Friday, 31 January 2014

About Warehouses Location

warehousingThe location of the warehouse is one of the major decisions faced by retailers and manufacturers. It’s essential to decide how close the warehouse needs to be to the factory, suppliers and the end customer. There are often three problems faced when considering the location:
  • Placing the warehouse near to the production facility
  • Having a single distribution centre that is in a central position away from the production plant
  • Having more than one warehousing system in different places
As with most things, the best way to work out the right location is discovering what position will have the best return on investment. You can also use the following considerations to help you determine the best location:
  • The cost of distribution from the warehouse to the market service area
  • The transport services available such as rail, road links and vehicles
  • The rates of transportation and the distribution cost per unit
  • Close competition in the area
  • Labour costs and supply in the area
  • The availability of suitable power, water, disposal and sewage in the area
  • The thoughts and attitudes of the nearby public, businesses and the government
  • Possibilities for future expansion
  • Cost of the land required for the warehouse
  • Possibility of selling or changing the facility in the future
  • Warehouse restrictions in the area
  • Company requirements and constraints




Thursday, 30 January 2014

What is the Meaning of Warehousing?

warehouse
In life we require multiple types of goods supplied. Some of these goods we buy in bulk and we’re able to store them in our homes or businesses. Others are sometimes limited in their availability and need to be purchased at certain times of the year. Storage is required continuously whether goods are available all year round or intermittently. The stock is stored until it is required to be sold or distributed. This large scale storage is known as warehousing.

Warehousing requires a warehouse keeper who will be able to organise the systematic storage of goods, making sure they’re available when needed. It’s such a vital part of the distribution of goods, whether they are raw materials, works in progress or finished products.  The warehousing is part of the supply chain network, synchronising with the objectives to ensure the chain is maintained.

Modern day warehousing is now frequently combined with distribution. The goods are stored and distributed to the end customer from the same location. These distribution centres have been born as a result of time pressures caused by customer demand and they can be used to cut costs dramatically. 

Wednesday, 29 January 2014

What Makes an Ideal Warehouse?

There are several characteristics that make up an ideal warehouse. These include:
    warehousing
  • Warehouse located near highways, airports, seaports and railway stations with access to easy loading and unloading facilities and zones.
  • Warehouse with plenty of storage space to organize the goods 
  • Proper protections for goods from sunlight, moisture, wind and dust, rain and pests
  • 24 hours,  state of the art security system for theft of goods prevention
  • Warehouse equipped with latest fire prevention equipment to lower risk of loss due to fire
  • Warehouse with climate controlled facilities for different product requirements
If you want to make comparisons between warehouses you’ll need to use the qualitative factor ra
ting method.   You can use this system to work out which warehouse is the best option based on your own specific preferences and requirements. You will need to:


  • Create your own list of relevant factors. The factors could include the inventory costs, costs of warehousing, transportation costs, costs of the lost sales and customer service costs.
  • Assign each factor with a weight of importance 
  • Have a common scale for each factor and designate the minimum
  • Give each warehouse or location a score based on the scale and multiple the scores by the weights 
  • Add up the points for each location and pick the one with the highest score

Tuesday, 28 January 2014

The Pros and Cons of Private Warehousing

Image: freedigitalphotos.net pakorn
There are several clear advantages that come with private warehousing, which include:
  • Warehouse performance may be enhanced due to management’s requirement to implement better monitoring system in the handling and storage of products. 
  • Errors are reduced since products are looked after by internal staffs 
  • Providing there is enough space the cost of warehousing can be less than the cost of public warehousing
  • The end user can benefit if there is a good use of human resources in the warehouse department
  • Private warehousing can be beneficial when there are no public warehouses available in the required products location
  • Private warehousing can be tailored to specific requirement of the company
  • Private warehousing can be rented instead of purchased
The disadvantages of private warehousing include:
  • A lack of corporate operation flexibility 
  • A low rate of return
  • Financial and tax complications 
In general practice, company may opt to utilise both public and private warehousing depending on their products and customer requirements.


Monday, 27 January 2014

The Pros and Cons of Public Warehousing

Image: freedigitalphotos.net pakorn
It’s important to weigh up the advantages and disadvantages of public warehousing. Here are some of the key points to consider:
  • Public warehouses are often more affordable compared to private and can help companies to attain better customer service level. 
  • The location of warehouse is often strategically situated to be easily reached.
  • Public warehouses offer flexibility in usage space
  • Overall warehouse fix cost is lower since companies are only paying for the space and services rendered. 
  • There are no liability cost when companies discontinue with their warehouse space usage
  • Companies’ peak requirements can be met with ease
  • Companies can benefit from the tax 
  • Companies do not need to concern about labour disputes

There are some cons to consider however:
  • Space may not be accessible at all times
  • There may be lack of available specialised service when required
  • System incompatibility may lead to communications problems

Return tomorrow to learn about the pros and cons of using private warehousing

Saturday, 25 January 2014

Supply Chain Planning

Supply Chain Planning 
Task
Demand Planning
Optimized quantification of demand.
Distribution Planning
Demand-oriented distribution planning, e.g., consideration of unexpected production gaps and late shipments.
Constraint-based Master Planning
Constraint-based master planning delivers real-time planning in consideration of materials, capacities, and individual restrictions in integrated distribution, manufacturing, and suppliers’ networks.
Transportation Planning
Transportation planning that gives the necessary transparency and that can accommodate all movement.
Manufacturing Planning and Scheduling
Detail planning of production. A precise time and Scheduling dependencies plan is ensured.
Network Design and Optimisation
Modeling of the entire supply chain and its business
Optimization situation, in order to recommend the most economic strategy. Thereby, companies can quickly and easily see the course of the dovetailed process chain.
Available to Promise
Binding availability and delivery date agreements become possible through an integrated view of the supply chain. Thereby, all available inventories, orders, resource availability (transportation, production capacity, personnel, etc.) as well as alternate suppliers are considered.

Source:: Kansky/Weingarten (1999), Seifert (2001).

Friday, 24 January 2014

Private and Public Warehousing

warehousing
Warehouses can be owned privately, these are sometimes owned by companies that use them to store or make their own merchandise. Other warehouses can be owned by organisations, companies in the private sector or the government agencies. They can be used by the general public prepared to follow the set conditions and terms; these are known as public warehouses.  It doesn’t matter if the warehouse s private or public, there are still several cost factors that need to be taken into account:

  • Additional costs of the repairs and maintenance work
  • Insurance costs
  • Buying capital interest for the site purchase
  • Funds interest for furniture purchases
  • Building and equipment depreciation
  • The fixed costs of the space
  • Variable costs such as the cost per unit being handled and processed
Private warehousing for example can be very expensive to create and there are additional expenses to consider ensuring the warehouse is properly equipped. Then there are the costs of the staff, maintaining regular paperwork and insurance fees. On the other hand public warehouses can help spread the expenses as the costs are distributed over several consignments of the clients. Public warehouses offer greater flexibility and services. It’s important to go through all the costs to decide which option is going to be the best option.


Image: freedigitalphotos.net Sura Nualpradid

Thursday, 23 January 2014

What are the Types of Warehousing?

warehousing
There are several different types of warehouses that are classified as:


•       Bonded – The government also own, control and manage bonded warehouses, and private agencies can too. It is necessary to have a license from the government to own a private bond warehouse. These warehouses are used to store goods that have goods inside that import duty is still due to be paid.

•       Co-operative – Co-operative warehouses are owned, controlled and managed by the cooperative societies. The members of the society are able to use the warehouse facilities at low and affordable rates.

•       Government – The government own these warehouses and they are controlled by either the state government, local authorities or the public corporations.  The private enterprises and government use the warehouses to store their goods.

•       Private – Private warehouses are owned by manufacturers or the traders. This is where they store and manage their own stock. Often these warehouses will be located close to the fields, wholesalers, retailers, factories or business centres. These warehouses are designed with the actual products being stored in mind.


•       Public – The public warehouses are managed in order to store goods of the general public. Individuals, companies and partnerships may own the warehouse but they will require licencing from the government who will regulate the functions and operations of the warehouses. 

Wednesday, 22 January 2014

What Issues Affect Warehousing?

warehousing
Warehouses, stores and distribution centres play an essential role in the supply chain network.  They’re essential when it comes to establishing the supply chain strategies, service and cost. There are several factors that need to be considered. Let’s look at these today.

Location of the Inventory

The type of stock that needs to be stored isn’t the only thing that needs to be considered in the supply chain network.  The location of the warehouses is also something that needs to be established. The options can also include the use of distribution centres that are dedicated to either the specific markets or parts of the product ranges, which can be used for fast moving lines and the slower moving lines can be held in the regional distribution centres.

Stability of the Market and Product Base

In order to establish the size and location of the warehouse it’s essential to consider the long term market growth potential and the possible expansion of the product. These decisions will also have an effect on the need for flexibility potential and this has an effect on the level of technology required as well as the type of warehouse.

Type of Materials

There are all sorts of materials that are handled and some require special arrangements and requirements regarding things such as temperature, humidity, containers and pallet loads. The various materials include raw materials, OEM auto spare parts, packaging, and works in progress and finished goods.

Warehouse Facility

When deciding on the type of warehousing facility, the size, location and size, it’s necessary to consider the customer base inventory levels, inventory optimisation, time compression and customer service levels. During this time it’s also important to consider if the warehousing facility should be run by a 3rd party or within the company.

Tuesday, 21 January 2014

Why Do We Need Warehousing?

warehousing
Warehousing plays an important role in the supply chain, and here’s why:


•       Continuous production – Factories need to have their raw materials stored so they can make a continuous supply of goods. The storage allows the factories to have enough raw materials put by so production is production.

•       Large scale production – Production needs to take current demand and future demand into consideration. Manufacturers are able to create their products in huge quantities, saving money. The products are then stored until sold.

•       Price stabilisation – Sufficient stock in warehouses is required to keep a sensible level of the price of the goods. If the goods are in scarce supply the price could be increased. If there are too many goods the prices may need to fall to move the goods. Warehousing allows the price to be stabilised.

•       Quick supply – Industrial and agricultural goods are often produced in specific areas and then sent throughout the country. These goods need to be stored near where they’re consumed so there isn’t a delay getting them to the consumers.

•       Seasonal demand – Goods are only demanded seasonally such as arm clothing during the winter. Storage allows these goods to be produced during the year so they’re ready when they’re needed.


•       Seasonal production – his is when the seasonal commodities are harvested at set times of the year but are purchased and consumed throughout the year. Storage allows the commodities to be supplied when needed.

Monday, 20 January 2014

Chit Chat:Chinese New Year and The Story Behind It















Chinese New Year also known as the Lunar New Year is celebrated on the first day of the first month based on the Chinese Lunar Calendar. Unlike the western Gregorian calendar based on the earth’s orbit around the sun, the lunar calendar is based on the moon’s orbit around the earth. This year, the Year of the Horse will take place on the 31st Jan 2014.

Chinese New Year is one of the most important and celebrated holiday around the world. It is time for family gatherings, repaying debts, enjoying feast, gift giving, gifting “lucky money” to friends and family and remembering ancestors.  It is usually celebrated in areas with a large ethnic Chinese population  and  in many cultures which had extensive Chinese interaction and influence such as Bhutan, South  Korea, Mongolia, Nepal, Taiwan, Vietnam, Laos, Cambodia and formerly Japan before 1873. Chinese New Year is also celebrated in Indonesia, Malaysia, the Philippines, Singapore, Thailand, and other countries with large Chinese populations although it may not be a part of the local traditional culture. The variations on how they celebrate Chinese New Year may vary depending on their culture, religion and geography.

The Story behind Chinese New Year

Like Aesop and his fables, there are many legends surround the Chinese culture.  One of them includes the origin of the Chinese New Year celebration.  This story has many variations but they all include a story of a demon monster with a body of a bull and a face of a lion that lived in the mountains.  The monster’s name was Nian () which also the Chinese word for “year”.  Near the end of the winter when there was nothing to eat, Nian would visit the villages and prey on whatever it could eat so every year on Chinese New Year Eve, the villagers would take their family and hide deep in the mountain. 

Over time the villagers realise that the monster were afraid of the color red, fire and noise.  The villagers came together and decided on a plan to scare off Nian when it made its annual visit.  They told everyone to light a fire and hanging red board in front of their houses and make as much noise as they can throughout the night to scare off Nian.  When Nian arrived at the village to wreck havoc, it was met with a sudden burst of exploding firecrackers. Startled by the noise, the flashes of light and red board everywhere, it fled and never returned again. 
Since then, on Chinese New Year's Eve, families would hang red banners, set off fire crackers, and light their lamps throughout the night awaiting the Chinese New Year. The custom spread afar and became a traditional celebration of the "Passing of Nian” or "Guo Nian" in Chinese.  

We hope you enjoyed the story. Royale International Group wishes you good health & fortune in the coming Year of the Horse!  Below you will find some Chinese greetings to help you deliver your blessings to the Chinese business partners around the world ~

(Usage Tips: As the Chinese celebrates around 2 weeks before & after the New Year day, these CNY greetings are best to be used from 20thJan till 15th Feb 2014.)

Chinese (Traditional) Pinyin  English Translation    
金玉滿堂    Jīnyùmǎntáng    May your wealth [gold and jade] come to fill a hall
大展鴻圖    Dàzhǎnhóngtú    May you realize your ambitions
迎春接福    Yíngchúnjiēfú   Greet the New Year and encounter happiness
萬事如意    Wànshìrúyì      May all your wishes be fulfilled
招財進寶    Zhāocáijìnbǎo   When wealth is acquired, precious objects follow       
恭喜發財    Gōngxǐfācái     May you have a prosperous New Year     
一本萬利    Yīběnwànlì      May a small investment bring ten-thousand fold profits  


What are the Context and Challenges of Humanitarian Logistics?

Humanitarian logistics face many challenges that all need to be overcome to ensure the assistance is in place when it’s needed, at the right price. Let’s take a look at some of the challenges in context.
humanitarian logistics challenges
  •  Reconstruction in Kosovo
At the end of the war there was a great need for adequate housing as the refugees returned. The building materials needed to be sourced for the neighbours surrounding Kosovo which required thousands of trucks and various other vehicles to help get vital goods around the country.  Security was a major issue and trace and tracking systems were often manual.
  • Speed of Delivery in Iraq
An urgent airlift was required to supply emergency supplies along with vehicles and materials. Calls were made quickly and within just days the logistics teams from all over the world pulled together to ensure everything was on route to where it was needed.
  • Moving People Out of Danger
When conflict erupts its essential to try and remove people out of the danger zones. The UN and NGO’s often take care of this but sometimes they require third party assistance. Logistics is needed to find and move vehicles, fuel, shelter, sanitation and food for the transported people.
  • Moving Staff
Moving staff such as relief workers is a logistics challenge in itself. Large numbers of people need to reach areas along with suitable equipment and shelter and this all needs to be achieved within budget.
  • The Lack of Technology
NGOs lack a lot of technological equipment and as a result there are lacking systems such as the management information systems and general information technology. These systems help the supply chain and save money making the systems more efficiently. NGO’s need to invest in these systems and recognise the vital role logistics play in the supply chain management. 

Saturday, 18 January 2014

Retailer and Manufacturer's Category Management (CM) Strategies


Market Position – Referenced Goals
Results-Referenced Goals
Retailer’s Objectives
  • Optimised assortment regarding target group and geographic position of the retail outlet
  • Improved image through consumer orientation, category performance and pricing
  • Gaining of new consumer segments
  • Exploiting of cross-selling potentials
  • Increased consumer loyalty
  • Unique identity and positioning among retailers
  • Price concept with higher value creation opportunity
  • Early recognition of market and consumer trends
  • Acquisition of market and marketing knowledge from manufacturers

  • Profit optimisaiton of the category through increased in revenue and earnings
  • Increased revenue through reduction of out of stocks
  • Reduced costs of capital invested
  • Increased productivity of retail space
  • Improved reach of consumers
  • Reduced costs through efficient promotion
  • Increased inventory turnover
  • Increased profit contribution of assortment
  • Increased purchased intensity of consumers
  • Cost optimization of new products introduction

Manufacturer’s Objectives
  • Acquisition of information about substitutions and complementary product relationships
  • Strengthening of brand loyalty
  • Price concept with higher value creation opportunity
  • Better understanding of consumer behavior
  • Access to POS data from retailers
  • Improved placement on shelves
  • Building of an image as a competence partner and preferred supplier
  • Early recognition of market and consumer trends
  • Gaining of influence at POS
  • Test markets for innovative products
  • Creation of a competitive advantage

  • Profit optimization of the category through increases in revenue and earnings
  • Improved reach of consumers
  • Cost optimization of new product introductions
  • Increased purchase intensity of consumers
  • Increased revenue through reduction of out of stocks
  • Cost effective use of advertising budget through efficient promotion


Source: Behrends (1995), Feld (1996), Seifert (2001).

Friday, 17 January 2014

Food Trends in 2014

Food trend
Millennial shoppers, those focusing on health and a change in consumer tastes are setting the stage for the food trends in 2014. Here are the trends that are going to continue to grow over the next twelve months and beyond.
  1. The ‘indiewoman’ is emerging. These are women over the age of 27 who live alone and are childless. These women love to shop, focus on their careers and socialise. They want to find great deals; they affiliate to brands and the indiewoman market as a whole spends $50billion on food and drink annually.
  2. Healthy options for “snackers” are on the rise. High fat, sugar and salt snacks will be replaced by healthier options and used to help imp rove overall diet quality.
  3. Consumers are reached by brands that are helping local areas through cause initiatives. Consumers respond to brands that help people feel good through serving the community, adding a sense of purpose.
  4. Convenience is important to consumers so click to cook is expected to grow. Using mobile technology consumers are able to shop for their groceries, using apps for their shopping lists, looking for recipes and comparing prices.
  5. Food retailers such as supermarkets will add further value to their customers by becoming part of the community. Supermarkets will look at the layout and consider creating areas where all ingredients are located for certain recipes.
  6. Consumers are loyal to their few chosen brands with the lines becoming blurred between private and national brands.
  7. Breakfast is widely considered to be the most important meal of the day. Consumers are going to add more protein to their diet and the breakfast in particular.
  8. Packaging continues to evolve with cartons being preferred over cans, especially where soups and pasta sauces are concerned. It’s time to look at touch sensitive packaging that can be used to reveal the information when requested. Apps on mobiles will also continue to become more frequently used to deliver information.
  9. Millennial are making sure supermarkets are using social medial. Sites such as Pinterest are being used to increase sales and connect to the consumers directly.
  10. Consumers want to see international flavours in their products and ingredients and supermarkets need to recognise this.

Thursday, 16 January 2014

2014 Challenges in the Consumer Product Market: Part 3: Growing Your Business

consumer product challenges 2014
Despite the continuous slow economic market growth facing companies in 2014, potential growth opportunities are always available. Here are a few suggestions that can help with your business growth for 2014:

  • Digital commerce is big business and it is essential for companies to speed up their digital commerce capabilities and presence through the use of digital marketing, mobile and social media.
  • By improving these digital capabilities, it will help equip companies to optimise their product selection while having a better understanding of their consumer’s preference and trends. It will also assist in refining their product marketing strategies and build better consumer relationship through improved consumer’s experience.
  • Companies can adopt cloud computing and analytics to help save time, money and provide better sales service in new markets.
  • A recent study done in 2013 by the American Pantry shows that consumers remain loyal to brands they care about which means consumer product companies need to rethink their brand and product portfolio, to build their consumer brand relationship and better address the gap between the affluent and lower income consumers.
  • Companies can look at growing their businesses by also targeting the Millennial generation since they will most likely use online and mobile technology across the shopping lifecycle and connect with the Baby Boomers as they are a large and wealthy segment that have shown significant interest with the mobile technology this past year.
  • Go to market strategies need to be refined to align with emerging retail channels. Consumer product companies should also look at tapping into the emerging ecommerce channel to provide better customer support.

Wednesday, 15 January 2014

2014 Challenges in the Consumer Product Market: Part 2

Some trends may interrupt everyday businesses and should be wary of so let’s take a look at these in more detail.
    Source: Image courtesy of Johnny Magnusson/ .freestockphotos.biz

  • Global economic growth continues to be slow especially in emerging markets while the European market remains in recession. Despite the global markets showing signs of improvement, consumer product companies may still experience lower product demand in some markets.
  • Many private equity firms and consumer product good companies are taking advantage of the cash reserves, low interest rates, easy credit access to increase exposure within the markets with growth so merger and acquisition activities will increase but businesses may reallocate existing funds from non performing markets to fund these new ventures.
  • The growing digital influence on consumer groceries shopping is on the rise and has made digital commerce a growing retail channel but most consumer product company digital commerce capabilities are still in the infancy stages in driving product trial and promoting repeated purchases. 
  • While consumers are getting more comfortable in embracing technology to make purchases with their smart phones to compare pricing, find sales and deals, and use coupons. With the increase demand on digital media marketing, companies need to focus on using social media to connect with their consumer and measure their ROI in digital media marketing.
Tomorrow we’ll be closing our focus on consumer product market for 2014 by looking at what businesses can develop to strengthen their growth.

Tuesday, 14 January 2014

2014 Challenges in the Consumer Product Market: Part 1

consumer challenges
Source: Image courtesy of Ambro /FreeDigitalPhotos.net
The quest for profitable growth remains challenging for all consumer product (CP) companies. With the consumer’s embrace of technology and eCommerce, consumer products companies will need to pay attention to the following challenges this year:
  • According to the 2013 American Pantry Study, brand loyalty in the grocery sector is declining. Less expensive brands and private labels are becoming more popular since many people find these alternatives goods comparable to many of the major brands available. Furthermore, research has found that many plan on continuing using private label brands even after the economy has fully recovered.
  • Economic uncertainty has left consumer in recession mode. Consumers are continuing to be cautious of their spending habits and are less likely to impulse buy. They embrace saving tactics by utilizing loyalty cards, reward schemes, store brands, shopping lists, coupon and delay sale purchases.  
  • With digital technology on the rise, companies need to ensure they have a strong digital commerce strategy in place. Consumers are using the Internet, apps and social media to compare prices, research goods and even buy their goods online. 
  • Consumers using online, club and dollar retail channels over grocery and mass merchandise are causing cross channels conflicts for retailers. Retailer will need to look into clearly define and incorporate eCommerce into their sales channel strategy.
Return tomorrow for part two of our consumer market challenges for 2014.

Monday, 13 January 2014

The Generation Y Shopping Trends

Generation Y Shopping Trend Generation Y consists of more than 80 million tech savvy US shoppers between the ages of 18 and 35. According to the Urban Land Institute (ULI), they found that despite their affection for online purchases they still like to shop in stores. If you’re trying to attract this generation, here are some Generation Y trends you need to know to help you stay on top:
  • Unlike the common belief that this tech savvy generation has abandoned more traditional forms of shopping by using the Internet for all their shopping needs, they still like to shop in person and consider the experience as a form of entertainment. 
  • They are open minded with their spending and may visit a variety of different stores and retail centres throughout the month. These includes going to the malls, department stores, power centres, apparel stores; as well, as more localised independent businesses. 
  • They tend to prefer discount department stores such as Kmart and Walmart, followed by supermarkets, for their food shopping.
  • They are well informed shoppers and would likely to do their research online to compare prices before purchasing.
  • The Internet and information technology era has created a generation that enjoys music, light, colour and design. If retailers can adopt this trend to their designs and merchandise, this will help keep the Generation Y shopper interested in their product/service. 
Here are some important tips for retail property owner, developers and managers based on the ULI findings:
  • Restaurants price points are not a major concern for the Generation Y but appeal factor is so owners must continuously keep their appeal up to date in order to keep their customer from leaving.  
  • Malls remain popular among the Generation Y shopper but they must stay competitive in order to keep their customers from leaving. Some of the things they can look at implementing includes: interior renovation enhancement, incorporation of movie theatres, adding specialty food and grocery vendors, pop up stores and help promote social gathering events.
  • Generation Y are a major fan of warehouse clubs and discount stores. Owner can look at converting aging malls and vacant sites into something along this line.
  • Lifestyle centres can attract Generation Y by focusing on the brands that the Generation Y follow and provide more varieties in eateries and specialty selection businesses such as gym, salon, pet shop and bike shop in their centres.
  • Retailers need to continue to explore the online channels as well as the in-store fulfillment and focus on cost efficient and speedier deliveries. Focus on warehousing and logistics are also becoming more important to eCommerce retailers that require distribution, warehousing and pick and pack service.            

Saturday, 11 January 2014

Retailers and Suppliers' Supply Chain Management (SCM) Objectives


Market Position– Referenced Goals
Results-Referenced Goals
Retailer’s Objectives
  • Expansion of logistical competence through  manufacturing partner
  • Increased consumer loyalty
  • Better understanding of actual demand behavior
  • Improved image through fresher products
  • Quick logistical realization of new product introduction

  • Increased revenue through reduction of out of stocks
  • Increased turnover of stock
  • Inventory reduction
  • Reduced cost of capital invested 
  • Increased earnings
  • Lower depreciation through expired goods (expiration of “use-by” date)
  • Optimisation of ordering and billing processes

Manufacturer’s Objectives
  • Improved image as competence partner of retailer
  • Quick logistical realization of new product introduction
  • Ability to influence logistics chain
  • Creation of a competitive advantage
  • Better understanding of actual demand behavior

  • Increased revenue through reduction of out of stocks
  • Increased earnings
  • Optimisation of ordering and billing processes
  • Reduction of logistics costs
  • Optimised production
  • Reduced inventory of raw materials and finished product


Source: Seifert (2001).

Friday, 10 January 2014

Asia Pacific Consumer Insights – Part Two

In 2013 the expenditure was expected to grow in the largest consumer markets across the Asia Pacific, Japan, China, South Korea, Indonesia and India. However, the overall growth was rather subdued thanks to the economic uncertainty continuing, slowed growth in China and a slow demand from Europe.

Unstable currencies are causing an increase in the prices of imported goods and as a result consumer confidence is being knocked. However, there is still some long term potential to look forward to, especially from Indonesia, China and Indonesia, the emerging markets. 

Japan - Caution from the businesses and the consumers result in slowed down growth. Mixed impacts from the government spending, structural reforms and quantitative easing has resulted in a weaker yen. The Japanese stock market does show uncertainty and so fewer companies are going to commit themselves to increasing pay and hiring programs and this will have an impact on consumer spending.

China - Despite the slow economic growth the consumer market is expected to expand. The markets are moving away from discretionary spending and start new habits, spending on watches, clocks, silverware and travel goods.

India - The weakening rupee is going to continue to hurt the consumers and investors are concerned about the high current account deficit, which is reaching new highs. As a result imported goods are expected to become more expensive, which will be damaging to the third largest consumer market in the Asia Pacific. Business investments are expected to continue to be held back such as crippling inflation and interest rates. Looking on the upside the size of the consumer market helps to keep the emerging market potential high.

South Korea - This market is full of indebted consumers that have concerns over their economic prospects.  Houses that are being consumed by debt are reducing the spending and lack of disposable income is a concern, with the country's export market also looking uncertain.

Indonesia - Increasing inflation is causing problems here, similar to other markets in the area. Spending is being reduced as a result and the cost of borrowing has been increased. Indonesia does have a resilient however and consumers remain confident when spending despite the tightening of the budgets.

Thursday, 9 January 2014

Asia Pacific Consumer Insights – Part One

Consumers in the Asia Pacific have been enjoying spending over the Christmas period, thanks to their improving economies. The increased spending can be put down to many different reasons, including:
  • The festive spirit
  • Year-end bonuses
  • Air travel continued to be popular
You can take advantage of the increased spending by encouraging consumers to return to you and attracting new customers, some of the techniques used are: 
  • Being encouraged to join customer loyalty programmes and connecting with major brands over social networks
  • In January spending is expected to continue thanks to post-holiday sales, gift cards and email marketing providing personalised offers
While Christmas is a Christian holiday it actually gets a lot of attention from other religions such as Muslims, Buddhists and Hindus.  There is a commercial aspect that also sees retailers encouraging spending which has increased the spread of Christmas as well as the after-affects that have been experienced thanks to missionary work and colonialism. The year-end bonuses certainly boost spending. Many families in the Philippines depend on the remittances that come from their family members that work overseas and money being sent home has increased by 7.4%. The raise in money sent home was witnessed during December and caused by increases in holiday spending.

Indian consumers have shown that they are willing to pay for air travel during the Christmas period even though prices are increased. Destinations such as Dubai, Bangkok and Singapore are popular, mainly due to their links and proximity to India.  Travel is popular at this time of year because of the lengthened holidays.

Finally the merry mood experienced around Christmas helps spending, along with positive job prospects and reduced interest rates. Business confident has improved job prospects and consumers are feeling more positive and confident with their spending. Additionally the consumers have been able to keep up with their credit obligations, further increasing confidence.