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The Canadian Retail and Supply Chain Management Industry
April 2002
Industry Innovation Profile
The Industry
Supply chain management provides supervision and direction for the various parts of the distribution system such as production scheduling and inventory control, transportation, warehousing, wholesaling, retailing and brokerage.
Retail Trade
The retail industry is defined as the retailing of merchandise in small quantities to the general public generally without transformation, and rendering services incidental to the sale of merchandise. The retailing process is the final step in the distribution of merchandise.
Wholesale Trade
The wholesale industry consists of two types of firms. First, there are wholesale merchants who buy and sell goods on their own account; that is, they take title of the goods they sell. In addition to the sales of merchandise, they may provide or arrange for the provision of logistics, marketing and support services such as packaging and labelling, inventory management, shipping, handling of warranty claims, in-store or co-op promotions and product training.
The second type are wholesale agents and brokers, who buy and sell merchandise owned by others on a fee or commission basis.
Logistics
The logistics industry is defined as service providers of the process of planning, implementing and controlling the flow and storage of goods and services and related information from the point of origin to the point of consumption.
Innovation
Advances in transportation, inventory management and logistics all contribute to improve the performance of the Canadian economy, especially manufacturing, retailing and wholesaling.
Improved supply chain management practices shorten the time, reduce costs and increase the reliability of getting goods and services from the supplier to the customer.
A substantial saving from improved logistics practices is attributed to lower inventory (and carrying) costs as products are distributed on a just-in-time basis. Faster inventory turnover rates lead to improved productivity as operating costs are substantially reduced.
Inventory management is a critical part of the logistics systems for each business in the chain. The emphasis is on product flow rather than on price when ordering supplies to be sold in stores.
Internet-based systems communicate information to suppliers in order that the best production and inventory decisions are made. These collaborative systems, allow suppliers and retailers to share in the risks and opportunities regarding product flow and inventory management. Critical decisions and costs are being passed down the supply chain. The end result is improved efficiency, better flow and lower costs.
Major retailers keep inventory levels to a minimum (e.g., 3-5 weeks supply) as many products become rapidly obsolete, which also saves on inventory carrying costs and administrative expenses. In addition to reducing costs, e-commerce solutions permit customers to custom order products based on individual needs and preferences. Customers are able to mass customize orders based on virtually thousands of choices.
Contact:
Guy Pineault
(613) 954-2962
pineault.guy@ic.gc.ca
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