While being adopted for business process improvement, SCM best practices enable or transform supply chain operations to maximise process velocity, visibility and accuracy, with focus on value-added activities to increase revenues and reduce costs and lead times.

Below are some best practices related to Business Process Improvement:

• Category Management
• Collaborative Planning, Forecasting and Replenishment (CPFR)
• Co-Managed Inventory (CMI)/Vendor-Managed Inventory (VMI)
• Cross-Docking/ Flow Through
• Direct Store Delivery (DSD)
• Electronic Messaging
• Floor Ready Merchandise (FRM)
• Kanban Scheduling
• Lean Manufacturing

Category Management It is the retailer and manufacturer process of managing categories as strategic business units, producing enhanced business results by focusing on delivering consumer value. Included under this definition are all of the activities associated with understanding consumer needs, influencing consumer demands, and ensuring that the right products are in the right place at the right time and at a right price that is acceptable to the consumers. It does not replace traditional branded consumer marketing, retailer marketing or buyer-seller activities. Rather, it complements to these activities, reduces inefficiencies and increases effectiveness by avoiding redundant, improperly focused and often counterproductive efforts.

Collaborative Planning, Forecasting and Replenishment (CPFR) CPFR is a concept that allows for combined processes across the supply chain through the use of a set of process and technology models. It aims at helping businesses achieve an environment for dynamic information sharing integrating both the demand and supply elements and effectively planning, forecasting and replenishing customer needs through the total supply chain. This practice improves communication, enables collaboration of partners across the supply chain, improves planning, forecasting and replenishment of customer needs.

Co-Managed Inventory (CMI)/Vendor-Managed Inventory (VMI) CMI/VMI is a form of co-operation between supplier and customer in which customer shares inventory information with supplier. Inventory and sales information are transmitted from the customer to the supplier and such information is used by the supplier for the execution of stock replenishment or as forecast data for future stock requirement calculation and adjustments to the next production run. In both CMI/VMI, supplier assumes responsibility for initiating proposed replenishment order base on customer's sales/inventory data. The fundamental difference between CMI and VMI is the fact that customer maintains the responsibility for the replenishment in CMI by revising and confirming proposed order while this responsibility is transferred to the supplier in VMI under the control of pre-established agreement. CMI/VMI benefits both the customer and supplier: Benefits on Customer Side: Reduces or eliminates purchasing activities. Enables focus on strategic supplier management and process development Reduces or eliminates order backlog Inventory turnover and SKU availability (stock outs) in customer inventory should improve Benefits on Supplier Side: Improved visibility of customer demand enables supplier to postpone manufacturing decision thus reducing stock Improved visibility translates into added flexibility in production scheduling Advanced co-operation creates a logistical lock between supplier and customer

Cross Docking/ Flow Through It is a distribution system that eliminates all non-value adding activities such as storage in the Manufacturer, Wholesaler or Retailer distribution centres. On arrival at the distribution centres, products are delivered directly to the point of dispatch. It thus helps reduce distribution costs, storage space and stock levels; increase turnover, shelf-life and availability of products; smoothen distribution process and goods flow; and enable distributors to receive consolidated orders from retail outlets.

Direct Store Delivery (DSD) DSD is method of delivery product from a supplier (brand owner/distributor) directly to the retail store, bypassing warehouses. Shelf inventory is usually managed by the brand owner/distributor, with product check-in done by both the brand owner/distributor and the retailer. DSD benefits both the brand owners/distributors and the retailers. Brand owners/distributors can: Manage the space containing their company product(s) Conduct and execute in-store merchandising Handle store-level category management Have control on store-level inventory to ensure maximum sell-through from shelf and minimum out-of-stocks Benefit from products with high velocity returns and high profit margins Retailers can Gain significant labour savings – eliminating labour hours from warehouse to retailer delivery, from shelf-replenishment to inventory control

Electronic Messaging Whether connecting to manufacturers, distributors, retailers, or logistics providers, information flow has been at the core of today's supply chain operation and business processes. Information sharing can be enhanced when all trading partners across the supply chain commit to using Electronic Messaging technologies to bring greater value to the customers. Improving efficiency through the electronic exchange of information helps facilitate smoother physical flow of goods and funds through the supply chain – from factory production through manufacturing, shipping, distribution to retailing, and vice versa. While Electronic Data Interchange (EDI) remains the most prevailing way of electronic messaging implementation, eXtensible Markup Language (XML) is catching up at unprecedented speed.

Floor Ready Merchandise (FRM) This practice covers a manufacturer's activities of packing and ticketing merchandise before shipping. Customers provide detailed specifications on packaging and barcode labels, and the manufacturer prepares the shipment accordingly. This allows goods to be shipped through the supply chain without any further re-packaging, saving customers’time in re-packaging and ticketing. The benefits are reduced lead time, more efficient application of packaging and reduced packaging waste.

Kanban Scheduling The Japanese word kanban, which translates as “signboard”, has become synonymous with demand scheduling. With kanban scheduling, the operators use visual signals to determine how much they run and when they stop or change over. The kanban rules also tell the operators what to do when they have problems and who to go to when these problems arise. Finally, a well-planned kanban has visual indicators that allow managers and supervisors to see the schedule status of the line at a glance. The kanban schedule replaces the traditional weekly or daily production schedule that is replaced with visual signals and predetermined decision rules that allow the production operators to schedule the line. It thus frees up the materials planners, supervisors to manage exceptions and improve the process. Finally, it also places control at the value-added level and empowers the operators to control the line.

Lean Manufacturing As in most factories, the material in the production line spent more than 95% of its time waiting (waiting for value to be added or waiting in finished goods inventory for a customer.) The goal of Lean is to virtually eliminate waiting time. In environment really practicing Lean Manufacturing, every operation becomes so flexible that the actual usage by the customer creates a demand on the factory to build only the amount consumed by the customer, whether external or internal. The Lean factory is flexible enough to efficiently build in small batches to keep up with consumption. Parts will move directly from one workstation to another at high velocity and reduce the waiting time, work in process and finished goods inventory by 50% to 80%.