Introduction to Quick Response Logistics
Quick Response Logistics is one of the most debated topics in logistics studies over the years because of its increasing role in reducing operational expenses. It is a supply chain management strategy that has been used by manufacturers, soft lines retailers, and general merchandise to minimize operating expenses, forced markdowns, and retail out-of-stocks all achieved by reduced response time (Felipe, 2007). Most of the retailers and suppliers work together to respond quickly to the consumers needs as they are able to share point-of-scale scan data thus in a potential point to forecast the needs of their consumers now and in the future and more rapidly. Quick Response Logistics has proven advantageous in most of the industries across the globe for instance, in the apparel industries because they are able to achieve efficient consumer response. The concept of quick response logistics integrates inventory deployment, production scheduling, and demand management thus helping firms to make better use of the available information, inventory, and production resources for competitive advantage (Cachon, 2010).
Quick Response Logistics is, therefore, a management concept that has been used by several firms including the fast food companies so as to enhance customer satisfaction while at the same time remain competitive in the market. The main argument of quick response logistics is that it shortens the lead time (from the time an order has been received to the time when the product is delivered to the consumer) thus increasing the cash flow. The concept of quick response logistics is similar to the concept of Efficient Customer Response System (ECR) as they work to respond more rapidly to consumer demands for competitive advantage (McKinnon, 2011).
The changes in technology and the globalization process have altered consumer’s needs and beliefs thus transforming the whole logistic system. Consumers across the globe expect instant product availability in the market with much of the supply or logistics system changing from physical distribution to logistics management. The logistics transformation has been linked with retail and consumer changes, service requirements, and cost of the service in the market. Quick response on products is, therefore, highly appreciated because holding stock or inventory at one time is one of the costly activities in a firm and it can result into a competitive disadvantage for the firm. Holding stock is expensive and in many cases it becomes obsolete (Cachon, 2010).
Quick Response Logistics and Demand
Quick Response Logistics requires high levels of demand information and transparency in the market. For instance, when goods are sold in the market, information concerning the sale of that product is easily communicated to both suppliers and retailers so that they can plan for more production in the market. However, one of the main challenges with quick response logistics is that in many times, once demand is known, it becomes static. The demand of that particular product in the market is in itself dynamic information with the location and volume of demand changing between the time of delivery and the point of estimate (Cachon, 2010).
The fashion industry is one of the firms that have taken advantage of the quick response logistics so as to enhance customer satisfaction and competition in the market. The fashion industry has volatile demand as the fashion chain comes with new seasons. Most of these firms deal with short-season items and they rely on other partners thus the need for the quick response logistics so as to match the volatile demands in the market (Felipe, 2007). That said, most of the retailers and suppliers have implemented the quick response logistics in different segments. For instance, the retailers and vendors use the quick response whereby the retailers use electronic data interchange to transmit their purchase thus enhancing customer satisfaction (Cachon, 2010). The frozen food market is another supply chain that has used quick response logistics because of the limited cold storage capacity and also to cut inventory levels (McKinnon, 2011).
However, as suppliers strive to enhance customer satisfaction in the market, they make common mistakes in achieving quick response in logistics, and this acts as a weakness in quick response logistics. One of these weaknesses is order processing as suppliers want to do everything quickly to meet the demand of the consumer. Most of the suppliers focus on improved order processing believing that all customer orders must be processed quickly. Unfortunately, the process will have minimum benefit because advance notice of what the customer is about to order is needed (Felipe, 2007). A quicker response or transfer of the order to the customer still leaves operations with the need to fill the order a flexible manufacturing operation. In such a situation, inventory is built on anticipation of future orders and in many cases, the accuracy on these forecasts fails and the quick response is not achieved. Therefore, until the manufacturing operations are flexible to meet the changes in customer demand, quick response cannot be achieved in the market. The other weakness of quick response logistics is forecasting. It is argued that most of the sales forecast approaches do not support quick response. Most of the suppliers use aggregate forecast but in many cases, customers purchase what they want and not necessary what has been aggregately forecasted by the supplier (Cachon, 2010).
Quick response logistics has some advantages and disadvantages which cannot be overlooked in this report. The implementation of the quick response logistics has economic benefits both to the retailers and suppliers. Regarding suppliers, they get economic benefits by reducing buying mistakes, reducing stock holding, getting higher stock returns, quick tracking of merchandise, enhancing cash flow, enhanced competitive advantage, higher profits than competitors, and improved customer service (Cachon, 2010). Regarding retailers, some of their economic benefits include enhanced communication systems, ease in tracking of products, enhanced planning systems, security of getting more orders, quick access to sales information, higher levels of sales returns, reduced stock holding, higher profit margins, enhanced customer loyalty and satisfaction, quarantined competitive advantage, and production volume is increased. Alongside these benefits, there are some disadvantages attributed with the implementation of the quick response logistics such as enhanced retailer demands which in many cases erodes the margin and increased operational costs as installing the IT systems comes with additional costs in the whole supply chain system (Felipe, 2007).
Despite these disadvantages, the quick response logistics has become a culture and strategy for most of the operations. The suppliers have been able to build their strong brands in the market while retailers are able to reduce their inventory through collaborations, replenishment, forecasting, and planning. That said, quick response logistics has played a key role in value chain management because it has helped in linking both the demand and supply side effectively. In any distribution and purchasing system, the buyer-seller relationship is very crucial, and this is when the quick response logistics comes in as it provides quality in inventory management, proper distribution, efficient packaging, and higher production (Felipe, 2007).
In conclusion, the concept of quick response logistics was invented following the advancement in technology and increase in competition in logistics to help firms achieve a competitive advantage by responding quickly to the customer demands across the globe. The quick response logistics culture reflects an enterprise with high networks for strong relationships with consumers, retailers, and suppliers thus making the enterprise remarkably flexible to meet the changing demands of customers as quickly as possible. The firms are focused on making networks and partnerships in line with consumer demands. The main argument with quick response logistics is that it focuses on the beneficial effect of reducing both external and internal lead times. Short lead times in any supply chain are advantageous because it reduces non-value-added waste, cost, and improves quality in the firm while increasing the competitiveness of the firm in the global market. Most of the firms especially the fashion industries have implemented the quick response logistics so as to cut inventory and also increase the stock-turn rate. These firms deal with volatile demands thus the need to ensure that their orders are delivered to their customers as quickly as possible thus reducing the average of stockholding of these products. The frozen food market is another supply chain that has used quick response logistics because of the limited cold storage capacity and also to cut inventory levels. That said, quick response logistics has been used by many firms so as to reduce their operational costs while at the same time enhance their competitiveness in the market.
Cachon, G. (2010). The Value of Fast Fashion: Quick Response, Enhanced Design, and Strategic Consumer Behavior. Retrieved from: http://opim.wharton.upenn.edu/~cachon/pdf/FastFashion_R2_v3.pdf
Felipe, C. (2007). The Impact of Quick Response in Inventory-Based Competition. Retrieved from: http://www.iese.edu/research/pdfs/DI-0722-E.pdf
McKinnon, A. (2011). Quick-response in the Frozen Food Supply Chain: The Manufacturers’ Perspective. Retrieved from: http://www2.hw.ac.uk/sml/downloads/logisticsresearchcentre/cs2.pdf