Retail sourcing models

To begin the exploration of the complexities of retail sustainability for apparel we will first consider the sourcing models commonly used by retailers. 

However, when considering the sustainabUity of apparel retail, the most important aspect of the business model to consider is associated with how the retailer sources products. This activity has the most direct impact on the ability of the retailer to be sustainable. The retailer s products and supply chain are the most significant source of the environmental and social impacts. Up to two-thirds of a retailer s carbon footprint and up to 90% of its water footprint is created by its products and supply chain (WRAP, 2011). And as a retailer s supply chain may have more than 20 times more workers in it than in its retail operation, and often in countries where social issues may be significant, the supply chain is a major source of social and ethical challenges for the retailer. Therefore, the sourcing model for products and suppliers is a critical consideration in the development of a sustainability strategy. 

At the other end of the sourcing model range are those retailers who operate a wholesale model, where they are essentially buying products off the rack. These retailers have little opportunity to influence the production process, and in general have little knowledge about the supply chain and the materials used to make the finished... 

Furthermore, it is important to note that many retailers will use more than one sourcing model depending on the market segment and their international presence. For example, it is not uncommon for a retailer entering a new segment of the clothing market to use a wholesale model at the time of entry into that market, and then, over time, develop their in-house skills to design, develop, and source the product. 

Many researchers have put a considerable amount of effort into studies of the chiral recognition mechanisms (using, e.g., NMR and molecular modeling), but yet the choice of chiral selector or chiral phase for a new compound is often based on trial and error. Different strategies for chiral method development have been presented by many of the retailers of chiral columns as a service for the customers. In addition to the information supplied by these retailers, another source of knowledge is Chirbase, a database that contains more than 50,000 HPLC separations of more than 15,000 different chiral substances [61], which also can provide guidance to the analytical chemist. 

Retail supply chains are different than other industry models. Many of the components of the supply chain are the same product sourcing, inbound transportation, processing, location and storage of inventory, outbound transportation, company operations, and information. However, retailers are at the end of the chain, just before the products touch the consumer. As a result, the retailer is at the end of the cumulative efficiencies and deficiencies of aU the chain partners. It may be that retail supply chains are just a bit more complex. Imagine the thousands of vendors, each with their own ideas and operations, aU moving with a thousand different retailers set of unique requirements and multiply this by the 90,000-t different stock keeping units (SKUs) in the typical large discount store. 

Figure 1 gives an example of an eight node network that represents a distribution system between factories and retailers. Nodes 1 and 2 are factories whose production capacities (net supplies) are 6 and 9. Nodes 3, 4, and 5 are warehouses (intermediate nodes) whose net supplies are zero. Nodes 6, 7, and 8 correspond to the retailers, whose net supplies are —3, —5, and —7. Each arc is labeled with its unit transportation cost and its upper bound. In this example, there are only arcs between source nodes and intermediate nodes and tetween intermediate nodes and sink nodes. In a general minimum cost flow model there can be arcs between any two nodes in the network. 

Circumstances may require a shift to outsourcing from local sourcing, which may involve higher costs but also higher profits, if the resulting decisions are made quickly and adapt to caurent trends. For example, moving from a promotion-intensive retail envitonment to an every-day-low-price format may improve or decrease profits, depending on the context. The models and tools we will discuss will enable these decisions. 

Evaluate the fit of the data model to use channel data. Investigate integration of downstream data, such as retail POS data, to provide a better source of true demand. Synchronize data inputs. Embrace new forms of channel data to drive innovation. 

In the traditional supply chain model, the raw material suppliers are at one end of the supply chain. They are connected to manufacturers and distributors, which are in turn connected to a retailer and the end customer. Although the customer is the source ofthe profits, they are only part of the equation in this push model (E-Future, 2006). The order and promotion process— which involves customers, retailers, distributors, and manufacturers—occurs through time -consuming paperwork. By the time customers needs are filtered through the agendas ofallthe members ofthe supply chain, the production cycle ends up serving suppliers every bit as much as customers. 

Note that attention is focused squarely on a retailer s function as a resale intermediary, whereas some of the horizontal competition frameworks treat retailers as the primary source of product (by excluding the retailers procurement activities from the model scope). Such models blur the distinction between the terms manufacturer and retailer. ... 

The rationale for the model is that retail customers demand instantaneous availability and the retailer will experience lost sales if the product is not in stock. In contrast, internet customers are willing to wait. In particular, the short delay incurred by transshipping leftover product from a retailer to the customer does not result in lost sales in the internet channel, although the longer delay required to source the product from the manufacturer does result in lost sales in the internet channel (as it does in the traditional channel). 

The mathematical formulation of the model consists of the objective function (Eq. 12.1) and constraints (Eq. 12.7-12.13). Equations (12.2-12.6) are auxiliary measures used to the elements of the objective function. The notations used are defined in Table 12.1. The weights wy and wy are used to combine the physical units selection and web service selection criteria in a single objective function. The physical units selection is performed to maximize e-retailer s profit calculated as a difference between revenues R and sourcing cost Ci, delivery cost C2 and fixed cost C3. The web service selection is performed to maximize infrastructure processing efficiency L. 

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