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Supply Chain Integration in the Food Industry - Essay Example

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Supply chain management (SCM) is an important part of any business or operational system; but in food industry in general, and the retail grocery business specifically, there is a higher need for efficiency. This is due, in part, to the perishable nature of many grocery items, as well as the vagaries and oscillations of consumer demand…
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Supply Chain Integration in the Food Industry
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Download file to see previous pages My first action as the new CEO would be to implement an efficient consumer response (ECR) system. As one author notes, "ECR is an approach to supply chain management a managerial approach that starts with consumer demand and then gears the whole of the supply chain to responding to that demand. It is a customer-driven, demand-pull product management system..." (Gillooley and Varley 42). This method makes particularly good business sense in the retail grocery environment because it is based on supplying products by allying all of the elements of the supply chain with customer purchasing patterns. Consider, for example, how this type of SCM system would increase efficiency during the holidays. Normal sales of large, frozen turkeys are generally low during the months of January through October, but spike over November and December. A supply chain which was based on the ECR model would be integrating suppliers, distributors, and in-store inventories to minimize costs and maximize what can only be considered as a diminishing profit margin, e.g., the closer to Thanksgiving it gets, the cheaper the price for the birds and the more competitive the market becomes. The alternatives to this integrated approach are either to run out of inventory and lose market share, or to over-stock and suffer a negative product age issue; neither of which are profitable nor efficient. Accordingly, the ECR would be my first move as the new CEO. My second strategic focus on using supply chain integration would focus on operation and information systems.
Similarly to Mr. Johnston, I know that information systems efficiency and interoperability is an important area for an SCM. Proper use of technology to maximize efficiency is well worth the investment, as demonstrated by Wal-Mart in past case studies. One reason information systems are so vital is the operational support they provide and the speed and accuracy at which they provide it. This systems integration directly addresses issues like overstocking which, in many retail businesses is costly, but in a retail grocery setting can be prohibitively expensive. As Ketzenberg and Metters note, "although all major grocers use scanner technology at cash registers...[in most stores] stock ordering is still done manually by employees visually checking shelf sets" (31). It is for this reason that I think Mr. Johnston's investment in technology is astute; and I would do the exact same thing. As the information systems are integrated and the operational aspect of inventory tracking moves from visual unit counts to a more efficient and accurate SCM system, additional benefits will be gained; the ability to interface with the ECR system noted above will permit supply chain managers to monitor the relationship between quantities ordered and sold so that accurate forecasting can bring higher efficiency, lower costs, and greater customer satisfaction. The blending of a ...Download file to see next pagesRead More
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