competitive pressures from a number of sources. In a bid to improve profitability and efficiency, retailers are seeking ways to reduce costs, improve efficiency and enhance customer service through efficient supply chain management.
A Retailer’s Guide to
Supply Chain
Management
w o r k i n g i n p a r t n e r s h i p w i t h
IBM Business Consulting Services
Supply Chain
Management
Retail Council of Canada
Founded in 1963, Retail Council of Canada is the Voice of Retail. It is a not-for-profit association whose more
than 9,000 members represent all retail formats, including national and regional department stores, mass mer-
chants, specialty chains, independent stores and online merchants.
RCC speaks for an industry that touches the daily lives of Canadians in every corner of the country
– by providing jobs; consumer value; world-class product selection; and the colour, sizzle and
entertainment of the marketplace.
Canadian retailers take pride in their industry and the contribution it makes to the country’s well-being. And
whenever the opportunity presents itself, RCC is there promoting retail as a career; as a portal to
the world of work; as an economic driver; and as a barometer of consumer tastes and confidence.
Retail Council of Canada
1255 Bay Street, Suite 800
Toronto, Ontario, M5R 2A9
Tel: 1-888-373-8245
E-mail: [email protected]
www.retailcouncil.org
ABOUT IBM
IBM is the world’s largest information technology company, with over
80 years of leadership in helping businesses innovate. With consult-
ants and professional staff in more than 160 countries globally,
IBM Business Consulting Services provides clients with business
process and industry expertise, a deep understanding of technology
solutions that address specific industry issues, and the ability to
design, build and run those solutions in a way that delivers bottom-
line value for Canadian businesses. For more information, contact:
IBM Canada Business Consulting Services
Retail Practice
10 York Mills Road, Suite 400
Toronto, Ontario, M2P 2G7
At tenti on: Li no Casal i no, Canadi an Retai l Leader, l i no. casal i no@ca. i bm. com
Visit www.ibm.com/bcs/retail
A Retailer’s Guide to Supply Chain Management
3
Table of Contents
Executive Summary 3
Introduction
What i s Suppl y Chai n Management and
why i s i t i mportant for retai l ers? 4
What are the typical Supply Chain
issues faced by Canadian retailers? 6
What are some of the current Supply Chain
initiatives retailers are working on? 7
What tools are available to enable
improvements in Supply Chain Management? 8
Where is Supply Chain Management
heading in the future? 10
What steps should retailers be taking
now to improve their Supply Chain? 11
Glossary of terms 12
Online Resources 14
About the author 15
Executive Summary
During the past few decades, retailers have been facing increasing
competitive pressures from a number of sources. In a bid to improve
profitability and efficiency, retailers are seeking ways to reduce costs,
improve efficiency and enhance customer service through efficient
supply chain management. However, to manage the supply chain
most effectively, retailers must understand exactly what the supply
chain encompasses, its key concepts, and common issues and
challenges they may face as they implement a workable strategy.
With prevalent issues such as high inventory levels and low service
levels, Canadian retailers are embarking on numerous initiatives to
improve their supply chains. These initiatives are wide-ranging. On
one end of the spectrum, retailers are still struggling with the basics
– manual processes, data inaccuracies, and disparate systems.
On the other end, retailers are investigating the use of emerging
practices and technologies aimed at delivering substantial
improvements in performance.
Many retailers are turning to technology to improve their supply
chain. Technology alone will not drive optimization; however, it can
be a performance enabler. Typically, retailers have implemented best-
of-breed solutions or have custom-developed their own applications.
Supply chain planning, event management and procurement tools
are some of the many popular “off the shelf” software tools available
for retail enablement. Understanding what these tools offer and how
they can enable retail processes is the first step in choosing the right
software for their business. However, initiatives in these areas must
have strong business sponsorship and an associated business case.
Even with the right tools in place, a retailer will have to implement a
variety of strategies to obtain a competitive supply chain. Some of
these strategies include developing an innovative supply chain vision,
focusing on differentiating competencies, utilizing dynamic global
sourcing and implementing demand synchronization. With the
appropriate roadmap in place, supply chain excellence can be a key
competitive differentiator for any retailer.
With these factors in mind, this paper provides an overview of
supply chain management in a retail setting, trends and business
issues that surround it, current initiatives, available tools, and
strategies for successful implementation as retailers move forward.
4
Introduction:
What is Supply Chain Management
and why is it important for retailers?
Supply chain management is a well-known term that has been
highly publicized throughout the business community during the
past decade. In its most generic sense, it is a term that refers to the
flow of products and services from suppliers to manufacturers and
retailers through to the ultimate destination – the consumer. It also
refers to the flow of information backwards and forward through the
supply chain between the consumer, retailers, manufacturers and
suppliers, enabling the rapid replenishment of existing products or
the development of new products to meet changing market demands.
But how is supply chain management defined for retailers?
Supply chain management functions within a retail environment
include the planning, execution, optimization and measurement of
the following: sourcing/procurement, Collaborative Planning
Forecasting and Replenishment (CPFR), demand forecasting (as it
pertains to product quantities and time requirements), inventory
replenishment, inbound and outbound transportation, store logistics
and warehouse management. While each of these functions are
processes unto themselves, they are all related and should, in effect,
be integrated and considered holistically rather than in isolation.
Further, supply chain management should be tightly integrated
with merchandising, assortment planning, marketing (new product
introduction), information technology, finance, and human
resource management.
Supply chain management’s importance has been gaining momen-
tum and focus from retailers. There are numerous reasons for this.
During the past two decades, major changes in supply chain
management have been driven across a variety of industries by
some common trends:
• Consumers have become increasingly demanding in terms
of their expectations of price, selection, availability and quality
of both products and services. They are seeking higher degrees
of product and service customization. Empowered customers
expect on-time delivery, self-service with real-time order
configuration and status information, and optimally priced
product/service bundles.
• Product lifecycles have shrunk dramatically, and as a result, speed-
to-market and product innovation have become critical to corpo-
rate success.
• The development of new technology solutions and the increasing
utilization of the Web have enabled optimization and connectivity
between trading partners. This is evidenced by collaborative hubs,
e-procurement solutions, optimization algorithms and event
management solutions.
• Supply chains have become increasingly global and complex,
presenting greater challenges in managing supply and demand.
New customer and distribution channels are being developed,
then enhanced by technological innovations and geographical
expansion. Existing channels are under pressure and require
constant change to retain market position.
Figure 1. On-demand Maturity Model
A Retailer’s Guide to Supply Chain Management
A Retailer’s Guide to Supply Chain Management
5
• Retailers are the last node prior to the consumer in
the supply chain. Why does this matter and why does this
create added complexity for the retailer? Most suppliers and
manufacturers will ship in pallet quantities. The retailer must take
these pallet quantities and break them down into store-required
quantities of cases and units. While a manufacturer will typically
ship a relatively small number of SKUs to the retailer, the retailer
must receive a high number of SKUs and sort these SKUs
into store shipments. Depending on the type of retailer, the store
shipments could include vastly different products – soaps, shoes,
bottles, electronics, glassware and shirts – all requiring different
types of handling. The in-store logistics process must then take
these box/unit shipments and place the units on the shelves before
they are purchased by the consumer.
• Retail is multi-channel. Consumers purchase product from
retail stores, Web sites, kiosks, mail order and catalogues. Some
product is picked off the shelf directly. Some product is shipped
to consumer households. Some product is ordered via the Web
and then picked up at the retail outlet. The variety of logistical
scenarios must be carefully planned and executed so that product
is shipped with optimal service to the consumer and minimal cost
to the retail organization.
In this context, effective supply chain management becomes
important for retailers as it can help them balance supply and
demand. It can assist retailers by ensuring the right product is
available for consumers, thereby reducing out-of-stock merchandise
and providing optimal service levels. It can provide a mechanism
for establishing stronger relationships with suppliers and business
partners. Finally, the supply chain functions in a retail environment
tend to account for a high percentage of the costs and assets
associated with operating a retail environment. Therefore, retailers
who have connected their supply chain processes, implemented
enabling technologies, and streamlined their asset base will likely
be higher performers than retailers who have loosely implemented
disparate systems.
• Companies have dramatically increased their use of global
sourcing partners for cost and capability reasons, extending the
number of players involved in delivering value to a customer.
• Cost reduction continues to be a major corporate agenda item, and
the costs inherent in the supply chain management functions tend
to be significant in terms of overall corporate spend. Current mar-
gin pressures are severe, and supply chain performance is focused
increasingly on the overall business impact and shareholder value.
These trends have moved industries from the static and functional
view of the 1980s through to the horizontal process view
and eventually the external collaboration view of the early 2000s.
The future of supply chain management will be one of on-demand
– an environment where communities of suppliers, manufacturers
and retailers are linked by a supply chain Web – communicating in a
real-time, sense-and-respond environment. This will be enabled by
technologies such as Radio Frequency Identification (RFID), wire-
less, and mobility infrastructures. We will discuss the outlook for
supply chain management in later sections.
The retail industry has faced tremendous change and challenge
when it comes to supply chain management. In fact, there are some
unique characteristics of retailing that increase the complexity of the
retail supply chain:
• Retail is a highly variable business. Whether it is the time
of year, the weather outside, the relative confidence of consumers
or product promotions, retail demand for products and services
fluctuates throughout the year. This fluctuation has a tremendous
impact – not only for retailers who must ensure that products arrive
on their shelves in the most cost-effective manner, but for all
members of the supply chain who deal with the complexities of
product lead times and production dependencies.
• Retail complexity is high. Retailers typically carry tens of
thousands of stock keeping units (SKUs), further proliferated in
complexity by the number of permutations and combinations
associated with store-specific assortments. Canada’s vast geo-
graphical area, which forces retailers to deal with the requirements
of both rural and urban locations, also adds to the complexity.
A Retailer’s Guide to Supply Chain Management
6
What are the typical Supply Chain
issues faced by Canadian retailers?
As Canadian retailers continue to look at their operations to identify
opportunities for improvement, many are dealing with issues in their
supply chain, including:
• High inventory levels. As discussed earlier, inventory reduction
is viewed as a key opportunity for Canadian retailers. In fact, retail
inventory is seen, globally, as the single most important lever for
retailers to control costs, particularly during weak economic times.
In the IBM/Executive Technology Retail CIO Outlook published in
April 2003, the inventory management category was identified by
35 per cent of global CIOs as the greatest opportunity to cut costs
through investment in technology.
• Low service levels to retail stores. In some cases, retailers
struggle to ensure that the right product is available in the
right quantities at store level. Some retailers have targeted
specific growth categories, but have been unable to translate their
growth plans into improved category performance, largely due to
operational inefficiencies. Others suffered as a result of consumer
feedback, an indication that the retail outlets seemed to have
frequent out-of-stocks, affecting consumer brand image for
the retailer and increasing lost sales due to out-of-stocks.
Out-of-stocks could represent 2 per cent to 3 per cent of additional
sales, rather than lost sales.
• High transportation and logistics costs. Delivering to
hundreds of locations across Canada can represent a high cost for
many Canadian retailers. Further, managing in-bound product that
arrives from all over the world adds to the complexity (such as
lengthy lead times) and cost. Retail logistics costs, including
distribution centre operations and transportation costs, can
typically range from 3.5 per cent to 4.5 per cent of sales.
• Complexities associated with global sourcing. Offering an
assortment of products to the consumer that is competitive and
of value often means retailers must search the globe for the best
possible product at the lowest cost. This means sourcing from
around the world, which carries the added complexity of lengthy
product lead-times and supplier labour management. Supplier
product costs could be as high as 70 per cent of revenues,
depending on the product category.
• Outdated and/or non-integrated technologies. Retail is
an industry populated by a wide variety of solutions areas such as
point-of-sale (POS), merchandising and assortment management,
business intelligence, financial management, and labour
scheduling. In most cases, retailers are running legacy
applications or a myriad packaged software applications that need
to be interfaced. Retailers typically spend less than 2 per cent of
revenues on information technology.
• Innovation is diffused throughout the industry. The retail
industry will benefit from accelerating the spread and implemen-
tation of innovative technology and business practices. Many of
the innovations will bring limited benefits – even for companies
implementing them – unless the innovations are widely and
quickly adopted within the industry. (Source: Retail Supply Chain
Industry Innovation Panel Report, Retail Council of Canada,
October 2002.)
While many retailers do not fully understand their true supply chain
process costs, estimates range from 11 per cent to 15 per cent
of sales, representing a very significant cost base for any retailer
operating in today’s difficult environment. At the root of all these
issues is data. For many Canadian retailers, data management
continues to be a major thrust – whether it is product, inventory level
or price accuracy. For this reason and many others already
discussed, supply chain management has been a key priority
for Canadian retailers.
It is expected that supply chain management will continue to be a key
priority for Canadian retailers as a result of the following:
• Wal-Mart continues to define operational excellence in the area of
supply chain management and retailers are taking lessons from
the world’s largest retailer. Canadian retailers also acknowledge
that to become a player of world-class status and to compete in the
global retail economy, they must come equipped with world-class
supply chain operations and know-how.
• With the ongoing global instability, uncertainty over the direction
of interest rates and fluctuating oil prices, Canadian retailers have
dealt with a level of consumer confidence and spending which in
the past 12 months amounted to slow (or in some retail segments
negative) same-store sales growth. This slow growth left many
retailers with more inventory in their stores and distribution
centres than there was demand for, thereby forcing retailers to
look at cost reduction opportunities as a means to improve
corporate profitability.
A Retailer’s Guide to Supply Chain Management
7
• The proliferation of technological advancement and communica-
tion standards such as RFID, Global Trade Item Number (GTIN),
ECCnet and others are forcing retailers to understand these glob-
al/local initiatives and how they can potentially apply them to opti-
mize the supply chain in their own environments. For instance, the
Uniform Code Council, Inc. (UCC) has announced the 2005
Sunrise date initiative. This initiative requires U.S. and Canadian
retailers to have the capability to scan and process EAN-8 and
EAN-13 symbols, in addition to 12-digit UPC symbols, at the POS
by January 1, 2005.
What are some of the current
Supply Chain initiatives retailers
are working on?
Companies today are placing more emphasis on the supply chain
to transform their business model. They are radically changing the
way an organization senses, thinks, interprets and reacts. More and
more, successful companies are organizing their supply chains
horizontally (as opposed to the traditional vertical functional silos)
and orchestrating end-to-end extended supply chains, or value chain
networks. They are extending the “four walls” inside their enterprises
by integrating more with the “outside” – through sharing knowledge
and innovation with suppliers.
Retailers are reviewing their supply chain practices and defining
visions for the future; but at the same time, they are fixing the basics
– cleansing data, defining improved metrics, standardizing business
processes and practices, training staff, and integrating technology
– all in hopes of developing a low-cost supply chain that
competitively positions the organization for the future.
Let us examine what Canadian retailers are currently doing to
improve their supply chain, focusing on current initiatives.
(Future initiatives and trends will be explored in a later section.)
Collaborative Planning, Forecasting and Replenishment
(CPFR). Retailers are interested in finding ways to reduce invento-
ries and improve their ability to both anticipate and fulfill consumer
demand. They are improving their forecasting and merchandise
planning activities and finding ways to work with manufacturers and
suppliers to reduce cycle times and inventories throughout the entire
supply chain. They are also looking at ways to replenish inventory
rapidly through auto-replenishment tools and ways to improve
working capital such as Scan-Based Trading.
Radio Frequency Identification (RFID) assessment. Canadian
retailers are assessing – and in some cases piloting – RFID
technology. They are closely watching Wal-Mart and other key
retailers, including Metro AG, to determine the readiness of the
technology and the success of rollout efforts. More importantly, they
are developing their own business cases to link the use of RFID
technology to business benefits and implementation costs. Metro
AG’s “Future Store Initiative” has delivered very strong results to date
– results that will increase the visibility and popularity of retail
technologies such as RFID. Concerns, while minor, are mostly asso-
ciated with privacy issues – for example, the extent to which retailers
have knowledge about the products consumers have in their homes.
Buying optimization. Retail organizations are performing strategic
sourcing reviews, streamlining their buying practices and policies
and investigating the potential for e-procurement technologies,
particularly for non-merchandise spend. These projects tend to
be low-risk but are associated with high returns: reduction in
uncontrolled, unapproved spending from 5 per cent to 30 per cent;
bulk discount savings of up to 20 per cent; and, significant reduction
in administrative costs. They are also continuing to review their
merchandise buying practices and looking for ways to reduce costs,
improve inventory levels and better manage their base of suppliers.
This is particularly important for Canadian retailers who are sourcing
products from around the globe.
Data synchronization. Retailers are also looking at ways to
synchronize their data with that of their trading partners. It has
been shown that inaccuracies in the supply chain contribute to
approximately 10 to 15 per cent of total out-of-stocks. In addition,
standards in data synchronization such as UCCnet and ECCnet have
created a common way for retailers and manufacturers to define
product and pricing information. Data synchronization enables rapid
purchase order and invoice reconciliation, eliminates data re-entry
and reduces catalogue errors. For example, the Hardlines
E-Collaborative Commerce Committees in the U.S. and Canada are
bringing together buyers and sellers to implement e-commerce
solutions that improve consumer value in the overall hardlines
supply chain.
Reviewing supply chain network infrastructure. Revisiting the
supply chain network is no small feat. Few retailers are
interested in reviewing the cost-effectiveness and service levels
supplied by distribution centres to retailers across Canada.
This process normally involves utilization of sophisticated
algorithms that take large amounts of data and determine costs
and benefits of alternative network designs. There are other retailers
who are constructing new distribution centres to support their
growth and productivity objectives.
A Retailer’s Guide to Supply Chain Management
8
Outsourcing non-core functions. At a macro level, the retail
industry has not yet, unlike other industries, outsourced core
business processes such as human resources. However, retailers
have outsourced supply chain functions and continue to outsource
application management services (not complete outsourcing
of information technology, but rather outsourcing of selected
application support functions, such as help desk).
Legacy application replacement. Some Canadian retailers
are running portions of their supply chain with custom-developed
applications, but more and more of these custom applications are
being replaced with packaged software applications. For example, a
number of Canadian retailers are replacing their legacy warehouse
management solutions with off-the-shelf packaged software. These
projects tend not to focus on the technology alone but involve
changes to business processes, people, the organization, and
metrics in order to improve service levels from the distribution
centre and/or lower service costs.
Supply chain visibility / information flow. Canadian retailers are
looking for ways to improve supply chain visibility across the entire
pipeline. Supply chain event management tools have provided the
capability to view end-to-end processes across the supply chain.
This end-to-end view can help identify bottlenecks for both product
and information flow, allowing appropriate resolutions to take place.
Supply chain processes automation. Many supply chain automa-
tion applications now exist in retail. Automated data collection is a
common application, due to the increased use of data collection
devices and the high penetration of data warehouses. Also, many
technologies in the logistics space – such as robotics – have improved
productivity dramatically, justifying their initial capital expenditure.
While some of these initiatives involve the implementation of tech-
nology, retailers are developing business cases to support changes
to their supply chain environment. The technology initiatives are
usually preceded by a business process improvement initiative
and subsequent business case linking the identified process and
organizational changes with the technology implementation.
What tools are available to
enable improvements in
Supply Chain Management?
There are a number of tools available to enable effective retail supply
chain management. These tools span a variety of purposes – some
are used to manage planning; some are used for transaction-level
processing; some are used as optimization algorithms; others are
integration tools that link suppliers to manufacturers to retailers.
The retail industry is characterized by a plethora of different systems.
In fact, most retailers have taken a best-of-breed approach to their
information technology architecture, as opposed to implementing
Enterprise Resource Planning (ERP),(which is more widespread in
the consumer packaged goods industry).
Listed below are examples of off-the-shelf software systems that
impact and enable supply chain management in a retail environment.
This is not meant to be an exhaustive list of tools, nor is it meant to
represent a rating of available products. It is simply representative of
the potential tools available in each category.
• Merchandise and assortment planning systems. While
some would argue that merchandising and assortment planning
functions are not supply chain functions, they do have an
impact on a retailer’s supply chain as they impact store service
levels and inventory levels. Tools from GERS, JDA, Retek, SAP
and STS can be used to assist in the merchandising and
assortment planning process. More broadly, these tools offer
additional capabilities in supply chain management from both
a planning and execution perspective.
• Supply chain planning and optimization. In terms of CPFR
and/or any other type of retailer/supplier collaboration, there is a
variety of tools available to retailers. Some of the aforementioned
tools (from JDA, Retek and SAP, plus tools offered by PeopleSoft
and Oracle) offer Web-based collaboration functionality. There are
also other specialized tools from i2, Manugistics and Synchra
Systems. In addition to CPFR and Web-based collaboration, both
i2 and Manugistics offer transportation optimization functionality
as well as supply chain network optimization tools. They utilize
alert-type functionality and exception-based management to high-
light issues in the supply chain that require management attention.
A Retailer’s Guide to Supply Chain Management
• Warehouse Management Systems (WMS). There are a wide
variety of WMS products in the marketplace to support the needs
of the retail industry, such as Catalyst, EXE and Manhattan. WMS
products tend to focus on optimizing the flow of goods within
the four walls of the distribution centre, but also offer some
functionality aimed at inbound and outbound transportation
planning and execution.
• Event management. There are a number of products, including
some listed above, which offer event management functionality.
These products enable detailed tracking of supply chain events
such as product movement or equipment breakdown (i.e., supplier
downtime) and provide mechanisms to identify alternatives.
Products include i2, Manugistics, Red Prairie, SAP and Viewlocity.
• Marketplaces and exchanges. There are a number of market-
places that can be utilized to improve supply chain management
performance. Transportation organizations such as the National
Transportation Exchange (NTE) and Freightwise provide a mecha-
nism for retailers and manufacturers to buy and auction
transportation space. Simple auction marketplaces such as
eBay are being used to sell close-out or defective but saleable
inventory and supplies no longer required by retailers. The World
Wide Retail Exchange (WWRE) offers members functionality such
as collaboration, data synchronization, negotiations and auctions,
demand aggregation, and order management.
• Procurement tools. While some of the broader off-the-shelf
products from JDA, Retek and SAP offer procurement functionality
and Web tools to assist in the procurement process, other more
specialized e-procurement tools exist (e.g., Ariba, which is being
used by STAPLES Business Depot, Target and Hallmark).
• Data synchronization. As is the case with other areas, some
of the broader application solutions such as SAP, JDA, Synchra
and i2 offer solutions for data synchronization. ECCnet offers
Canadian retailers a standardized online forum for data, images
and bar code communication. Other marketplace tools are
offered by Trigo, Lansa and IBM (Websphere Business Integrator
and Crossworlds).
• RFID. Radio Frequency Identification is a highly popular topic for
supply chain professionals. The concept of tagging pallets, cases
and items with a radio frequency-enabled tag that can be read
immediately and enable real-time tracking of product throughout
the supply chain is a concept that is expected to transform supply
chain management as we know it today.
Third-party logistics is not a tool in terms of application software
but is worth mentioning because it can enable improvements in
supply chain. A number of retailers have already outsourced a portion
of their supply chain to a third-party logistics organization. An
outsourcing relationship, if properly managed, can benefit a retailer
in terms of improving service levels while reducing overall costs.
9
A Retailer’s Guide to Supply Chain Management
10
Innovative supply chain vision. The winners in today’s
competitive landscape will deploy smart supply chain models that
deliver game-changing standards of service at competitive cost.
They will connect the end-to-end value chain and differentiate
supply chain approaches based on product/customer segments.
Successful innovation is the key driver for revenue growth,
competitive margins and, in some cases, even survival. Increasingly,
this innovation has to be delivered through a virtual network of
partners working together in a collaborative environment to bring
product and services to market faster, smarter and cheaper. Retailers
such as Wal-Mart and Zara have developed game-changing supply
chains that provide their organizations with a competitive advantage.
Focus on differentiating competencies. The trend toward
global sourcing and increasing use of partners for supply chain
activity is set to continue, fueling the growth of networked value
chains. Retailers are already sourcing global products and increasing
their use of partners for areas such as logistics, transportation and
distribution. Driving this trend is the imperative to not only seek unit
cost advantage and secure best market capabilities, but also to share
risks with partners and create a pay-as-you-use variable supply
chain model. Operations excellence in managing all supply chain
functions remains a foundation for any world-class supply chain.
However, a new perspective on operations excellence is required, not
only in what a company does but also in what a company’s supply
chain partners do and how a business orchestrates them.
Where is Supply Chain Management
heading in the future?
A number of retailers are taking the necessary steps to simplify their
supply chain, reduce overall costs, reduce stock-out occurrences
and reduce inventory levels. They are looking at the implications of
technologies such as wireless and RFID on the supply chain. But how
would one describe the characteristics of the future supply chain?
Based on knowledge of what supply chain leaders in various
industries are planning and doing – both within and outside of the
retail industry – we have identified the strategies that successfully
competitive supply chains are utilizing. They include:
• Innovative supply chain vision
• A focus on differentiating competencies
• Dynamic global sourcing and demand synchronization
• Use of emerging technologies
Figure 2. Integrated Retail Supply Chain Model
Source: IBM Business Consulting Services 2004
A Retailer’s Guide to Supply Chain Management
11
Dynamic global sourcing and demand synchronization.
Global sourcing patterns will continue to shift dynamically in search of
lower-cost sources. In addition, retailers will continue to rationalize and
harmonize their own global value chain resources in search of more
efficient and effective means of satisfying global customer demands.
Fast, flexible, efficient and transparent response to changing customer
demands and supply shocks remains the goal for supply chain
management and will be essential to compete in this new world.
Use of emerging technologies. Innovative new technologies
(such as RFID) continue to emerge that enhance and transform
supply chain capabilities and afford new ways to deliver and finance
technology infrastructure on a pay-as-you-use basis. This type of
model will be a critical enabler that delivers new capabilities, enhances
ROI and supports fast, modular implementation of supply chain
concepts across multiple value chain partners. For example, a major
retailer created a supply chain that is driven by customer demand
and supply chain events. The first to implement supplier electronic
collaboration, which was extended to Vendor Managed Inventory
(VMI), this company is now using RFID tags and scanners for inven-
tory management, auto-replenishment and loss prevention.
What steps should retailers be taking
now to improve their Supply Chain?
1. Assess where you are now
Transformation of the retail supply chain is a journey and requires a
roadmap, or structured approach, on how to get there. The journey
should begin with a diagnostic assessment of your company’s
current supply chain performance, and comparing it to a future end
state. The assessment should also analyze how your company is
positioned relative to leading practices of other companies both
within and outside of the retail industry.
As a company matures through the various stages of a static
enterprise model – functional optimization, horizontal process
integration, external collaboration, on-demand supply chain – certain
characteristics are evident. A diagnostic assessment will help you
determine where you are on the maturity model and help you
prioritize initiatives that will have the greatest impact on shareholder
value and ROI. Based on this assessment of your supply chain
maturity in terms of processes, organizational aptitude and enabling
technologies, you can begin to formulate a supply chain vision
and strategy.
2. Develop a strategy for making change
Your strategy should include the following key steps:
• Identify the company’s core supply chain differentiators and
capabilities, and assess current performance.
• Determine which functions could be better performed by a
partner, and begin to identify these partners.
• Define the supply chain process components and needs for
organizational reconstruction.
• Define the measurement framework, which is aligned with
business objectives and goals. Set targets and thresholds for the
key supply chain performance indicators.
• Evaluate the financial and operational value to be achieved
in terms of financial performance and operational performance
characteristics such as cycle time, quality and service level
attainment. Use modeling tools to simulate end-state financial
statements and operational performance criteria.
• Define the real-time information and connectivity vision, including
an open and services-based technology architecture, required to
support the vision.
• Prioritize which initiatives will have the greatest impact on growth,
operational excellence, ROI and shareholder value.
3. Create a roadmap to achieve transformation
Transformation requires a roadmap that establishes the steps
required to achieve the vision. Each supply chain component has
associated performance criteria – both financial (e.g., costs, revenue
influence) and operational (e.g., cycle time, quality, service level
attainment). The initiatives with the greatest business impact, both
financially and operationally, can be prioritized and implemented
with speed to bring value to the organization. A transformation port-
folio should be created which focuses on these prioritized initiatives.
4. Achieve the benefits of a new approach
A new mindset is required for implementing the strategy. The old
model of fixed strategy and long implementation times is dead. In its
place, companies are demanding either rapid ROI or an ROI that is
self-funding, with a modular approach to implementation, often
involving pilots followed by a scale-up.
More scrutiny is now being placed on the delivery and tracking of
benefits, helping to ensure that benefits flow through to the bottom
line and that multiple supply chain initiatives do not “double
account” for benefits and overstate the business case, especially in
inventory and process cost reductions. On-demand implementation
approaches (e.g., gain sharing, pay-as-you-use) can provide the
impetus to kick-start major transformation programs and generate
the change momentum required to build a longer-term vision.
GLOSSARY OF TERMS
3PL (Third Party Logistics): The use of an outside party to perform
some part of the logistics function, typically trucking or warehousing.
It is appropriate if there are economies of scale in logistics function.
ABC (Activity Based Costing): An accounting method that
attempts to closely associate costs, particularly indirect costs, with
the activities that generate the costs.
ASN (Advance Shipping Notice): An electronic message from
the shipper (or supplier or sender) to the customer that the product
has been shipped and is expected to arrive during a specified
time interval.
ASP (Application Service Provider): A firm that provides both
computing power and business software to businesses via the Web.
A business that uses an ASP can be billed per transaction, so that
a small firm might be able to use a powerful piece of software
without having to pay a high fixed license fee for it.
APS (Advanced Planning & Scheduling): A computerized system
that extracts real-time information from the supply chain, with
which to calculate a feasible schedule, resulting in a fast, reliable
response to the customer. APS utilizes planning and scheduling
techniques that consider a wide range of constraints to produce
an optimized plan.
Assortment Planning: A process to define a retailer’s selection of
merchandise. Includes both the depth and breadth of products carried.
Best of Breed: Systems or functions that exhibit the highest level
of performance in their class. Tradeoffs occur in multiple-function
systems when the costs of integrating several systems offset the
benefits of having the best system in each individual area.
CPFR (Collaborative Planning, Forecasting and Replenishment): A
set of guidelines for how participants in a supply chain share
information, mainly forecasts and plans for promotions.
Seehttp://www.cpfr.org
Client/Server ERP: A networked information processing architec-
ture in which information and the ERP program are stored on
both servers and clients, and processed cooperatively as the client
processor interacts with the server. Tasks may be local, shared,
or centralized.
Collaborative Hubs: An information technology solution that
transparently handles the transfer of information between
trading partners.
Cross Docking: A system for operating a distribution centre
in which product from inbound vehicles move almost immediately
to outbound vehicles without being put into storage. The supplier
of the inbound product may be a completely different firm from
the receiver of the outbound product. The major purpose of a
cross-docking distribution centre may be to “break bulk” at some
level (e.g. down to the skid level).
Demand Forecasting: The process of calculating and predicting
future demand events usually based on extrapolation from past
experience, and with varying degrees of uncertainty.
Demand Synchronization: The timely and accurate updating of
any item (i.e., product) information within and across enterprises to
ensure a consistent match of data between the owner/originator of
the product data and all users of the data.
ECCnet: Canada’s online, standardized product registry for
synchronized data exchange. Product listing through the ECCnet
registry is already a standard term and condition of trade in the
Canadian grocery, pharmacy and foodservice sectors.
E-Procurement Solutions: Software solutions that allow the
purchase and sale of supplies and services over electronic
networks such as the Internet.
ERP (Enterprise Resource Planning): A comprehensive software
system that has coordinated modules to perform all the standard
business data processing functions such as: general ledger,
accounts receivable, accounts payable, asset management,
HR/payroll, forecasting, purchasing, inventory, materials
requirements planning (MRP), production planning, warehouse
management, sales, order management, and distribution.
A Retailer’s Guide to Supply Chain Management
12
A Retailer’s Guide to Supply Chain Management
Event Management Solutions: Information technology
that allows extraction and analysis of real-time information from
the supply chain. These solutions can monitor the status and
promote the execution of events throughout the production and
distribution process — from sourcing to ordering to delivery.
GTIN (Global Trade Item Number): A code, similar to UPC, for
identifying products or SKUs.
Lost Sales: An analysis of actual/potential unsatisfied demand due
to lack of inventory.
Marketplaces and Exchanges: Virtual medium that allows
common groups of entities to undertake business transactions. They
can focus on either indirect or specific direct goods and services,
and may be built around vertical (industry specific) or horizontal
(cross industry) lines.
Maverick Spending: Refers to purchases made with non-preferred
or non-contracted service providers and may mean higher prices are
paid for goods and services, service level agreements with contracted
service providers are not honoured and potential probity issues.
Merchandise and Assortment Planning Systems: Information
systems that allow an organization to effectively advertise, promote,
and organize the sales of a particular product. Generally involves both
in-store and outside store activities that promote a product, including
pricing, assortment, product placement, signage, displays, etc.
Merchandising: The activities associated with selling products,
such as identification of the market, advertising at the right time
in the right media, and creating attractive packaging and displays.
Optimization Algorithms: An unambiguous formula or set of
rules for solving a problem in a finite number of steps resulting in
an optimal solution.
Outsourcing: The hiring by firm X of an outside firm Y to perform
some activity Z that might otherwise be performed by X.
POS (Point-of-Sale): Data typically accumulated by retail
scanners. Users of these data have up to the minute information
on how much of what product was sold when and at which outlet.
Postponement: A modification to a production and distribution
process, so that some operation on the product is done later in time
and closer to the final customer. Typically, there are two motivations:
a) less inventory needs to be carried earlier in the process because
of risk pooling, and b) transportation costs may be reduced because
the not-quite-complete product is easier to transport.
Procurement: The process of acquiring supplies or services from
external sources, beginning with the determination of a need for sup-
plies of services and ending with contract completion or closeout.
RFID (Radio Frequency Identification): A type of label or badge
that is read electronically rather than optically. The reader need
not touch the label in order to read it. Typical storage content is 126
bits of information.
SKU (Stock Keeping Unit): A distinguishable product. e.g.,
mushroom soup/10oz, mushroom soup/20oz constitute two
different SKUs.
Supply Chain Planning & Optimization: The set of supply chain
activities that focus on evaluating demand for material and capacity
and formulate plans and schedules based on meeting that demand
and company goals. System functions often involved in the planning
cycle include Master Production Schedule (MPS), Materials
Requirements Planning (MRP), Rough Cut Capacity, Capacity
Requirements Planning (CRP), Distribution Requirements/Resource
Planning (DRP) and Advanced Planning and Scheduling (APS).
UCC (Uniform Commercial Code): A standard set of laws governing
commercial transactions (bills of lading, letters of credit, bank
deposits, etc.) adopted by all states in the U.S. except Louisiana
(it uses a variant of the Napoleonic code).
13
A Retailer’s Guide to Supply Chain Management
14
UCC (Uniform Code Council): An industry group to promote
multi-industry standards for product identification or bar codes.
Seehttp://www.uc-council.org
UPC (Universal Product Code): A 10 to 12-digit machine-readable
numeric product code that originated in the food industry. The first
several digits represent the manufacturer, the remaining digits
the product.
VMI (Vendor Managed Inventory): An inventory management
policy whereby the supplier decides when to restock product at his
customer’s site based on up-to-the minute usage information from
the customer. These agreements typically include a penalty to be
paid by the supplier if there is a stock out, and an upper limit on how
much inventory can be carried at the customer. The payment
arrangement may allow the customer to pay for product only when
the customer uses it. The customer must provide the supplier with
up-to-date information on stock level and perhaps even forecasts of
future usage.
WMS (Warehouse Management System): A software system for
tracking where product is stored in a warehouse, generating pick
lists, and prompting the proper outbound shipments.
RETAIL COUNCIL OF CANADA
Founded in 1963, Retail Council of Canada is the Voice of Retail. It is a
not-for-profit association whose more than 9,000 members represent all
retail formats, including national and regional department stores, mass
merchants, specialty chains, independent stores and online merchants.
www.retailcouncil.org
IBM CANADA BUSINESS
CONSULTING SERVICES
IBM is the world’s largest information technology company,
with over 80 years of leadership in helping businesses innovate.
With consultants and professional staff in more than 160 countries
globally, IBM Business Consulting Services provides clients
with business process and industry expertise, a deep understanding
of technology solutions that address specific industry issues, and
the ability to design, build and run those solutions in a way that
delivers bottom line value for Canadian businesses.
www.ibm.com/bcs/retail
ECCnet - Canada’s National Product Registry
Provides retailers and distributors with clean, standardized data.
www.eccnet.org
Global Commerce Initiative
A voluntary body created to improve the performance of the
international supply chain for consumer goods through the
collaborative development and endorsement of recommended
standards and key business processes.
www.gci-net.org
ONLINE RESOURCES
IBM and the IBM logo are trademarks or registered trademarks of International Business Machines Corporation and are used under license by IBM Canada Ltd.
Other company, product and service names may be trademarks or service marks of others. ©Copyright IBM Corporation 2004. All rights reserved.
ABOUT THE AUTHOR
Lino Casalino, Canadian Retail Leader
IBM Business Consulting Services
Lino Casalino leads the retail industry practice in Canada for IBM
Business Consulting Services. With more than 15 years of consult-
ing experience, Lino specializes in helping companies solve complex
business problems through the application of both business and
technology solutions. Lino has assisted more than 40 leading con-
sumer packaged goods and retail companies over the course of his
consulting services career. Designated a Certified Management
Consultant (CMC) and Professional Engineer of Ontario (PEO), Lino
holds a Bachelor of Applied Science and Engineering from the
University of Toronto, and a Master of Business Administration from
the University of Georgia. Lino can be reached at:
Tel: 416-549-3116
E-mail: [email protected]
ABOUT IBM
IBM is the world’s largest information technology company, with over
80 years of leadership in helping businesses innovate. With consult-
ants and professional staff in more than 160 countries globally,
IBM Business Consulting Services provides clients with business
process and industry expertise, a deep understanding of technology
solutions that address specific industry issues, and the ability to
design, build and run those solutions in a way that delivers bottom-
line value for Canadian businesses. For more information, contact:
IBM Canada Business Consulting Services
Retail Practice
10 York Mills Road, Suite 400
Toronto, Ontario, M2P 2G7
Attention: Lino Casalino, Canadian Retail Leader
Visit www.ibm.com/bcs/retail
w o r k i n g i n p a r t n e r s h i p w i t h
IBM Business Consulting Services
RETAIL COUNCIL OF CANADA
1255 Bay Street, Suite 800
Toronto, Ontario M5R 2A9
1-888-373-8245
[email protected]
www.retailcouncil.org
IBM CANADA BUSINESS
CONSULTING SERVICES
Retail Practice
10 York Mills Road, Suite 400
Toronto, Ontario, M2P 2G7
1-800-IBM-7080 ext. BCS
www.ibm.com/bcs/retail
doc_424713163.pdf