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What is Supply Chain Management? Quick Definitions…

While Supply Chain Management is a new term (first coined in 1982 by Keith Oliver from Booz Allen Hamilton in an interview with the Financial Times), the concepts are ancient and date back to ancient Rome. The term “logistics” has its roots in the Roman military. Additional definitions:

  • Logistics involves… “managing the flow of information, cash and ideas through the coordination of supply chain processes and through the strategic addition of place, period and pattern values” – MIT Center for Transportation and Logistics
  • “Supply Chain Management deals with the management of materials, information and financial flows in a network consisting of suppliers, manufacturers, distributors, and customers” ‐ Stanford Supply Chain Forum
  • “Call it distribution or logistics or supply chain management. By whatever name it is the sinuous, gritty, and cumbersome process by which companies move materials, parts and products to customers” – Fortune 1994

According to the Council of Supply Chain Management Professionals…

  • Logistics management is that part of supply chain management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers’ requirements.
  • Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies.
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Consortium For Operational Excellence In Retailing (COER) @Wharton – Day 1 Quick Recap

About Consortium For Operational Excellence In Retailing (COER)

Consortium for Operational Excellence in Retailing (COER) is focused on advancing retail operations from a combined academic and business perspective. We hold an annual conference in May, alternating between Harvard Business School and The Wharton School, where we present cutting edge academic research for participants to exchange ideas, thoughts, and challenges. COER attracts companies and academics from various parts of the world.

COER began as the Harvard/Wharton Merchandising Effectiveness Project in 1996, started by Marshall Fisher of The Wharton School and Ananth Raman of Harvard Business School. The academics in COER have published dozens of papers in leading journals and many case studies that are taught at top business school. The work produced by COER was summarized recently by Fisher and Raman in the book “The New Science of Retailing,” Harvard Business School Press. COER has facilitated the work of numerous doctoral students, many of whom currently are on the faculties of leading business schools.

COER grew out of the understanding that while the retail industry now has the analytical tools to make merchandising more effective, there are still many areas where academia can help to push the retail industry forward from an operational perspective.

Consortium For Operational Excellence In Retailing (COER) – Day 1 Quick Recap
Session One: Kicking the Growth Addiction
Presentation by Marshall Fisher, Vishal Gaur of Cornell University, and Herb Kleinberger of NYU
Key takeaways:
  • Growth (Open more stores!)
  • Denial (Should we open more stores?)
    • Stop opening stores when they stop providing a return.
  • Mature (We need to get more from existing stores.)
    • Drive out non-productive work.
    • Grow revenues faster than expenses. In business of scale, even a 1% or 2% increase can have significant bottom line impact if expenses are kept in check.
    • Focus on projects that return significant capital returns.

 

Presentation by Donald Ngwe of Harvard Business School and Paulo Campos of Zalora
Key takeaways:
  • Selectively inducing search friction on a retail website can increase margins by as much as 20%, without negatively affecting conversion. Cost neutral chance in selling strategy that promises significant potential returns.
  • Caveats: Increased search friction on a website may drive consumers to the competitors site Long-term performance may be harmed as consumers form expectations about an on-line store.
Presentation by Santiago Gallino of Tuck School of Business and Antonio Moreno of Kellogg School of Management
Key takeaway:
  • Retailers need to optimize on
    • 1) Price competition,
    • 2) Information & ratings,
    • 3) Fulfillment speed,
    • 4) Return policy, and
    • 5) Retailer brand promise.
Presentation by Chloe Kim, Marshall Fisher, and Xuanming Su, all of The Wharton School
Key takeaway:
  • A variant fulfillment model where the delivery trucks are positioned (parked) at optimal locations for customers to self pick-up. This study took at look deeper at what daily repositioning can do to sales. Using a random forest machine learning algorithm the team determined that the firm could realize a 25.6% increase in sales.
Session Five: Managing Customer Compatibility
Presentation by Ryan Buell of Harvard Business School
Key takeaways:
  • Customer satisfaction and loyalty are tightly aligned.
  • Greatest influence on customer satisfaction:
    • 1) The Customer – 94%. That’s right, it’s mostly out of your control.
    • 2) Employee – 2%
    • 3) Locations – 2%
    • 4) Processes – 1%
    • 5) Markets – 1%
  • If you are really good at 1 dimension which is most aligned with your brand promise, customer will typically apply positive attribution to your business’ other dimensions.
Presentation by Amitabh Sinha of Michigan Ross School of Business
Key takeaways:
  • Dynamic warehousing is the acquisition of warehousing space and services on-demand, in small increments, from a large pool of geographically spread warehouses, on a pay-as-you-go basis (OPEX).
  • However,  self-owned/operated networks may be cheaper depending on a number of variables. Lack of cost certainty. Systems integration.
  • There may be a optimal model that leverage both dynamic and self-owned/operated networks.
Session Seven: Data Driven Pricing
Presentation by Kris Ferreira of Harvard Business School
Key takeaways:
  • How can you combine predictive analytics to predict demand with prescriptive analytics to make tactical decisions?
  • There was a ~10% increase in revenue when models where applied.
Session Eight: The Effect of Social Influence on Demand
Presentation by Vishal Gaur of Cornell University
Key takeaways:
  • Two dimensions: Popularity “Share” rankings and Quality rankings.
  • Low quality (low reviews), should push Popularity “Share” rankings with customers.
  • High quality (high reviews), should push Quality rankings with customers.
Session Nine: Case Study—Coca Cola Vietnam
Presentation by Ananth Raman
Key takeaways:
  • Company’s can die from a thousand little cuts, not just one big wound.
  • Drive employee satisfaction
  • Drive lasting relationships with your customers.
  • Deliver what you say you are going to deliver.
Session Ten: A Conversation on Cyber Security
Ananth Raman in conversation with Kent Burnett of Dillard’s, Inc.
Key takeaways:
  • Security is a multi layered effort
  • Employees need to be trained and tested on security policy and procedures
  • It is an industry issue, which takes industry collaboration. Collaboration through organizations such as Retail Cyber Intelligence Sharing Center (R-CISC) – https://r-cisc.org/.

Consortium For Operational Excellence In Retailing (COER) @Wharton – Day 2 Quick Recap