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- April 5, 2012 -

 
     
 

Supply Chain Graphic of the Week: A Framework for Retail Supply Chain Excellence

 

Model from Annual RILA Supply Chain Study is Very Useful, but is In-House Manufacturing Really a Best-in-Class Retail Capability?

 
     
 

By SCDigest Editorial Staff

 
 

 

We always look forward to the annual Retail Industry Leaders Association (RILA) supply chain study, now in its third year, and released a few weeks ago in conjunction with RILA's annual logistics conference.

As for all three years, the research effort was led by Dr. Brian Gibson of Aubirn University, this year with assistance from his Auburn colleague C. Clifford Defee.

 

We did a full review and comment on the report two weeks ago (see Third Annual RILA Supply Chain Report Finds Pure Cost Gutting Drops Sharply as Key Strategy, Multi-Channel Commerce Continues to Be Major Area of Focus), but did not include in that article the graphic below that was featured in the report defining what the it calls "best-in-class" retail supply chain capabilities.

 

RILA Model for Best-in-Class Supply Chain Capabilities

 

 

Source: Brian Gibson, C. Clifford Defee, RILA

 

The model is largely self-explanatory, though there is more detail in the full report itself, a link to which is available in the SCDigest review article found in the link above.

A couple of things stuck out to us:

 

We like the foundation focusing on human resources and internal talent.

 

We also like the recognition that the supply chain must really be centered all the way down to the shelf.

 

Goes without saying today that multi-channel excellence has become a core capability requirement.

 

Finally, we wonder a bit about the "internal manufacturing" block. The report says "Leading retailers enhance private label performance by owning and operating the production level of the supply chain."

 

The report says the practice is common in grocery retail (Kroger, Meijer), and says the practice can also be found in the apparel and other retail. Is it a best-in-class capability others should strive for? We think that idea needs a lot more research and debate. It obviously ties into the whole "core versus context" analysis.

 

Have a comment? Send it at the Feedback button below.

 
 
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Feedback
2008-10-03

Oct. 3, 2008

There are valid reasons for both the DC and DSD distribution models, but neither should determine the store assortment, which depends on the consumer.

The Distribution Center model makes sense when you have many prepackaged products which are continuously replenished and require little in-store servicing. With the facility justified, you can also add seasonal and holiday 'in and out' products which can share the distribution network.

The key is to manage the time supply of inventory in the warehouse and distribute it efficiently.

The Direct Store Delivery model can be implemented purely as a distribution method or also allow the manufacturer to manage some of the in-store merchandizing.

I do not see any advantage of using DSD simply to deliver merchandise. Although it may help the 'mom and pops' that are on the same route as a large retailer, the DSD model must be more expensive. Once the big drops are removed, it will become more costly to reach the independent retailers but the larger retailer must benefit.

If DSD is used to support in-store merchandising, then you have a different story. The manufacturer's representative can give their products the individual attention that increases their sales. The bad thing is that they can also load up the store with inventory if no one is watching.

Bill Bittner
President
BWH Consulting



 


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