Unit 6 Supply and Stock Management in Retail
-------------------------------------------------
Unit 6 Supply and Stock
-------------------------------------------------
Management in Retail
Hajar Houari
Business and Fashion CH 1E
Miss A. Lekic
Index
1. About Inditex page 2
2. About ZARA page 3
3. Structure of the supply chain Corporate Social Responsibility page 4
4. Product page 5 Policy on the use of animal-skin products LWG
5. Leather page 6 Legislation on Health and Safety
6. Customs page 7 Legislation on Transport
7. Manufacturer page 8
8. Distribution page 9
9. Solutions on saving costs page 10 The impact of legislation
10. Methods and systems used in retail stock management page 11 In-house receiving page 12 Merchandise Distribution Technology page 13
11. Key components used to manage retail storage page 14 PQRST page 15 Retail storage solutions page 16
12. Security of stock page 17 Importance of security management page 18
Sources page 19
page 1
1. About Inditex
Head office: A Coruña, GALICIA, Spain
Inditex is a large Spanish corporation and the world's largest fashion group. It is made up of almost a hundred companies dealing in activities related to textile design, production and distribution and owns brands like Zara, Massimo Dutti, Bershka, Oysho,
Pull and Bear, Stradivarius, Zara Home, and Uterqüe.
The purpose of this Company is:
The manufacture, marketing at any stage, importation, export and wholesale and retail of all kinds of textile raw materials, yarns, cloths, fabrics and finished apparel and home products as well as any other complementary products of the aforementioned, including those of cosmetics and leather goods.
Inditex selects the world’s best manufacturers to produce its collections.
Inditex’s production chain is highly diversified, with approximately half of its manufacturing conducted in near-source areas and in Europe, which gives the company unmatched swiftness and flexibility to address changing trends.
Inditex participated during the 2011 financial year in the United Nations Global Compact Supply Chain
Sustainability Advisory Group, with the aim of pooling best practices in the sustainable management of the supply chains has made it possible for the group to advance by sharing and applying the best practices in sustainability at the world level in the matter of suppliers.
page 2
2. About ZARA Amancio Ortega began making clothes in a rented Garage in 1963. Now Zara's parent, Inditex, a listed Company where Mr. Ortega still 59% owns, has more than 5,000 stores in 77 countries. It is still growing apace, especially in China, where it will open 80 more stores this year.
ZARA has one of world’s most successful logistics operations. Distribution has an increasing influence on the strategy for companies and is therefore for some companies like ZARA an important part of the marketing plan. Because ZARA’s policy is to do as little advertising as possible.
The secret of Zara's success is its speed four weeks for a new fashion idea to hit the shops and the feedback that store managers send to head office, to help it fine-tune it’s ideas. Few rivals come close to ZARA.
Hennes & Mauritz (H&M) of Sweden is nearest. It is not as fast to market with new styles it takes months rather than weeks. But where it has caught on, especially in Germany, The Netherlands and Austria, its market penetration is higher. It has distribution centers dotted around Europe. Some 65% of its product is made in lower-cost countries in Asia. That means H&M’s cost base is lower than Inditex's, but it is more vulnerable to disruptions.
There are a total of 1659 Zara stores. The majority located in Europe.
page 3
3. Structure of the supply chain
For this task 1 we had to outline the structure of the retail supply chain for a selected product from the manufacturer to the retail outlet. And for task 2 outline the impact of legislation on the retail supply chain. With the learning outcome to understand the structure of the retail supply chain. And how key legislation has impacted on the retail supply chain.
This report contains the following:
- The structure of the supply chain.
- The role of producers, processors and distribution organizations.
- Solutions on saving costs.
- Legislation on Transport, Health and Safety and other legislation. Zara controls most of the steps on the supply chain, designing, manufacturing and distributing products. Inditex selects suppliers all over the world to produce its collections and has an extensive supply chain with a presence in over 40 countries. The fact that significant part of its supplies are carried out in areas close to the headquarters of each of the chains (where the design and logistics teams are located) makes possible a rapid and flexible response to the market. This is the reason for
ZARA’s success, it’s known for its fast fashion.
Corporate Social Responsibility:
Inditex's production needs increase each year and, for this reason, it is one of the Group's strategic priorities to ensure the sustainability of its supply chain, both through the fulfillment of the Code of Conduct for
External Manufacturers and Suppliers, which has been in force since 2001, and the strictest standards for product quality, health and safety. Inditex ensures that all its suppliers and external workshops undertake to comply with such Code. The entire Group participates in this task coordinated by the Department of Corporate Social Responsibility CSR. In order to carry out its policy, Inditex has local Corporate Social Responsibility teams in India, Bangladesh, Turkey, China, Morocco, Brazil, Portugal and Spain, which work with the objective of offering and guaranteeing customers of any of the brands of which Inditex is made up a product which has been prepared with maximum respect for the Fundamental Employment Standards as well as the strictest requirements which are progressively added to the regulations.
page 4
4. Product
I chose a pair of leather pants. That are a hundred percent lambs leather on the outside, ninety-eight percent lambs leather and two percent elastic on the inside.
This is one of the most expensive pieces ZARA sells, with a selling price of €279,00.
Designed in ComditelPg Ind. Sabón - Av. Diputación -Ed. Inditex B 79, Arteixo, 15142 Spain.
Policy on the use of animal-skin products:
Inditex applies standards for the responsible manufacture of its products as regards the use of elements of animal skin (leather) and of skin with hair (fur). In the first case, the Group uses skin which comes exclusively from animals raised on farms for providing food and under no circumstances from animals killed exclusively in order to market their skins. As regards fur, or skin with hair, Inditex does not use this product, wherever it comes from. Inditex is also a member of the Leather Working Group (LWG),which develops a protocol of environmental auditing to evaluate and promote environmental practices that are more sustainable within the leather industry.
Leather Working Group
(LWG)
LWG is a working group created in 2005 to develop a protocol of environmental auditing which would make it possible to evaluate the fulfillment and the environmental practices of the tanneries and which, in turn, promotes more sustainable environmental practices in the leather industry. LWG aims to improve the sustainability of the tanning industry, by working in a transparent manner through the participation and representation of brands, tanneries, retailers and other interested parties in the sector. The group also enjoys the participation of the main centers of excellence and research of the sector and the review of the auditing system by non-governmental organizations, academic institutions and other interested organizations. As a member of LWG, Inditex will evaluate and measure, in a rigorous manner, the technical-environmental processes of tanneries and the capacity to define improvements with its suppliers. The audits will be carried out by leather industry experts.
page 5
5. Leather
The leather being used for ZARA products are native of
Morocco. Morocco is the second-biggest supplier to Inditex.
ZARA leather products are mostly cow, buffalo, sheep, goat and lambs leather.
Leather is a durable and flexible material created by the tanning of animal rawhide and skin, often cattle hide. It can be produced through manufacturing processes ranging from cottage industry to heavy industry. Tanning is the process which converts the protein of the raw hide or skin into a stable material which will not putrefy and is suitable for a wide variety of end applications. This process is also takes place in Morocco. Leather tanning, Fes, Morocco leather tanning, Marrakech, Morocco
Legislation on Health and Safety:
Working conditions in the textile, garment and leather industries around the world increasingly demand special attention and effort from the international trade union movement. Every year, some two million men and women lose their lives through accidents and diseases linked to their work. In addition, workers suffer 270 million occupational accidents and 160 million occupational diseases each year. The failure of many governments to enforce health and safety standards means that efforts to improve working conditions in one country can be undermined by the flight of production to countries where workplace safety is ignored. Ignoring occupational health and safety is one way by which international market operators can minimize costs, engaging in a form of "social dumping" at the real costs of workers' lives. Inditex regards its safety and health policy as a vital, integral part of the Group’s management. Inditex believes that improving safety and health conditions is a cornerstone of the corporation's activities that extends to all levels of the company. Inditex is committed to complying with current legislation, codes of best practice and any other commitments to which the company voluntarily subscribes. The company’s growth is based on constant improvement of its workplace conditions. The corporation prohibits any work that priorities any other consideration above that of safeguarding workers’ safety and health conditions. Productivity is the result of safety. Training, raising awareness and participation by Inditex workers in the management of health and safety issues are key elements for achieving the goals outlined in the company's prevention planning policy. Safety and health management at Inditex is based on ongoing improvement. It is analysed, planned, coordinated and executed in accordance with the reality at the company, with a commitment to compliance with the policy, prevailing legislation and the commitments to which the company has voluntarily signed on. Inditex’s safety and health policy is a required subject for all Inditex employees and outside contractors.
page 6
6. Customs
Morocco Spain headquarter ZARAChina Manufacturer
Spain distribution centreThe Netherlands distribution center ZARA store. The leather from Morocco is being transported by boat to ZARA headquarter in Spain. Industria de DiseñoTextil S.A., registered business address at Av. de la Diputación, EdificioInditex,
15142, Arteixo, A Coruña (Spain.) From the headquarter the leather is being cut and a pattern made for the pants and transported by plane to China where it’s being sewn and finished.
From the Manufacturer in China it’s being brought back to Spain, to the distribution Center where it’s being packed and transported to distribution centers and stores all over the world. From the distribution center in Spain it’s being brought per truck to the distribution center here in The Netherlands.
Legislation on Transport
Goods entering the Customs area of the EU (Spain,
The Netherlands) from a non-EU (Morocco, China) country are subject to a number of rules. The main rule is that these goods must be given a 'customs designation'. You can give these goods a customs designation by placing them under a 'customs procedure', for example. There are various customs procedures. A declaration should be filed for the goods, certain formalities should be fulfilled when the declaration is made, such as submitting invoices and keeping the goods available for inspection by Customs the import duties and/or other import taxes owed should be paid the declaration process involves a check as to whether the goods comply with the regulations in the area of safety, health, the economy and the environment. Other legislation which must be reckoned with like licences, eg ‘O’ licence (for goods exceeding 3.5 tonnes gross weight), Heavy Goods Vehicle Licence (for goods exceeding 7.5 tonnes gross weight); Road Traffic Acts 1988 and 1991; Dangerous Goods (Safety Advisors) Regulations 1999
The Netherlands Customs Administration has different tasks and responsibilities in the field of safety, health, economy and environment (abbreviated as 'VGEM'). For example, Dutch customs officers monitor the import, export and transportation of goods. For this purpose, Customs checks whether taxes due at the time of import are paid and whether goods meet the requirements at the time of export. Customs also supervises compliance with VGEM legislation. This legislation stipulates that importing, exporting or transporting certain goods within the Netherlands and/or the European Union is prohibited, or is only permitted if (strict) conditions are met, or if the goods meet certain requirements. On account of its VGEM responsibilities, Customs carries out a large number of inspection, observation and investigation tasks at the request of various ministries. page 7
7. Manufacturer
The leather is manufactured in Morocco, it’s been true the tanning process. It is now suitable for a wide variety of end applications.
From the ZARA headquarter in Spain the leather is being cut, the pattern and leather is being brought to China where it’s being sewn and finished. Although 34% of Inditex’s manufacturing is outsourced to Asia, and 14% to parts of Europe including Turkey, those tend to be the more basic items. The high-fashion stuff, 49% of what it sells, is cut and finished in Spain though some sewing is done elsewhere. Most of the time the sewing for these high-fashion products is being finished in China. And because this is a leather product and expensive it belongs to the high-fashion stuff.
ZARA’s FAST FASHION PROCESS
1. ZARA’s design team monitors fashion trends and store sales. Based on this they come up with
1000 designs a month.
2. They send these out for manufacturing around the world. 3. Completed designs are shipped back to Spain.
4. Local store managers in each country tell the ZARA head office in Spain what the store needs and how much. 5. The design team then flies or truck out consignments for each of
ZARA’s over 1608 stores based on local needs and trends. A store gets consignments twice a week.
2
page 8
8. Distribution
Distribution has an increasing influence on the strategy for companies and is therefore for some companies like ZARA an important part of the marketing plan. Because ZARA’s policy is to do as little advertising as possible. Inditex’s logistical centres supply merchandise to our stores twice a week. ZARA ‘s distribution centre receives the articles from their own factories or from outside suppliers. They also manage stock and oversee dispatch and delivery, so that each point of sale receives what it has requested as soon as possible and in perfect condition. Quick response is one of the pillars of their success.
Zara Logistical Centres in located in Arteixo, A Coruña (Zara Logística) and Zaragoza (Plataforma Europa).
Pull & Bear Logistical Centre in Narón, A Coruña. Massimo Dutti, Bershka and Oysho Logistical Centre in Tordera, Barcelona. Stradivarius Logistical Centre in Sallent de Llobregat, Barcelona. Tempe Logistical Centre in Elche, Alicante. This centre distributes the footwear that can be found in all of Inditex’s brands' stores. Zara recently opened for 100 million euros a new distribution center in Zaragoza. All products pass the first major distribution center where about 2.5 million items per week are treated. Normally running the distribution center about 4 days, 24 hours and three days with one or two teams, 800 permanent employees work 8 hours a day. In peak times this capacity by approximately 50%.
Products are being transported from this distribution Centre To distribution centers all over the world. The clothing is sorted, labeled and packed transported by truck to the head office in the Netherlands.
Distribution Centre ZARA NEDERLAND B.V Amsterdam. There is a total of 21 ZARA store’s here in The Netherlands. Zara has stores in Alkmaar, Almere, Amersfoort, Amsterdam (flagship store), Amstelveen, Apeldoorn, Arnhem, Breda, Groningen,'s-Hertogenbosch, Den Haag, Eindhoven, Enschede (opening end of oktober 2012), Hilversum, Hoofddorp, Maastricht, Rotterdam (3 stores), Tilburg, Utrecht en Veenendaal. And since November Rotterdam is the first city in the Netherlands to have a ZARA HOME store.
page 9
9. Solutions on saving Costs
Zara already does as much as possible to save money. Because this is a leather product and expensive it belongs to the high-fashion stuff ZARA sells, and most of the time 49% of the high-fashion stuff is cut and finished in Spain though some sewing is done in China. A way to save costs is to manufacture the leather products in Morocco. Or finish the sewing in Spain, that way you can save money by ‘removing China of the supply chain.’’ Another way to also save money is by removing the CSR by doing so INDITEX can save money but at the same time they might lose allot of customers.
The impact of legislation CSR
(Corporate Social Responsibility see page 4)
Zara owner lays down ethics for Moroccan suppliers. CASABLANCA, June 27Moroccan suppliers of Spanish fashion retailer Inditex have one year to meet ethical standards laid out by the country's textile association or lose their contracts, industry said the executives in June of this summer. Morocco is the second-biggest supplier to Inditex (ITX.MC).
Inditex has shifted some production to China in recent years but Morocco's proximity to Spain allows the firm to get new designs to European stores in a few days, helping it react more quickly to catwalk trends. Moroccan textile association AMITH's label "Fibre Citoyenne" covers labour laws, social security, safety, minimum working age, working hours and environmental standards. Inditex is the Moroccan textile industry's biggest client. They cannot allow it to emerge that one of Inditex's suppliers did not respect this country's social norms. Under the initiative unveiled by AMITH and Inditex executives in Casablanca the Moroccan government will finance a programme to help Inditex's Moroccan manufacturers comply with the rules over one year. Those that fail will lose Inditex as a client. Most Moroccan textile employees work illegally, receiving wages in cash from firms that keep no records of working hours. Industry observers say that even firms that play by the rules often rely on subcontractors that do not. That has turned into a competitive disadvantage now that ethically-minded Western shoppers look more than ever at who made their clothes and under what conditions. At the other end of the scale, firms that act within Moroccan law have complained of being hamstrung by time-consuming administrative procedures and rigid labour rules.
page 10
10. Methods and systems used in retail stock management
For task 3 the assignment was to outline two methods and two systems used in retail stock management then compare two methods or two systems used in retail stock management and Evaluate the use of one information communication technology system in retail stock management. With the learning outcome to understand how retail stock management methods and systems are used.
Manufacturing resources planning
Manufacturing resource planning is also called MRP II. It is a system for the manufacturing resources are planned, as material resources, people and machines. This is a part of the logistics.
MRP II is an extension of MRP I, this is called Material Requirements Planning. MRP I is a part of MRPII.
MRP is an integrated manufacturing control. This is a forecast of the manufacture of finished products made. The number of people, machinery, supplies, etc is hereby set on prognosis. If there is in addition to the production control is also the management of (all) other processes of interest for the integral liner companies, MRP II should be "scaled up" to an Enterprise Resources Planning also abbreviated to ERP.
Material resource planning
Material requirements planning (MRP-I) is used for planning the logistics of material procurement
(raw materials and components). In addition, this also determined the production process, because in MRP I worked with a pre-established sales and production plan of the final product. The required materials are known. These are listed in the parts list, logistics sometimes called bill of material. On the basis of the established sales and production plan and the particular period in which production takes place, the planner can calculate what materials and components and the quantities thereof to be redeemed. It is also possible to calculate when these products should be purchased by taking into account the duration of the delivery of the product. The period when starting the production is indeed predetermined. MRP-I assumes an unlimited capacity. It takes no account of aspects such as machines, people, money, suppliers, etc. In order to solve manufacturing resources planning developed. This is also called MRP II.
The ultimate goal of MRP is:
- Reliable delivery times
- satisfied customers
- smaller stocks
- smaller warehouses
- Less idle time of machines and people.
- Reduction of costs (financial)
Enterprise Resource planning
Material requirements planning (MRP) is a production planning and inventory control system used to manage manufacturing processes.
Most MRP systems are software-based, while it is possible to conduct MRP by hand as well. An MRP system is intended to simultaneously meet three objectives:
Ensure materials are available for production and products are available for delivery to customers. Maintain the lowest possible material and product levels in store Plan manufacturing activities, delivery schedules and purchasing activities.
page 11
In-house receiving
Centralized receiving
Many of the larger department stores and specialty organizations, catalog operations, E-tailing ventures, and home shopping outlets receive their goods at a centralized location in which all of the products go through a receiving procedure before they are sent to their final destinations. Often times, in the cases of the off-site retail operations, the receiving department is within the headquarters of the company, and the goods remain there until they are ordered by the customs. There are several reasons why centralized receiving is the choice of the vast majority of large retail organizations. These include the following:
- More space for merchandise on the selling floor.
- Better control of goods.
- Cost reduction. Regional receiving
When a brick-and-mortar operation has a large number or units dispersed throughout a range of geographical locations, most opt for regional receiving departments. Instead of having a range centralized facility to handle the goods for every store in the chain, regional offices cover less time than if it came from centralized points. A company with units throughout the United States, for example, that subscribes to this decentralized arrangement will more than likely get the goods to the stores in the different regions more quickly than if they were all shipped from a centralized location that was far away from many of the regions. The receipt of goods in a timely manner is particularly important to the fashion retailer. With fashion cycles playing such a significant role in its merchandising endeavors, every day that is saved in shipping gives the retailer more time to sell the items.
Individual store receiving
In the case of individual proprietorships, where just one or a few units are involved In the receiving procedure, there is little choice but to have each unit process its own incoming merchandise. Goods are usually delivered to the front door of the store, then opened, checked, tagged, and made ready for the selling floor directly within the selling space. In some stores, small back rooms are available to handle the incoming merchandise. The latter choice is a better one, since it does not interfere with the activities taking place on the selling floor. Since the people responsible for the unpacking, sorting, and making merchandise ready for inclusion onto the racks and counters are responsible for other chores, the cartons are often left unattended until they have the time to attend to them.
page 12
Merchandise Distribution Technology
Unlike in the past when a retailer had to manually handle the tasks associated with the receiving and marketing of merchandise from vendors, today’s merchants have the benefit of technology to interface with their suppliers. Most important among the retailer-vendor innovations are electronic data interchange EDI, and vendor managed inventory VMI.
Vendor managed inventory VMI Vendor rating
Many organizations are facing and wide range of different vendors. Their number is usually increased, while the purchasing department remains the same or even shrink. Eventually the track and "educating" your suppliers often impossible to manage. It reacts exclusively on recent incidents. A Vendor Rating or supplier assessment system ensures that your suppliers continuously monitors and captures their performance. This can be a relatively simple system, for example, on the basis of delivery time accuracy, but it can also be a more extensive system with several subjective criteria. The more criteria, the more accurate the assessment and the better the image provider. It is ideal in combination with a supplier handbook. Vendor rating benefits
• Using a good vendor rating system gives good and clear picture of the performance of your suppliers.
• Because the suppliers are assessed using predetermined criteria can right decisions are made based on facts and not based on feelings.
• By better insight in future incidents can be prevented.
• It gives a better insight allowing you stronger position in negotiations with your supplier
Electronic data interchange EDI is a structured transmission from computer-to-computer to exchange data organized in a format specified by retailers and vendors. Without any human intervention involved at either end of the transactions. It is more than just an e-mail; for instance, organizations might replace bills of lading and even cheques with appropriate EDI messages from one trading partner to another trading partner. Inherent in the benefits of the system are better inventory management, reduced expenses, improved accuracy, better business relationships, increased sales, and a minimization of paperwork. Retailers of all classifications use the EDI system, It is especially attractive to fashion retailers, because the increased speed of transactions can extend the life of the product on the selling floor, in catalogs, in E-tail outlets, and on home shopping operations. Where time is of the essence in retail transactions, no other system can place a company in a better market position. With ZARA this is the most essential thing and the reason of their success, because they make use of this system they have the possibility to react quick and deliver consignments to ZARA stores all over the world in just 2 weeks.
page 13
11. Key components used to manage retail storage
A good storage installation can provide significant opportunities for the retail sector- avoiding investment in re-build facilities or even relocation. As everybody involved in this sector looks to maximize available space, the benefits arising from either installation or a two-tier storage facility are increasingly well recognized.
Additional sales area or an enhancement of back of house operations can both gain from involvement in this field. manage the installation throughout the lifecycle of the project, from the survey and design phase, through planning and building regulation application, to manufacture and installation. Fire protection, lighting and accommodation, and a range of stairways to meet the applicable building regulation offer further options.
General storage building regulations
All materials stored in tiers shall be stacked, racked, blocked, interlocked, or otherwise secured to prevent sliding, falling or collapse. Maximum safe load limits of floors within buildings and structures, in pounds per square foot, shall be conspicuously posted in all storage areas, except for floor or slab on grade. Maximum safe loads shall not be exceeded. Aisles and passageways shall be kept clear to provide for the free and safe movement of material handling equipment or employees. Such areas shall be kept in good repair. When a difference in road or working levels exist, means such as ramps, blocking, or grading shall be used to ensure the safe movement of vehicles between the two levels. Material stored inside buildings under construction shall not be placed within 6 feet of any hoist way or inside floor openings, nor within 10 feet of an exterior wall which does not extend above the top of the material stored. Each employee required to work on stored material in silos, hoppers, tanks, and similar storage areas shall be equipped with personal fall arrest equipment meeting the requirements of Subpart M of this part. Non compatible materials shall be segregated in storage. Bagged materials shall be stacked by stepping back the layers and cross-keying the bags at least every 10 bags high. Materials shall not be stored on scaffolds or runways in excess of supplies needed for immediate operations. Brick stacks shall not be more than 7 feet in height. When a loose brick stack reaches a height of 4 feet, it shall be tapered back 2 inches in every foot of height above the 4-foot level. When masonry blocks are stacked higher than 6 feet, the stack shall be tapered back one-half block per tier above the 6-foot level. Lumber: Used lumber shall have all nails withdrawn before stacking. Lumber shall be stacked on level and solidly supported sills. Lumber shall be so stacked as to be stable and self-supporting. Lumber piles shall not exceed 20 feet in height provided that lumber to be handled manually shall not be stacked more than 16 feet high. Structural steel, poles, pipe, bar stock, and other cylindrical materials, unless racked, shall be stacked and blocked so as to prevent spreading or tilting ."Housekeeping."
Storage areas shall be kept free from accumulation of materials that constitute hazards from tripping, fire, explosion, or pest harborage.
Vegetation control will be exercised when necessary.
"Dockboards (bridge plates)."Portable and powered dockboards shall be strong enough to carry the load imposed on them. Portable dockboards shall be secured in position, either by being anchored or equipped with devices which will prevent their slipping. Handholds, or other effective means, shall be provided on portable dockboards to permit safe handling.
Positive protection shall be provided to prevent railroad cars from being moved while dockboards or bridge plates are in position.
page 14
PQRST
The PQRST key (Item, Quantity, Route, Service, Time) is used for improvement of the flow of goods movements, such as decisions about (new) layout of the rooms. The collection of data based on different components of the PQRST key provides important information that could lead to the design of a well-organized warehouse.
Product
What products are stored and possibly repackaged and collected? Whether these products can be easily transported internally, depending on factors including:
Type of product
Type of packaging
Type of unit load
Existing internal transport.
Quantity
How many products are stored, transported and collected?
Average quantity stored by product, Average amount per hour should be collected or stored,
Quantity per unit load.
Route
Where will the goods arrive?
What route should the goods be stored?
Through which route the orders must be collected?
Where should the items be put down?
Support
The S stands for Support, Service or support services.
Support services include the repair department for internal transport, administration and sales department. Also within the wholesale for these departments covered by support services.
Time
When the products come in?
In what order should the products come in?
How fast should the products be repacked?
How fast should the products be stored?
When should the orders be collected?
How much time does it take delivery of the goods?
How much time does the storage of goods?
How long are the goods around in the warehouse?
How long does one have to collect an order?
page 15
Retail storage solutions
Stock control is defined as: "The activity of checking a shop’s stock" Many shops now use stock control systems. Stock control system can be used to include various aspects of controlling the amount of stock on the shelves and in the stockroom and how reordering happens. These include: Ensuring that products are on the shelf in shops in just the right quantity. Recognizing when a customer has bought a product. Automatically signaling when more products need to be put on the shelf from the stockroom. Automatically reordering stock at the appropriate time from the main warehouse. Automatically producing management information reports that could be used both by local managers and at Head office. These might detail what has sold, how quickly and at what price, for example. Reports could be used to predict when to stock up on extra products, for example, at Christmas or to make decisions about special offers, discontinuing products and so on. Sending reordering information not only to the warehouse but also directly to the factory producing the products to enable them to optimize production. Stock management in the retail supply chain follows the following sequence:
Request for new stock from stores to head office
Head office issues purchase orders to the vendor
Vendor ships the goods
Warehouse receives the goods
Warehouse stocks and distributes to the stores
Stores receive the goods
Goods are sold to customers at the stores
The management of the inventory in the supply chain involves managing the physical quantities as well as the costing of the goods as it flows through the supply chain.
In managing the cost prices of the goods throughout the supply chain, several costing methods are employed: Retail method, Weighted Average Price method, FIFO (First In First Out) method, LIFO (Last In First Out) method, LPP (Last Purchase Price) method and BNM (Bottle neck method)
Advantages and disadvantages
Stock control systems ensure that just the right amount of stock are on the shelves. If there is too much stock, it ties up a company's money, money that might be better spent on reducing their overdraft, on advertising the business or on paying for better facilities for customers, for example. Too much stock means that some perishable products might not sell and would have to be thrown away and this would reduce a company's profit. If there were not enough products on the shelf, they might run out. If this happens, they would lose business and again, profits would not be as good as they ought to be. Stock control systems save a lot of staff time. Savings may be possible by reducing the number of staff needed in the business thereby improving profits. A stock control system will not remove the necessity for checking what is on the shelves regularly - things get stolen and these won't be recorded. Stock control systems also mean that a business may have to close down while the system is changed from a manual one. They may also involve a considerable investment in equipment and support. Stock control systems require training and some staff might find them difficult to use. They can also break down so a procedure needs to be in place so the business can continue to trade. This could involve further costs as well, perhaps requiring the purchase of backup equipment or a support agreement. Usually, the benefits of a stock control system outweigh the disadvantages.
page 16
12. Security of Stock
Electronic Article Surveillance Systems (EAS)
The most widely used EAS systems are the radio frequency (RF). In this system, a label basically s miniature disposable electronic unit and antenna is attached to a product and reponse from the label is then picked up by an adjacent receiver antenna in one of the gates at the store’s exit. This processes the label response signal and will trigger an alarm when it matches specific criteria. When package that meets this criteria moves through the gates, the alarm rings, indicating that there is an illegal removal of goods from the store’s premises.
Electromagnetic (EM) Systems.
Many retail chains throughout Europe use the EM system. This technology us magnetic, iron-containing strips with adhesive layers that are attached to the merchandise. Unlike the tags in then EAS system, which are removed once customer pays for the merchandise, the strip is not removed at the checkout counter but is deactivated by a scanner.
An advance of this system is that the strip can be reactivated if the merchandise is returned.
Acousto-Magnetic System.
This is the newest entry in antishoplifting systems. Stores that use RF systems require the labeled transmitters in the items and the receivers in the gates to be about eight feet apart. Retailers with wide entrances prefer the acousto-magnetic system. The tags an labels used in the acousto-magnetic system are detected in wide areas, so this doesn’t require stores to have narrow-gated entrances. The acousto-magnetic system also responds extremely well with metal shopping carts, unlike other systems that don’t work with metal objects. One of the world’s largest producers of antishoplifting devices is Sensormatic , the subject of the following Spotlight.
Video Surveillance Systems (CCTV)
Closed circuit televisions systems enable security personnel to monitor store activity as it is taking place. In the newest, more sophisticated systems, retailers are able to monitor several stores in their organization, as well as distribution centers, from a single location. These remote video surveillance systems allow retailers to transmit full-frame images streams over high-speed phone lines to a variety of locations and to electronically store digital video images for review of evidence. Although the video cameras were once easily visible, today’s offerings are harder to spot. They can be mounted in smoke detectors, sprinkle heads, thermostats, and clocks, making them virtually invisible to the shoplifter who might attempt to stay out of their view.
page 17
Importance of security management.
The importance of security, we need to look at security as an enhancement to a business.
Not just as an expense. Security can be a somewhat vague concept.
So let’s break it down into segments and define what it really means.
Physical security is the actual measures you take to protect your premises and equipment.
Information security means taking actions to safeguard your data, both electronic and printed.
This consists of adopting security policies and imposing an electronic authentication and control system on yourself and your employees. All of this enhances productivity by creating an environment that functions smoothly. Clearly defined security practices are necessary to avoid over control. These practices can greatly enhance the productivity of your employees by reducing down time.
A through business survey will identify areas of your business that need improvement and areas that perform especially well. Knowing these strengths and weaknesses will allow you to allocate funds with more certainty. Growing a business is not just about getting new customers or keeping the ones you have.
It is also about managing your resources and controlling costs.
Asset management is a big part of this. How much control do you have over your business? Are you spending money in places you shouldn't? How do you know?
You can look at security and inventory control as a means of enhancing or managing your cash flow.
A strong security program leaves your business open to exploitation and compromise.
page 18
Sources
Internet: www.inditex.com http://en.wikipedia.org/wiki/Inditex http://en.wikipedia.org/wiki/Zara_%28retailer%29 http://www.slideshare.net/wolanita/zara-7471931 http://www.itglwf.org/lang/en/health-and-safety.html http://www.reuters.com/article/2007/06/27/idUSL2764574420070627 http://en.wikipedia.org/wiki/Electronic_data_interchange http://en.wikipedia.org/wiki/Material_requirements_planning http://nl.wikipedia.org/wiki/Enterprise_resource_planning http://en.wikipedia.org/wiki/Stock_control http://www.retailstoragesolutions.co.uk/ http://en.wikipedia.org/wiki/Stock_management http://www.askdeb.com/inventory-management/retail/ http://www.ehow.com/about_6747692_description-inventory-control.html#ixzz29qcWe200 http://www.osha.gov/pls/oshaweb/owasrch.search_form?p_doc_type=STANDARDS&p_toc_level=0&p_keyvalue=&p_status=CURRENT http://nl.wikipedia.org/wiki/PQRST-sleutel
TV:
BBC report on http://www.bbc.co.uk/news/business-11395084
Books:
Fashion Retailing (see pages enclosed)
page 19
Unit 6 Supply and Stock
-------------------------------------------------
Management in Retail
Hajar Houari
Business and Fashion CH 1E
Miss A. Lekic
Index
1. About Inditex page 2
2. About ZARA page 3
3. Structure of the supply chain Corporate Social Responsibility page 4
4. Product page 5 Policy on the use of animal-skin products LWG
5. Leather page 6 Legislation on Health and Safety
6. Customs page 7 Legislation on Transport
7. Manufacturer page 8
8. Distribution page 9
9. Solutions on saving costs page 10 The impact of legislation
10. Methods and systems used in retail stock management page 11 In-house receiving page 12 Merchandise Distribution Technology page 13
11. Key components used to manage retail storage page 14 PQRST page 15 Retail storage solutions page 16
12. Security of stock page 17 Importance of security management page 18
Sources page 19
page 1
1. About Inditex
Head office: A Coruña, GALICIA, Spain
Inditex is a large Spanish corporation and the world's largest fashion group. It is made up of almost a hundred companies dealing in activities related to textile design, production and distribution and owns brands like Zara, Massimo Dutti, Bershka, Oysho,
Pull and Bear, Stradivarius, Zara Home, and Uterqüe.
The purpose of this Company is:
The manufacture, marketing at any stage, importation, export and wholesale and retail of all kinds of textile raw materials, yarns, cloths, fabrics and finished apparel and home products as well as any other complementary products of the aforementioned, including those of cosmetics and leather goods.
Inditex selects the world’s best manufacturers to produce its collections.
Inditex’s production chain is highly diversified, with approximately half of its manufacturing conducted in near-source areas and in Europe, which gives the company unmatched swiftness and flexibility to address changing trends.
Inditex participated during the 2011 financial year in the United Nations Global Compact Supply Chain
Sustainability Advisory Group, with the aim of pooling best practices in the sustainable management of the supply chains has made it possible for the group to advance by sharing and applying the best practices in sustainability at the world level in the matter of suppliers.
page 2
2. About ZARA Amancio Ortega began making clothes in a rented Garage in 1963. Now Zara's parent, Inditex, a listed Company where Mr. Ortega still 59% owns, has more than 5,000 stores in 77 countries. It is still growing apace, especially in China, where it will open 80 more stores this year.
ZARA has one of world’s most successful logistics operations. Distribution has an increasing influence on the strategy for companies and is therefore for some companies like ZARA an important part of the marketing plan. Because ZARA’s policy is to do as little advertising as possible.
The secret of Zara's success is its speed four weeks for a new fashion idea to hit the shops and the feedback that store managers send to head office, to help it fine-tune it’s ideas. Few rivals come close to ZARA.
Hennes & Mauritz (H&M) of Sweden is nearest. It is not as fast to market with new styles it takes months rather than weeks. But where it has caught on, especially in Germany, The Netherlands and Austria, its market penetration is higher. It has distribution centers dotted around Europe. Some 65% of its product is made in lower-cost countries in Asia. That means H&M’s cost base is lower than Inditex's, but it is more vulnerable to disruptions.
There are a total of 1659 Zara stores. The majority located in Europe.
page 3
3. Structure of the supply chain
For this task 1 we had to outline the structure of the retail supply chain for a selected product from the manufacturer to the retail outlet. And for task 2 outline the impact of legislation on the retail supply chain. With the learning outcome to understand the structure of the retail supply chain. And how key legislation has impacted on the retail supply chain.
This report contains the following:
- The structure of the supply chain.
- The role of producers, processors and distribution organizations.
- Solutions on saving costs.
- Legislation on Transport, Health and Safety and other legislation. Zara controls most of the steps on the supply chain, designing, manufacturing and distributing products. Inditex selects suppliers all over the world to produce its collections and has an extensive supply chain with a presence in over 40 countries. The fact that significant part of its supplies are carried out in areas close to the headquarters of each of the chains (where the design and logistics teams are located) makes possible a rapid and flexible response to the market. This is the reason for
ZARA’s success, it’s known for its fast fashion.
Corporate Social Responsibility:
Inditex's production needs increase each year and, for this reason, it is one of the Group's strategic priorities to ensure the sustainability of its supply chain, both through the fulfillment of the Code of Conduct for
External Manufacturers and Suppliers, which has been in force since 2001, and the strictest standards for product quality, health and safety. Inditex ensures that all its suppliers and external workshops undertake to comply with such Code. The entire Group participates in this task coordinated by the Department of Corporate Social Responsibility CSR. In order to carry out its policy, Inditex has local Corporate Social Responsibility teams in India, Bangladesh, Turkey, China, Morocco, Brazil, Portugal and Spain, which work with the objective of offering and guaranteeing customers of any of the brands of which Inditex is made up a product which has been prepared with maximum respect for the Fundamental Employment Standards as well as the strictest requirements which are progressively added to the regulations.
page 4
4. Product
I chose a pair of leather pants. That are a hundred percent lambs leather on the outside, ninety-eight percent lambs leather and two percent elastic on the inside.
This is one of the most expensive pieces ZARA sells, with a selling price of €279,00.
Designed in ComditelPg Ind. Sabón - Av. Diputación -Ed. Inditex B 79, Arteixo, 15142 Spain.
Policy on the use of animal-skin products:
Inditex applies standards for the responsible manufacture of its products as regards the use of elements of animal skin (leather) and of skin with hair (fur). In the first case, the Group uses skin which comes exclusively from animals raised on farms for providing food and under no circumstances from animals killed exclusively in order to market their skins. As regards fur, or skin with hair, Inditex does not use this product, wherever it comes from. Inditex is also a member of the Leather Working Group (LWG),which develops a protocol of environmental auditing to evaluate and promote environmental practices that are more sustainable within the leather industry.
Leather Working Group
(LWG)
LWG is a working group created in 2005 to develop a protocol of environmental auditing which would make it possible to evaluate the fulfillment and the environmental practices of the tanneries and which, in turn, promotes more sustainable environmental practices in the leather industry. LWG aims to improve the sustainability of the tanning industry, by working in a transparent manner through the participation and representation of brands, tanneries, retailers and other interested parties in the sector. The group also enjoys the participation of the main centers of excellence and research of the sector and the review of the auditing system by non-governmental organizations, academic institutions and other interested organizations. As a member of LWG, Inditex will evaluate and measure, in a rigorous manner, the technical-environmental processes of tanneries and the capacity to define improvements with its suppliers. The audits will be carried out by leather industry experts.
page 5
5. Leather
The leather being used for ZARA products are native of
Morocco. Morocco is the second-biggest supplier to Inditex.
ZARA leather products are mostly cow, buffalo, sheep, goat and lambs leather.
Leather is a durable and flexible material created by the tanning of animal rawhide and skin, often cattle hide. It can be produced through manufacturing processes ranging from cottage industry to heavy industry. Tanning is the process which converts the protein of the raw hide or skin into a stable material which will not putrefy and is suitable for a wide variety of end applications. This process is also takes place in Morocco. Leather tanning, Fes, Morocco leather tanning, Marrakech, Morocco
Legislation on Health and Safety:
Working conditions in the textile, garment and leather industries around the world increasingly demand special attention and effort from the international trade union movement. Every year, some two million men and women lose their lives through accidents and diseases linked to their work. In addition, workers suffer 270 million occupational accidents and 160 million occupational diseases each year. The failure of many governments to enforce health and safety standards means that efforts to improve working conditions in one country can be undermined by the flight of production to countries where workplace safety is ignored. Ignoring occupational health and safety is one way by which international market operators can minimize costs, engaging in a form of "social dumping" at the real costs of workers' lives. Inditex regards its safety and health policy as a vital, integral part of the Group’s management. Inditex believes that improving safety and health conditions is a cornerstone of the corporation's activities that extends to all levels of the company. Inditex is committed to complying with current legislation, codes of best practice and any other commitments to which the company voluntarily subscribes. The company’s growth is based on constant improvement of its workplace conditions. The corporation prohibits any work that priorities any other consideration above that of safeguarding workers’ safety and health conditions. Productivity is the result of safety. Training, raising awareness and participation by Inditex workers in the management of health and safety issues are key elements for achieving the goals outlined in the company's prevention planning policy. Safety and health management at Inditex is based on ongoing improvement. It is analysed, planned, coordinated and executed in accordance with the reality at the company, with a commitment to compliance with the policy, prevailing legislation and the commitments to which the company has voluntarily signed on. Inditex’s safety and health policy is a required subject for all Inditex employees and outside contractors.
page 6
6. Customs
Morocco Spain headquarter ZARAChina Manufacturer
Spain distribution centreThe Netherlands distribution center ZARA store. The leather from Morocco is being transported by boat to ZARA headquarter in Spain. Industria de DiseñoTextil S.A., registered business address at Av. de la Diputación, EdificioInditex,
15142, Arteixo, A Coruña (Spain.) From the headquarter the leather is being cut and a pattern made for the pants and transported by plane to China where it’s being sewn and finished.
From the Manufacturer in China it’s being brought back to Spain, to the distribution Center where it’s being packed and transported to distribution centers and stores all over the world. From the distribution center in Spain it’s being brought per truck to the distribution center here in The Netherlands.
Legislation on Transport
Goods entering the Customs area of the EU (Spain,
The Netherlands) from a non-EU (Morocco, China) country are subject to a number of rules. The main rule is that these goods must be given a 'customs designation'. You can give these goods a customs designation by placing them under a 'customs procedure', for example. There are various customs procedures. A declaration should be filed for the goods, certain formalities should be fulfilled when the declaration is made, such as submitting invoices and keeping the goods available for inspection by Customs the import duties and/or other import taxes owed should be paid the declaration process involves a check as to whether the goods comply with the regulations in the area of safety, health, the economy and the environment. Other legislation which must be reckoned with like licences, eg ‘O’ licence (for goods exceeding 3.5 tonnes gross weight), Heavy Goods Vehicle Licence (for goods exceeding 7.5 tonnes gross weight); Road Traffic Acts 1988 and 1991; Dangerous Goods (Safety Advisors) Regulations 1999
The Netherlands Customs Administration has different tasks and responsibilities in the field of safety, health, economy and environment (abbreviated as 'VGEM'). For example, Dutch customs officers monitor the import, export and transportation of goods. For this purpose, Customs checks whether taxes due at the time of import are paid and whether goods meet the requirements at the time of export. Customs also supervises compliance with VGEM legislation. This legislation stipulates that importing, exporting or transporting certain goods within the Netherlands and/or the European Union is prohibited, or is only permitted if (strict) conditions are met, or if the goods meet certain requirements. On account of its VGEM responsibilities, Customs carries out a large number of inspection, observation and investigation tasks at the request of various ministries. page 7
7. Manufacturer
The leather is manufactured in Morocco, it’s been true the tanning process. It is now suitable for a wide variety of end applications.
From the ZARA headquarter in Spain the leather is being cut, the pattern and leather is being brought to China where it’s being sewn and finished. Although 34% of Inditex’s manufacturing is outsourced to Asia, and 14% to parts of Europe including Turkey, those tend to be the more basic items. The high-fashion stuff, 49% of what it sells, is cut and finished in Spain though some sewing is done elsewhere. Most of the time the sewing for these high-fashion products is being finished in China. And because this is a leather product and expensive it belongs to the high-fashion stuff.
ZARA’s FAST FASHION PROCESS
1. ZARA’s design team monitors fashion trends and store sales. Based on this they come up with
1000 designs a month.
2. They send these out for manufacturing around the world. 3. Completed designs are shipped back to Spain.
4. Local store managers in each country tell the ZARA head office in Spain what the store needs and how much. 5. The design team then flies or truck out consignments for each of
ZARA’s over 1608 stores based on local needs and trends. A store gets consignments twice a week.
2
page 8
8. Distribution
Distribution has an increasing influence on the strategy for companies and is therefore for some companies like ZARA an important part of the marketing plan. Because ZARA’s policy is to do as little advertising as possible. Inditex’s logistical centres supply merchandise to our stores twice a week. ZARA ‘s distribution centre receives the articles from their own factories or from outside suppliers. They also manage stock and oversee dispatch and delivery, so that each point of sale receives what it has requested as soon as possible and in perfect condition. Quick response is one of the pillars of their success.
Zara Logistical Centres in located in Arteixo, A Coruña (Zara Logística) and Zaragoza (Plataforma Europa).
Pull & Bear Logistical Centre in Narón, A Coruña. Massimo Dutti, Bershka and Oysho Logistical Centre in Tordera, Barcelona. Stradivarius Logistical Centre in Sallent de Llobregat, Barcelona. Tempe Logistical Centre in Elche, Alicante. This centre distributes the footwear that can be found in all of Inditex’s brands' stores. Zara recently opened for 100 million euros a new distribution center in Zaragoza. All products pass the first major distribution center where about 2.5 million items per week are treated. Normally running the distribution center about 4 days, 24 hours and three days with one or two teams, 800 permanent employees work 8 hours a day. In peak times this capacity by approximately 50%.
Products are being transported from this distribution Centre To distribution centers all over the world. The clothing is sorted, labeled and packed transported by truck to the head office in the Netherlands.
Distribution Centre ZARA NEDERLAND B.V Amsterdam. There is a total of 21 ZARA store’s here in The Netherlands. Zara has stores in Alkmaar, Almere, Amersfoort, Amsterdam (flagship store), Amstelveen, Apeldoorn, Arnhem, Breda, Groningen,'s-Hertogenbosch, Den Haag, Eindhoven, Enschede (opening end of oktober 2012), Hilversum, Hoofddorp, Maastricht, Rotterdam (3 stores), Tilburg, Utrecht en Veenendaal. And since November Rotterdam is the first city in the Netherlands to have a ZARA HOME store.
page 9
9. Solutions on saving Costs
Zara already does as much as possible to save money. Because this is a leather product and expensive it belongs to the high-fashion stuff ZARA sells, and most of the time 49% of the high-fashion stuff is cut and finished in Spain though some sewing is done in China. A way to save costs is to manufacture the leather products in Morocco. Or finish the sewing in Spain, that way you can save money by ‘removing China of the supply chain.’’ Another way to also save money is by removing the CSR by doing so INDITEX can save money but at the same time they might lose allot of customers.
The impact of legislation CSR
(Corporate Social Responsibility see page 4)
Zara owner lays down ethics for Moroccan suppliers. CASABLANCA, June 27Moroccan suppliers of Spanish fashion retailer Inditex have one year to meet ethical standards laid out by the country's textile association or lose their contracts, industry said the executives in June of this summer. Morocco is the second-biggest supplier to Inditex (ITX.MC).
Inditex has shifted some production to China in recent years but Morocco's proximity to Spain allows the firm to get new designs to European stores in a few days, helping it react more quickly to catwalk trends. Moroccan textile association AMITH's label "Fibre Citoyenne" covers labour laws, social security, safety, minimum working age, working hours and environmental standards. Inditex is the Moroccan textile industry's biggest client. They cannot allow it to emerge that one of Inditex's suppliers did not respect this country's social norms. Under the initiative unveiled by AMITH and Inditex executives in Casablanca the Moroccan government will finance a programme to help Inditex's Moroccan manufacturers comply with the rules over one year. Those that fail will lose Inditex as a client. Most Moroccan textile employees work illegally, receiving wages in cash from firms that keep no records of working hours. Industry observers say that even firms that play by the rules often rely on subcontractors that do not. That has turned into a competitive disadvantage now that ethically-minded Western shoppers look more than ever at who made their clothes and under what conditions. At the other end of the scale, firms that act within Moroccan law have complained of being hamstrung by time-consuming administrative procedures and rigid labour rules.
page 10
10. Methods and systems used in retail stock management
For task 3 the assignment was to outline two methods and two systems used in retail stock management then compare two methods or two systems used in retail stock management and Evaluate the use of one information communication technology system in retail stock management. With the learning outcome to understand how retail stock management methods and systems are used.
Manufacturing resources planning
Manufacturing resource planning is also called MRP II. It is a system for the manufacturing resources are planned, as material resources, people and machines. This is a part of the logistics.
MRP II is an extension of MRP I, this is called Material Requirements Planning. MRP I is a part of MRPII.
MRP is an integrated manufacturing control. This is a forecast of the manufacture of finished products made. The number of people, machinery, supplies, etc is hereby set on prognosis. If there is in addition to the production control is also the management of (all) other processes of interest for the integral liner companies, MRP II should be "scaled up" to an Enterprise Resources Planning also abbreviated to ERP.
Material resource planning
Material requirements planning (MRP-I) is used for planning the logistics of material procurement
(raw materials and components). In addition, this also determined the production process, because in MRP I worked with a pre-established sales and production plan of the final product. The required materials are known. These are listed in the parts list, logistics sometimes called bill of material. On the basis of the established sales and production plan and the particular period in which production takes place, the planner can calculate what materials and components and the quantities thereof to be redeemed. It is also possible to calculate when these products should be purchased by taking into account the duration of the delivery of the product. The period when starting the production is indeed predetermined. MRP-I assumes an unlimited capacity. It takes no account of aspects such as machines, people, money, suppliers, etc. In order to solve manufacturing resources planning developed. This is also called MRP II.
The ultimate goal of MRP is:
- Reliable delivery times
- satisfied customers
- smaller stocks
- smaller warehouses
- Less idle time of machines and people.
- Reduction of costs (financial)
Enterprise Resource planning
Material requirements planning (MRP) is a production planning and inventory control system used to manage manufacturing processes.
Most MRP systems are software-based, while it is possible to conduct MRP by hand as well. An MRP system is intended to simultaneously meet three objectives:
Ensure materials are available for production and products are available for delivery to customers. Maintain the lowest possible material and product levels in store Plan manufacturing activities, delivery schedules and purchasing activities.
page 11
In-house receiving
Centralized receiving
Many of the larger department stores and specialty organizations, catalog operations, E-tailing ventures, and home shopping outlets receive their goods at a centralized location in which all of the products go through a receiving procedure before they are sent to their final destinations. Often times, in the cases of the off-site retail operations, the receiving department is within the headquarters of the company, and the goods remain there until they are ordered by the customs. There are several reasons why centralized receiving is the choice of the vast majority of large retail organizations. These include the following:
- More space for merchandise on the selling floor.
- Better control of goods.
- Cost reduction. Regional receiving
When a brick-and-mortar operation has a large number or units dispersed throughout a range of geographical locations, most opt for regional receiving departments. Instead of having a range centralized facility to handle the goods for every store in the chain, regional offices cover less time than if it came from centralized points. A company with units throughout the United States, for example, that subscribes to this decentralized arrangement will more than likely get the goods to the stores in the different regions more quickly than if they were all shipped from a centralized location that was far away from many of the regions. The receipt of goods in a timely manner is particularly important to the fashion retailer. With fashion cycles playing such a significant role in its merchandising endeavors, every day that is saved in shipping gives the retailer more time to sell the items.
Individual store receiving
In the case of individual proprietorships, where just one or a few units are involved In the receiving procedure, there is little choice but to have each unit process its own incoming merchandise. Goods are usually delivered to the front door of the store, then opened, checked, tagged, and made ready for the selling floor directly within the selling space. In some stores, small back rooms are available to handle the incoming merchandise. The latter choice is a better one, since it does not interfere with the activities taking place on the selling floor. Since the people responsible for the unpacking, sorting, and making merchandise ready for inclusion onto the racks and counters are responsible for other chores, the cartons are often left unattended until they have the time to attend to them.
page 12
Merchandise Distribution Technology
Unlike in the past when a retailer had to manually handle the tasks associated with the receiving and marketing of merchandise from vendors, today’s merchants have the benefit of technology to interface with their suppliers. Most important among the retailer-vendor innovations are electronic data interchange EDI, and vendor managed inventory VMI.
Vendor managed inventory VMI Vendor rating
Many organizations are facing and wide range of different vendors. Their number is usually increased, while the purchasing department remains the same or even shrink. Eventually the track and "educating" your suppliers often impossible to manage. It reacts exclusively on recent incidents. A Vendor Rating or supplier assessment system ensures that your suppliers continuously monitors and captures their performance. This can be a relatively simple system, for example, on the basis of delivery time accuracy, but it can also be a more extensive system with several subjective criteria. The more criteria, the more accurate the assessment and the better the image provider. It is ideal in combination with a supplier handbook. Vendor rating benefits
• Using a good vendor rating system gives good and clear picture of the performance of your suppliers.
• Because the suppliers are assessed using predetermined criteria can right decisions are made based on facts and not based on feelings.
• By better insight in future incidents can be prevented.
• It gives a better insight allowing you stronger position in negotiations with your supplier
Electronic data interchange EDI is a structured transmission from computer-to-computer to exchange data organized in a format specified by retailers and vendors. Without any human intervention involved at either end of the transactions. It is more than just an e-mail; for instance, organizations might replace bills of lading and even cheques with appropriate EDI messages from one trading partner to another trading partner. Inherent in the benefits of the system are better inventory management, reduced expenses, improved accuracy, better business relationships, increased sales, and a minimization of paperwork. Retailers of all classifications use the EDI system, It is especially attractive to fashion retailers, because the increased speed of transactions can extend the life of the product on the selling floor, in catalogs, in E-tail outlets, and on home shopping operations. Where time is of the essence in retail transactions, no other system can place a company in a better market position. With ZARA this is the most essential thing and the reason of their success, because they make use of this system they have the possibility to react quick and deliver consignments to ZARA stores all over the world in just 2 weeks.
page 13
11. Key components used to manage retail storage
A good storage installation can provide significant opportunities for the retail sector- avoiding investment in re-build facilities or even relocation. As everybody involved in this sector looks to maximize available space, the benefits arising from either installation or a two-tier storage facility are increasingly well recognized.
Additional sales area or an enhancement of back of house operations can both gain from involvement in this field. manage the installation throughout the lifecycle of the project, from the survey and design phase, through planning and building regulation application, to manufacture and installation. Fire protection, lighting and accommodation, and a range of stairways to meet the applicable building regulation offer further options.
General storage building regulations
All materials stored in tiers shall be stacked, racked, blocked, interlocked, or otherwise secured to prevent sliding, falling or collapse. Maximum safe load limits of floors within buildings and structures, in pounds per square foot, shall be conspicuously posted in all storage areas, except for floor or slab on grade. Maximum safe loads shall not be exceeded. Aisles and passageways shall be kept clear to provide for the free and safe movement of material handling equipment or employees. Such areas shall be kept in good repair. When a difference in road or working levels exist, means such as ramps, blocking, or grading shall be used to ensure the safe movement of vehicles between the two levels. Material stored inside buildings under construction shall not be placed within 6 feet of any hoist way or inside floor openings, nor within 10 feet of an exterior wall which does not extend above the top of the material stored. Each employee required to work on stored material in silos, hoppers, tanks, and similar storage areas shall be equipped with personal fall arrest equipment meeting the requirements of Subpart M of this part. Non compatible materials shall be segregated in storage. Bagged materials shall be stacked by stepping back the layers and cross-keying the bags at least every 10 bags high. Materials shall not be stored on scaffolds or runways in excess of supplies needed for immediate operations. Brick stacks shall not be more than 7 feet in height. When a loose brick stack reaches a height of 4 feet, it shall be tapered back 2 inches in every foot of height above the 4-foot level. When masonry blocks are stacked higher than 6 feet, the stack shall be tapered back one-half block per tier above the 6-foot level. Lumber: Used lumber shall have all nails withdrawn before stacking. Lumber shall be stacked on level and solidly supported sills. Lumber shall be so stacked as to be stable and self-supporting. Lumber piles shall not exceed 20 feet in height provided that lumber to be handled manually shall not be stacked more than 16 feet high. Structural steel, poles, pipe, bar stock, and other cylindrical materials, unless racked, shall be stacked and blocked so as to prevent spreading or tilting ."Housekeeping."
Storage areas shall be kept free from accumulation of materials that constitute hazards from tripping, fire, explosion, or pest harborage.
Vegetation control will be exercised when necessary.
"Dockboards (bridge plates)."Portable and powered dockboards shall be strong enough to carry the load imposed on them. Portable dockboards shall be secured in position, either by being anchored or equipped with devices which will prevent their slipping. Handholds, or other effective means, shall be provided on portable dockboards to permit safe handling.
Positive protection shall be provided to prevent railroad cars from being moved while dockboards or bridge plates are in position.
page 14
PQRST
The PQRST key (Item, Quantity, Route, Service, Time) is used for improvement of the flow of goods movements, such as decisions about (new) layout of the rooms. The collection of data based on different components of the PQRST key provides important information that could lead to the design of a well-organized warehouse.
Product
What products are stored and possibly repackaged and collected? Whether these products can be easily transported internally, depending on factors including:
Type of product
Type of packaging
Type of unit load
Existing internal transport.
Quantity
How many products are stored, transported and collected?
Average quantity stored by product, Average amount per hour should be collected or stored,
Quantity per unit load.
Route
Where will the goods arrive?
What route should the goods be stored?
Through which route the orders must be collected?
Where should the items be put down?
Support
The S stands for Support, Service or support services.
Support services include the repair department for internal transport, administration and sales department. Also within the wholesale for these departments covered by support services.
Time
When the products come in?
In what order should the products come in?
How fast should the products be repacked?
How fast should the products be stored?
When should the orders be collected?
How much time does it take delivery of the goods?
How much time does the storage of goods?
How long are the goods around in the warehouse?
How long does one have to collect an order?
page 15
Retail storage solutions
Stock control is defined as: "The activity of checking a shop’s stock" Many shops now use stock control systems. Stock control system can be used to include various aspects of controlling the amount of stock on the shelves and in the stockroom and how reordering happens. These include: Ensuring that products are on the shelf in shops in just the right quantity. Recognizing when a customer has bought a product. Automatically signaling when more products need to be put on the shelf from the stockroom. Automatically reordering stock at the appropriate time from the main warehouse. Automatically producing management information reports that could be used both by local managers and at Head office. These might detail what has sold, how quickly and at what price, for example. Reports could be used to predict when to stock up on extra products, for example, at Christmas or to make decisions about special offers, discontinuing products and so on. Sending reordering information not only to the warehouse but also directly to the factory producing the products to enable them to optimize production. Stock management in the retail supply chain follows the following sequence:
Request for new stock from stores to head office
Head office issues purchase orders to the vendor
Vendor ships the goods
Warehouse receives the goods
Warehouse stocks and distributes to the stores
Stores receive the goods
Goods are sold to customers at the stores
The management of the inventory in the supply chain involves managing the physical quantities as well as the costing of the goods as it flows through the supply chain.
In managing the cost prices of the goods throughout the supply chain, several costing methods are employed: Retail method, Weighted Average Price method, FIFO (First In First Out) method, LIFO (Last In First Out) method, LPP (Last Purchase Price) method and BNM (Bottle neck method)
Advantages and disadvantages
Stock control systems ensure that just the right amount of stock are on the shelves. If there is too much stock, it ties up a company's money, money that might be better spent on reducing their overdraft, on advertising the business or on paying for better facilities for customers, for example. Too much stock means that some perishable products might not sell and would have to be thrown away and this would reduce a company's profit. If there were not enough products on the shelf, they might run out. If this happens, they would lose business and again, profits would not be as good as they ought to be. Stock control systems save a lot of staff time. Savings may be possible by reducing the number of staff needed in the business thereby improving profits. A stock control system will not remove the necessity for checking what is on the shelves regularly - things get stolen and these won't be recorded. Stock control systems also mean that a business may have to close down while the system is changed from a manual one. They may also involve a considerable investment in equipment and support. Stock control systems require training and some staff might find them difficult to use. They can also break down so a procedure needs to be in place so the business can continue to trade. This could involve further costs as well, perhaps requiring the purchase of backup equipment or a support agreement. Usually, the benefits of a stock control system outweigh the disadvantages.
page 16
12. Security of Stock
Electronic Article Surveillance Systems (EAS)
The most widely used EAS systems are the radio frequency (RF). In this system, a label basically s miniature disposable electronic unit and antenna is attached to a product and reponse from the label is then picked up by an adjacent receiver antenna in one of the gates at the store’s exit. This processes the label response signal and will trigger an alarm when it matches specific criteria. When package that meets this criteria moves through the gates, the alarm rings, indicating that there is an illegal removal of goods from the store’s premises.
Electromagnetic (EM) Systems.
Many retail chains throughout Europe use the EM system. This technology us magnetic, iron-containing strips with adhesive layers that are attached to the merchandise. Unlike the tags in then EAS system, which are removed once customer pays for the merchandise, the strip is not removed at the checkout counter but is deactivated by a scanner.
An advance of this system is that the strip can be reactivated if the merchandise is returned.
Acousto-Magnetic System.
This is the newest entry in antishoplifting systems. Stores that use RF systems require the labeled transmitters in the items and the receivers in the gates to be about eight feet apart. Retailers with wide entrances prefer the acousto-magnetic system. The tags an labels used in the acousto-magnetic system are detected in wide areas, so this doesn’t require stores to have narrow-gated entrances. The acousto-magnetic system also responds extremely well with metal shopping carts, unlike other systems that don’t work with metal objects. One of the world’s largest producers of antishoplifting devices is Sensormatic , the subject of the following Spotlight.
Video Surveillance Systems (CCTV)
Closed circuit televisions systems enable security personnel to monitor store activity as it is taking place. In the newest, more sophisticated systems, retailers are able to monitor several stores in their organization, as well as distribution centers, from a single location. These remote video surveillance systems allow retailers to transmit full-frame images streams over high-speed phone lines to a variety of locations and to electronically store digital video images for review of evidence. Although the video cameras were once easily visible, today’s offerings are harder to spot. They can be mounted in smoke detectors, sprinkle heads, thermostats, and clocks, making them virtually invisible to the shoplifter who might attempt to stay out of their view.
page 17
Importance of security management.
The importance of security, we need to look at security as an enhancement to a business.
Not just as an expense. Security can be a somewhat vague concept.
So let’s break it down into segments and define what it really means.
Physical security is the actual measures you take to protect your premises and equipment.
Information security means taking actions to safeguard your data, both electronic and printed.
This consists of adopting security policies and imposing an electronic authentication and control system on yourself and your employees. All of this enhances productivity by creating an environment that functions smoothly. Clearly defined security practices are necessary to avoid over control. These practices can greatly enhance the productivity of your employees by reducing down time.
A through business survey will identify areas of your business that need improvement and areas that perform especially well. Knowing these strengths and weaknesses will allow you to allocate funds with more certainty. Growing a business is not just about getting new customers or keeping the ones you have.
It is also about managing your resources and controlling costs.
Asset management is a big part of this. How much control do you have over your business? Are you spending money in places you shouldn't? How do you know?
You can look at security and inventory control as a means of enhancing or managing your cash flow.
A strong security program leaves your business open to exploitation and compromise.
page 18
Sources
Internet: www.inditex.com http://en.wikipedia.org/wiki/Inditex http://en.wikipedia.org/wiki/Zara_%28retailer%29 http://www.slideshare.net/wolanita/zara-7471931 http://www.itglwf.org/lang/en/health-and-safety.html http://www.reuters.com/article/2007/06/27/idUSL2764574420070627 http://en.wikipedia.org/wiki/Electronic_data_interchange http://en.wikipedia.org/wiki/Material_requirements_planning http://nl.wikipedia.org/wiki/Enterprise_resource_planning http://en.wikipedia.org/wiki/Stock_control http://www.retailstoragesolutions.co.uk/ http://en.wikipedia.org/wiki/Stock_management http://www.askdeb.com/inventory-management/retail/ http://www.ehow.com/about_6747692_description-inventory-control.html#ixzz29qcWe200 http://www.osha.gov/pls/oshaweb/owasrch.search_form?p_doc_type=STANDARDS&p_toc_level=0&p_keyvalue=&p_status=CURRENT http://nl.wikipedia.org/wiki/PQRST-sleutel
TV:
BBC report on http://www.bbc.co.uk/news/business-11395084
Books:
Fashion Retailing (see pages enclosed)
page 19
You May Also Find These Documents Helpful
-
1. Locate a firm that incorporates inventory management. Identify the type of inventory system (fixed order quantity system, fixed order period system, or a hybrid system) it uses.…
- 333 Words
- 2 Pages
Good Essays -
A quoting department for a custom publishing house can complete 4 quotes per day, and there…
- 309 Words
- 2 Pages
Satisfactory Essays -
Raw material supply – Ram Preparation – Fabric formation – Fabric finishing – Apparel manufacturing – Wholesaling (include Brand marketer, overseas buying offices and trading companies) – Retailers (include department stores, specialty store, mass merchandise chains, discount chains, off-price, factory outlet, mailed order)…
- 5578 Words
- 23 Pages
Good Essays -
Define the term customer relationship management. What has caused this definition to change over the past twenty years?…
- 481 Words
- 2 Pages
Satisfactory Essays -
Zara is one of the six retailing chains owned by Inditex (Industria de Diseilo Textil) of Spain who designs, manufactures, and sells apparel, footwear, and accessories for women, men, and children through Zara and five other chains around the world. Zara’s success is based on a business system that depends on vertical integration, in-house production, quick response, one centralized distribution centre, and low advertising cost all of which made it so successful thus far.…
- 3100 Words
- 13 Pages
Powerful Essays -
T.A. Spedding University of Greenwich, Chatham Maritime, Kent, UK K.K. Chan Nanyang Technological University, Singapore…
- 5007 Words
- 21 Pages
Powerful Essays -
Who do you think provided the inspection of damaged boxed; wrote a formal report and why a formal report is needed?…
- 334 Words
- 2 Pages
Good Essays -
To set up a Garments Accessories Industry also to carry on all or any of the business of Drawstring, Back Board, Tissue, Cartoon, Poly bags, Zippers, hungers Buttons, Fabrics in all kinds, dress makers, tailors halters Clothing’s, outfitters glovers, dry cleaners in readymade garments, Cotton, silken and woolen goods and knit wears of all sorts.…
- 3975 Words
- 17 Pages
Powerful Essays -
It refers to any material made through weaving,knitting,spreading,crocheting or bonding that may be used in productionof further goods(garments etc).…
- 1008 Words
- 5 Pages
Better Essays -
entire production process — from the cultivation of cotton to the production of yarns, fabrics and…
- 1776 Words
- 11 Pages
Powerful Essays -
4.3 A flawed or unrealistic business plan for a business for the future ---------- 5…
- 6197 Words
- 25 Pages
Powerful Essays -
Which involves spinning, combing, weaving, bleaching, dyeing, and printing, stitching, buying, and selling of textiles? They deal with yarn, linen, cloth and other goods including fabrics made from raw cotton, synthetic fiber, cloth other, goods and fabrics made from raw cotton, synthetic fiber and cloth, and to generate, accumulate, distribute and supply electricity.…
- 646 Words
- 3 Pages
Satisfactory Essays -
This term paper addresses the features and functions of Supply Chain Management by analyzing and comparing different companies in United Arab Emirates. By choosing Abu Dhabi Marine Operating Company “ADMA-OPCO” for my project I will demonstrate a list of facts about the whole supply chain of ADMA-OPCO as an Oil company that has been successful in the past 50 years for its importance the It is an oil and gas exploration and production company which is one of the important companies in Abu Dhabi where the Company prides itself in being a pioneering petroleum organization in this part of the world in oil and gas production which reflected a phenomenal transformation in Abu Dhabi. We used two kinds of methodologies (interview and research) for presenting the project by focus on different major parts of the procurement and distribution held in the organization, as well as how the company manages logistics and inventory under the title of supply chain and operation management.…
- 1960 Words
- 8 Pages
Powerful Essays -
There is a need to have a uniform procedure for the stores function so that optimum action is taken for a timely purchase at the best possible cost. In order to streamline stores function, there is a need for a uniform procedure. This SOP covers interalia, the entire subject of stores procurement, storage and preservation, issues on accounting management, stock verification, safety and security of stores. Suggestions for improvements in the procedures laid out on the basis of use and experience may be submitted for possible incorporation in the next revision. Any suggestions for changes, which may be desirable on priority, will be acted upon immediately.…
- 2998 Words
- 12 Pages
Good Essays -
The Sales and Inventory System is creating a web-based system. Advanced system on sales provide more reliable recording of sales of the company with comparison to its actual cost. Sales and inventory makes the company more productive, efficient and convenient to the company and its client. The system is meant to help the people show to their customers more relevant items, hoping to expedite and increase the sales and most importantly to increase the profit of the company. With the aid of sales and inventory systems, management can easily make consistent, reliable, and timely decisions. A computerized information system is far superior to a manual system when it comes to accessing files, as the speed at which this can be done is far quicker. If an employee's records are needed, these can be accessed in a matter of seconds, simply by searching for the relevant person on screen. All the information needed can be stored on a single file, as opposed to having reams of paper and various files for each employee that would require sifting through to access in a manual information system.…
- 2056 Words
- 9 Pages
Good Essays