Supply Chain Management and Logistics, Retail Examples

Best Practice and Statistics for Supply Chain and Logistics Pros, Plus Fun Facts

What is Supply Chain Management and What Are Retail Industry Examples?
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Question 

What are the Definitions of Supply Chain Management and Logistics, and what are some examples of both in the Retail Industry?

Answer

A supply chain is comprised of all the businesses and individual contributors involved in creating a product, from raw materials to finished merchandise.

Logistics is a specialized field of its own comprised of shipping, warehousing, courier services, road/rail transportation and air freight.

 

Retail companies become involved in supply chain management in order to control product quality, inventory levels, timing, and expenses. In a global economy, supply chain management often includes dealings with companies and individual contributors in other countries, which requires involvement in politics, trade and tariff laws, quality control, and international relationships.

RELATED:  Why Retail Merchandising Analysts Are Essential in Supply Chain Management >>

Examples of supply chain activities include farming, refining, design, manufacturing, packaging and transportation.  Because global supply chains are both logistically and technologically complicated, there are now global supply chain management specialists and firms who oversee the process for many different retail companies.

As consuming trends increasingly move towards digital purchases shipped from a central warehouse facility directly to the consumer, the largest retail companies are going to be increasingly involved with supply chain management and logistics.

The Role of Logistics in Supply Chain Management

Globally, Logistics is a $4 trillion business segment.  That means that moving and storing goods around the planet is 10% of the global GDP.

The Beginning of Supply Chain and Logistics

"Supply chain" was first used as a military term in the early 1900's to describe the process of getting food, weapons, ammunition, etc.

to the front line of battles.  This involved creating "supply points" between the military base and the battlefields.

"Logistics" was also a military-related word, first used in 1838 in the book "The Art of War, which was written by a French General in Napoleon's army.

Supply Chain and Logistics Fun Facts and Statistics

  • It's estimated that it costs $.37 to deliver a box of cereal to the breakfast table in the U.S. (source: Council of Supply Chain Management Professionals - CSCMP).
  • Barcodes were first used to track and label railroad cars.  The first product using a bar code was apack of Wrigley's gum scanned in a supermarket in 1974.  
  • Approximately 70& of all U.S. freight is transported by trucks each year. (source: PLS Logistics).
  • In 2015, approximately $671 billion dollars of manufactured and retailed goods were transported in the U.S. (source: PLS Logistics).
  •  Electronics, Furniture, Food, and Clothing are the categories of products that are shipped most often in the U.S. (source: PLS Logistics).

    Current Statistics and Fun Facts about Logistics - By the Numbers

    7% - The percentage of increase that the Transportation sector of Logistics has experienced each year from 2011 - 2016.  

    42% - the percentage of total global transportation services that are used by the United States.

    1.1 million - the total number of job openings in Logistics between 2013 and 2016 in the U.S.

    $70 billion - The annual global amount spent on air freight.

    72% - The percentage of cargo that is transported via air freight between Europe and Asia.

    1% - The percentage of total world trade that is transported by air freight, when measured by tonnage.

    35% - The percentage of total world trade that is transported by air freight when measured by the value of the freight.

    9.5 billion - total tonnage of freight carried via sea freighters, compared to 42 million tons of freight transported by air.

    $2 trillion - Total value of freight transported globally by road freight each year.

    9 million - The total number of people employed in jobs directly related to road freight in the U.S.  

    8 billion - The annual total tonnage of goods transported via road transport globally.

    Supply Chain Best Practices and Their Benefits

    According to Supply Chain Quarterly, these are the 10 Best Practices that companies in the retail industry (and any industry) need to ensure that their supply chain management is as effective as possible and contributing as much as possible to the company's bottom line.

    1. Identify supply chain stakeholders and establish a committee to engage stakeholders in supply chain issues and establish a work group comprised of departments.
    2. Make sure the supply chain itself has appropriate staffing.
    3. Technology is your friend.
    4. Establish synergistic relationships with key suppliers.
    5. Engage in collaborative strategic sourcing.
    6. Don't just consider price when making supply chain decisions.  Consider the "total cost of ownership."
    7. Supply chain leaders should have some contribution and control with contracts.
    8. Inventory optimization is essential.
    9. Establish appropriate controls throughout the supply chain system in order to minimize risk.
    10. Keep the supply chain sustainable with social responsibility and green initiatives.

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