Quick Response – Managing the Supply Chain to Meet Consumer Demand

Citation

Nair, A. (2001), "Quick Response – Managing the Supply Chain to Meet Consumer Demand", Supply Chain Management, Vol. 6 No. 1, pp. 48-51. https://doi.org/10.1108/scm.2001.6.1.48.1

Firms have developed “quick response” (QR) and “direct service delivery” systems in order to emulate the just in time approach in a retail setting (Masters, 1993). Sending frequent, small replenishment shipments to retail has led to increased customer service and satisfaction levels, greater financial success due to fewer lost sales, and substantially better end‐of‐season markdown performance. In this book, Bob Lowson, Russell King, and Alan Hunter try to show the increased importance of QR in the textile industry, which perhaps is the most demanding of QR applications.

The book is divided into four parts. The first part provides the theoretical background for QR. Chapter 1 broadly covers the new business environment, with its chaotic and complex state of affairs. Retailers must find new and revolutionary ways of doing things that combine abilities to produce a “paradigm shift” for handling diversity. In Chapter 2, the authors explore the new forces, the new ideas in management, organization and business administration. Three fundamental environmental “drivers” necessitate these new approaches: the demand of the market and consumer, the volume and rate of consumer and market demand and the variety of that demand. The move away from mass manufacturing to flexible manufacturing enables flexibility in products, volumes, mix, and delivery schedules and demands integration of logistics and manufacturing (Pagh and Cooper, 1998). Alternative manufacturing approaches are described within a supply chain management context. They describe the large array of terms used to describe SCM or a subset of SCM (e.g. value adding partnerships, strategic alliances, lan supply, partnership sourcing, time‐based distribution) and emphasize that these all have the same underlying theme.

In the third chapter, the authors try to highlight some of the recent thinking about organizational theory, management and business. The authors give an 11‐point parameterization of the “pipeline” measurement systems, encompassing decision making, processing and production, category management, new product introduction, product merchandising, product promotion, replenishment, distribution, EDI and bar‐coding technology, customer service, quality and reliability. The authors also point to the growing importance of complexity and chaos theory because of the non‐linear, large, open and unpredictable nature of the systems; management of change is expected to be the most critical success factor of all. The successful use of QR strategies and operations will rely totally upon the cultural adaptation of the firm and its associated network.

In Part II an attempt is being made to explain how to organize for the future; i.e. how to build flexibility and responsiveness into all unique and core activities. In Chapter 4, “QR: origins, status and outlook”, the authors briefly look at the origins of QR the groups involved in its development, and the circumstances that slowed its adoption. An overview of the current and future positions of QR among manufacturers and retailers is provided and the future of QR is explored. Customer service and inventory performance of anticipatory versus response based supply chains could be the core driver of future strategies. In Chapters 5 and 6, the authors try to focus on quick response applications and implementation issues. They examine the relative sizes and the degree of importance of markets for the buying public and for QR, while focusing on automotive, furniture, home ware, food retailing, Footwear, catalog houses and military operations. They explore the avenues for QR success in these different industries.

Part III covers the important topic of pipeline modeling and the authors use simulation techniques to test QR methodologies. In Chapter 7, the authors cover computer modeling, which then forms the basis of the research work in this book. The parameters are changed from traditional to QR practices for various facets of the textile industry, and the results were very encouraging. In Chapter 8, the sourcing simulator and its performance are discussed: it aids in exploring the impact of a wide variety of ordering, demand estimation, reordering and price markdown procedures in both traditional and QR settings. For example, for seasonal goods, the analysis of the benefits of QR versus both traditional and vendor managed inventory (VMI) was examined on parameters like weekly inventory and stock out patterns error in SKU mix, volume error, initial inventory level and markdowns. They show that a middle path of partial transition to QR is also relatively profitable. In Chapter 9 the authors show that a properly organized QR manufacturer can provide retailers with superior service to that of foreign imports, despite charging a higher unit cost. The savings to the retailer can be dramatic and easily offset the cost disadvantage, provided the correct measures of performance are applied (ones that reflect modern, supply pipeline requirements). In Chapter 10 the authors’ modeling work is extended to up‐stream processes, including pre‐season, transition, selling season and in‐season manufacturing shop order release and in‐season raw material reorders. The results show that there is a manufacturing strategy that is fully compatible with QR retailing. The percentage lost sales are very much in line with the retailing results given in the earlier chapter, and the percent reorder shortfall, percent fabric excess and percent merchandise surplus levels are excellent. The service/cost squeeze has induced manufacturers to develop manufacturing volumes and mix flexibilities to facilitate quick response to consumer demand (Johnson and Scudder, 1999). The authors think that the next step beyond individual models could be interactive CEO information systems; for example, decision surfaces or simulation Meta models fitted to the outputs of simulation runs can relate plant performance (inventory, order response times, etc.) to important input and operating parameters.

Part IV of the book is concerned with the research direction and important implementation directions. In Chapter 11, the authors iterate the need for caution in pushing store inventories back upstream (thus minimizing retailer‐carrying costs) by exploring aspects of SLIP (customer service level, lead‐time for supply, inventory on hand and the time taken to process raw material or components into finished goods). A comparative analysis of the upstream structures in the Japanese, European and North American supply chains is performed; performance measures and their applications in‐house, by suppliers, and by customers is the subject of research. The authors refer to the advanced planner and scheduler and the associated information flows and comment about the need for the use of neural networking for MIS because of the high level of diversity (large number of products involved in a company’s operations). The authors indicate that there is a growing body of research into the applicability of News Boy and related theories using the PoS information, and therefore correct PoS estimation is very important.

Contributions and limitations

The book contributes in exploring the concept of QR by building on the existing literature and stating its practical significance using simulation models. The textile industry is treated quite extensively, making this book particularly useful for practicing managers in this industry.

However there are some limitations that need to be highlighted. The authors strongly differentiate quick response from supply chain management. At times it seems that the motive is to associate some of the contextually strategic issues solely to the QR domain instead of treating them as factors relevant to the entire supply chain. The reasons for changing supply chain management to “managing supply chain” are quite weak. Another point to be noted is that “quick response” as treated in this book is related to efficient response to demand, but the effectiveness parameter seems to have been neglected; in other words, the issue of “how quick should this quick response be?” was not clarified. Probably a reference to efficient and effective postponement could have strengthened this argument (Pagh and Cooper, 1998).

Regarding implementation of quick response, only bits and pieces of costs associated with different aspects are aggregated to create a composite whole; a complete measure of total cost (financial as well as non‐financial) is not adequately addressed. The critical importance of managing change and cultural readiness also needs a more elaborate treatment; probably a full chapter is necessary to add insight to these soft issues related to the effective and efficient implementation of QR.

Furthermore, from the integration perspective, the success of QR depends on network partnership at a strategic level. The book focuses more on the operational issues of “making QR work” rather than the need for strategic intents and partnerships. While different measures of performance are suggested, there is inadequate attention to the cost of customer service or lost sales (which constitute an important component of the underlying QR theme).

The applicability of QR to other industry segments (except textiles) is handled on a cursory level; the textile industry results of the simulation studies might not be generalizable to a lot of other industries. The authors have acknowledged this limitation, but the reference on applicability could have been addressed rather than focusing on process/product types.

I would say that the title of the book Quick Response – Managing the Supply Chain to Meet Consumer Demand has a much broader implication than the material covered in the book. The book does a good job in operationalizing the various constituents of the supply chain for QR, but managing the supply chain indeed demands much more than that.