Supply Chain Planning Processes for Two Major Retailers

Abstract

This chapter describes supply chain practices and processes observed at two retailers in the home furnishing sector. Because of the large number of stock-keeping-units (SKUs), the inter-relationships among the SKUs, as well as use of multiple store formats and multiple marketing channels targeted to different customer segments, home furnishings is one of the most complex retail sectors. In addition to documenting the complex flows of materials and information in such multi-channel environments, we present details of key supply chain planning processes: product design and assortment planning, sourcing and vendor selection, logistics planning, distribution planning and inventory management, clearance and markdown optimization, and cross-channel optimization.

Due to its complexity, we believe that the assortment selection and supply chain management decisions for this sector pose many challenging problems, whose solutions extend beyond the current state of the art. At the same time, the challenges in this sector are relevant to many other retail sectors as well. Thus, we hope that documenting the practices for these supply chains will provide a foundation for future methodological research, some of which are identified in the chapter.