Wednesday, 28 January 2015

Toy Supply Chain Management Practices: What are the Supply Chain Management Practices for Toy Retailers?

There are different channels of toy retailers (department stores, discounters, independent toy specialists etc.) and the different retailers use different types of supply chains. There are three supply chain options are that frequently chosen by the retailers.
  • Just in Time – Just in Time ("JIT" also known as “pull” retailers) are used by retailers that have no or limited access to a distribution warehouse. They order in small batches that are based upon the demand of the consumer. The shelves of the store are usually well stocked and the stock kept low. These JIT retailers usually have the most sophisticated IT infrastructure and implement continuous replenishment and collaborative forecast.
  • Mixed Model – Mixed model supply chain management is used by the retailers that aren’t only limited to the sale of toys. It’s a common approach used by discounters and hypermarkets that have a regional distribution warehouse. Orders are made early in exchange for discounts and there is a high variability in demand. Markdowns are common and response times are slow when using thus system.
  • One off or Push – The wholesalers, supermarkets and department stores commonly use the one off method. The range of toys is expanded over the Christmas period, concentrating on the most popular and profitable toys of the moment. These types of retailers only place orders a few times in the year and they order in large batches, with limited replenishment. Risk is high as the retailers carry the inventory and risk obsolescence.

Supply Chain Management Practices
“Just in Time (JIT)”/ “Pull” Retailers
“Main-order”/”Mixed model” Retailers
“One-off”/ “Push” Retailers
A few toy specialists and (more advance) discounters
Mostly (more advance) department stores or supermarkets, discounters and hypermarkets
Mainly traditional wholesales, some department stores and supermarkets
Do not own a distribution warehouse
Normally own regional distribution centres (RDC)
Regional distribution centres (RDC)
Annual Retailer Demand Pattern (Approximately)
60-80% Pull
20-40% Push - (usually introduction of new productions and preparation of Christmas season)
20-40% Pull
60-80% Push – (mainly introduction of new products, promotional campaigns, preparation for Christmas seasons)
20% Pull
80% Push
Retail Strategy
Store location
- Sub-urban/high street
- High street/ sub-urban
- High street
Pricing or mark-up
- Low & medium
- Low & medium
- Medium & high
Assortment (toys)
- Deep (~10,000 SKU)
- Medium (~4,000 SKU)
- Low (seasonal)
Three main performance metrics
- Fill rate,
- Shelf-availability
- Supplier delivery reliability
-Weeks of supply availability
- Inventory turn
- Retail closing stock
-Retail closing stock
- Inventory turn
- Supplier delivery reliability
Distribution & Logistics
Delivery to
- Stores/ cross-docking
- Retailer’s Regional Distribution Centre (RDC)/ stores
- Retailer’s Regional Distribution Centre (RDC)/ / stores
Replenish freq.
- Daily (two to three times per week)
- Weekly
- Monthly
- Pushed basis
- Monthly
- Quarterly
1-7 days
1-30 days
>30 days
Order size
- Pieces
- Pieces/Carton/Pallet
- Carton/Pallet
Bullwhip effects
- Low demand variability
- Induced seasonality
- High demand variability< /p>
- Induced seasonality
- High demand variability 
- Induced seasonality
Information sharing & coordination
- Very important
- POS data are shared by all retailers
- Important
- POS data are shared by some retailers
- Not important
- POS data are shared by some retailers
Inventory & Cost Management Performance
- Low obsolete inventory
- High lost sales
- High obsolete inventory
- Markdown and lost sales
- Lower finished goods inventory
- Obsolescent
Current SCM Initiatives
- Collaborative Forecast
- Accurate response
- Collaborative Forecast
- None
Future SCM Initiatives
- Accurate Response
- Cross-docking
- Cross-docking
- Cross-docking

(Source: Supply chain management practices in toy supply chain 2005)

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