Supply Chain Management and Retail

Following the teachings of expert David Kiger, there is a topic that often goes partially unnoticed and whose importance is crucial when it comes to managing the supply chain effectively. Where do consumers and readers overall get and buy their products? Do they go directly to the manufacturing facilities? Or do they buy their products at distribution centers? Or off the delivery truck? Well, typically, consumers buy products, materials, and goods at retail stores. As David Kiger has mentioned before, the role of the supply chain is to get the right product to the right place at the right time in the most efficient way possible, aiming to satisfy the customer’s needs. This means that the supply chain is rather an ongoing flow of activities that should not stop once a certain product has left the manufacturing facility, nor the distribution center, or even when it is unloaded from delivery trucks, for if there is something that is inherently mandatory to the supply chain management, it is that supply chain management requires that the product gets to the customer’s hands.

Stores and retail stores in general can say that they have a certain product in stock, however, the market, and in that logic, the customers themselves, only care whether the product they want is exactly where they want it to be — and where it is supposed to be —: not in the pallets, not in some sort of back room, not in the wrong place. Customers want and need to find the products they are looking for on the shelves. Although having the right product on the right shelf at the right time is an asset, it is not enough to create an excellent retail experience for customers. The role of retail stores, aside from providing customers with their desired products, and having them available for them to find them at the right time, is also providing an excellent and outstanding retail store experience. At this point, readers might wonder what the characteristics of such retail store experience are, and it would be fairly easy to mention some that probably are plain to see: excellent yet competitive products and services prices, a clean, appealing and organized facility, excellent customer service, friendly easy-to-find store employees and, fast and efficient waiting and payment lines and, last but not least, fast and efficient payment processes and returns processes.

In general, what is clear is that both retail stores and manufacturing facilities are always bearing in mind the concerns related to materials, operations and, most importantly, logistics. They also need to sort out the issues related to capacity, productivity and value; and, in the competitive world of retail, in order to survive, both retail stores and manufacturing facilities need to operate consistently in an efficient, effective way, as well as being able to adapt rapidly to the upcoming and ongoing market trends and demands.

At first sight, working in the world of retail might be a daunting experience and maybe it entails a huge responsibility for someone who is not proficient in supply chain management. However, the same concept applies to other types of businesses: hospitals, airlines, banks, hotels, restaurants, auto dealers, etc. have in common the fact that they sell products and services to the final customer, just like retail stores do. They could all benefit from professionals that understand and are proficient in the application of terms like productivity, capacity, value, quality management, materials management, operations and, as readers might imagine at this point, logistics. These are not different than any other well-organized company or organization in the world: all of them require the help of supply chain managers.

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Image courtesy of Scott Maxworthy at Flickr.com

If readers were to take a look at an example in the real world, Starbucks serves as a good way of understanding the magnificence of the impact a well-managed supply chain has on a business. Starbucks has around 23.450 worldwide stores. For it to function properly, over 70.000 worldwide deliveries are required. In order for these deliveries to happen, Starbucks needs to attain a highly efficient, almost flawless, supply chain, which can be summed up in four main stages: it all begins with the coffee plantations, where coffee is collected and then transported to roasting and packaging facilities for further global delivery and distribution so that it can be prepared and sold at every store. However, every stage includes several characteristics necessary for it to function accordingly. At the plantations, 8.1% of the coffee is fair trade to meet consumer demand for ethically sourced coffee, and 90% is C.A.F.E verified. There are 6 roasting and packaging facilities; they have removed third-party roasting facilities and have moved towards a more standardized and centralized system. Product is delivered to the stores where highly trained staff aims to serve customers within three minutes starting from the moment they enter the store, and every year the company strives to improve the processes that allow the staff to reduce the serving time, depicting once again the importance of a well-managed supply chain and its tremendous impact.

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