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RMG 434 Study Guide - Final Guide: Service Level, Profit Margin, Accounts Payable

Retail Management
Course Code
RMG 434
Janice Rudkowski
Study Guide

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Chapter 1:
Supply chain: consists of all parties involved (directly or indirectly) in fulfilling a customer request;
includes manufacturer, suppliers, transporters, warehouses, retailers, customers
Objective of every supply chain should be to maximize the overall value generated. The value (i.e. supply
chain surplus) a supply chain generates is the difference between what the value of the final product is
to the ustoe ad the osts the etie suppl hai ius i fillig ustoe’s euest suppl hain
surplus = customer value supply chain cost)
The value of the final product to the customer can be estimated by the maximum amount the customer
is willing to pay for it.
Difference between value of the product and the price = consumer surplus
Difference between revenue generated from the customer and the overall cost across the supply chain =
supply chain profitability
Supply chain success should be measured in terms of supply chain surplus and not in terms of the profits
at an individual stage focus on profitability at individual stages may lead to a reduction in overall
supply chain surplus
Effective supply chain management involves the management of supply chain assets and product,
information and fund flows to grow the total supply chain surplus
Retailing in U.S. = largely consolidated; large chains buy consumer goods from most manufactures;
providers retailers sufficient scale that the introduction of intermediary distributors does little to reduce
costs; opposite for India many small retail outlets; limits the amount of inventory they can hold =
require frequent replenishment; requires manufacturer to bring full truckloads of product close to the
aket ad the distiute loall usig ilk us usig salle ehiles i ode to edue osts)
The importance of supply chain decisions: supply chain design, planning and operation decisions play a
significant role in the success or failure of a firm. To stay competitive, supply chains must adapt to
changing technology and customer expectations.
Decisions Phases in a Supply Chain:
1) Supply chain strategy or design phase: company decides how to structure the supply chain over the
next several years. Deides hai’s ofiguatio, ho esoues ill e alloated, hat poesses eah
stage will perform.
-decide whether to outsource or perform in-house, locations, capacities, products to be manufactured
or stored at various locations, transportation modes, info systems to be used, etc.
2) Supply chain planning phase: time frame = quarter to a year. Goal of planning = maximize supply
chain surplus that can be generated over the planning horizon
-includes generating a forecast, deciding which markets will be supplied from which locations, inventory
policies, timing/size of marketing and pricing promotions
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3) Supply chain operation phase: time frame = weekly or daily; companies make decisions regarding
individual customer orders; handle incoming customer orders in the best possible manner; firms allocate
inventory or production to individual orders, set delivery schedules of trucks, etc. (i.e. operational
Process Views of a Supply Chain
Supply Chain: sequence of processes and flows that take place within and between different stages and
combine to fill a customer need for a product. 5 stages: supplier manufacturer distributor
retailer customer
-2 ways to view the processes performed in a supply chain:
1) Cycle View: processes in a supply chain are divided into a series of cycles, each performed at the
interface between two successive stages of the supply chain
2) Push/pull View: processes in a supply chain are divided into 2 categories depending on whether they
are executed in response to a customer order or in anticipation of customer orders; Pull processes =
initiated by a customer order; Pull processes = initiated and performed in anticipation of customer
Cycle View: 4 process cycles which occur between the 5 stages of the supply chain (mentioned above):
Each of the 4 process cycles from the above diagram have 6 subprocesses:
Supplier stage markets product buyer stage places order supplier stage receives order supplier
stage supplies order buyer stage receives supply buyer returns reverse flows to supplier or 3rd
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