Supply Chain

J.C. Penney is long admired for its quality standards and processes and sets the bar once again in the complicated, evolving era of global supply chain management. JC Penney is the leading pioneer of supply chain efficiency. Known as the retail powerhouse, JC Penney has applied an innovative computer system that directly captures sales data for each of its products at the cash-register level. Rather than making forecasts on what corporate managers believe they will sell, forecasts are now based on real-time point-of-sale data.

"It's All Inside." The JC Penney tune was in the spotlight for a lengthy period of time as part of the retailer's Times Square "JC Penney Experience" marketing extravaganza, which highlighted its growing stable of private and exclusive brands.

"It's Around the World" rather than “It’s All Inside”, might be a more appropriate slogan for JC Penney's supply chain infrastructure--the teams of people, the quality laboratories, the transportation sources and technologies that work in tandem with internal and external resources worldwide to get JC Penney products to market. For this part of JC Penney's business, success is all about quality (supplier management), quantity (global trade management) and speed (time to market).

In 2003, JC Penney established a factory-to-store system for certain products, through which suppliers ship products to JC Penney on a weekly basis, within five to seven days of receiving orders. Through this method, the retailer has established a direct link with many of its private label merchandise suppliers, allowing it to order merchandise as needed in response to demand, instead of at regular, pre-established intervals. The suppliers produce the goods in response to incoming orders in a couple of days, instead of producing apparel far in advance and storing it in their warehouses.

One benefit is a major reduction in stock-outs. Another is a reduction in the time it takes to get an idea for a product into the store. The concept-to-consumer cycle used to take up to two years. That has been carved down to 45 days in some cases, thanks to close ties with vendors created through the direct-ship program. Moreover, direct-ship processes have helped JC Penney save roughly $30 million in average monthly inventory expenses.

This is a process JC Penney has developed with their suppliers. The company has also been expanding it as overseas suppliers have become more sophisticated. In addition, the ships are becoming faster, and technology is letting the company think in different ways than it did in the past.

JC Penney uses the Hong Kong-based manufacturer, TAL Apparel Group is an example. JC Penney outsources responsibility for sales forecasting and inventory management to TAL, which makes the decision on how many shirts to make, in what styles, colors and sizes. TAL sends the shirts earmarked for individual JC Penney stores, bypassing any requirement to store the product in the retailer's warehouses.

TAL began working with JC Penney on this initiative about a decade ago. This early partnership gave TAL a lengthy history of visibility into the retailer's demand, which allowed TAL to synchronize with JC Penney at the warehouse level in the early phases of the direct-ship program rollout. Weekly orders were communicated to TAL from JC Penney via EDI. TAL would then ship the merchandise within a week of the order receipt, cutting cycle time from four to six months down to 30 days.

TAL controls inventory management for its product in JC Penney's stores, including replenishment ordering. It establishes the forecast at store level to drive store replenishment and manufacturing, and its crossdocking system enables it to pack products to individual retail stores. When shipments arrive at the retailer's distribution facilities, they are scanned and routed straight to the appropriate dispatch truck for immediate shipment to the store.

Thanks to the demand planning system, JC Penney's store-level inventory for TAL merchandise is down by 50 percent. TAL's planning system has replaced JC Penney's ordering system. JC Penney's warehouses carry no TAL inventory and it restocks hot-selling TAL shirts within one month.

TAL has better visibility into demand at the store level from POS data and determines its inventory according to each of the individual store's requirements. Inventory levels were reduced from a six-month supply to a seven-week supply. It then packs, barcodes and consolidates shipping orders for delivery directly to the stores, eliminating warehouse inventory. This has led to savings of 15% of cost free on board (FOB).

Fashioning the Right Electronic Commerce Solutions; three GXS solutions help J.C. Penney’s business run more smoothly:
• J.C. Penney uses GXS’s EDI*EXPRESSSM Service, a network that enables companies to exchange business documents electronically with their trading partners. EDI is an integral part of J.C. Penney’s Quick Response program because it eliminates routine paperwork, which reduces administrative costs, product delivery delays and related supply chain inefficiencies. J.C. Penney now uses EDI*EXPRESS with more than 3,000 trading partners, which represents about 80 percent of J.C. Penney’s retail EDI traffic. GXS and J.C. Penney are also in an ongoing process of ramping and expanding documents to J.C. Penney’s trading partners.
GXS’s ASN Plus allows suppliers to simultaneously pack product shipments and produce barcode-shipping labels, as well as electronically generate and send ASNs and invoice EDI documents to buyers. Currently more than 70 percent of J.C. Penney’s shipment volume is processed via this system.
• J.C. Penney also uses GXS’s Global Product CatalogueSM, a centralized, electronic product catalog and data alignment service for universal product codes (UPCs), European Article Numbers (EANs) and related descriptive product information.
The Results
In-Store for Big Savings
Armed with GXS’s EDI*EXPRESS Service, ASN Plus and Global Product Catalogue,
J.C. Penney has:
• Achieved overnight delivery of purchase orders
• Dramatically reduced the number of Accounting Department associates who handle more than 40 million invoices annually
• Reduced operational and personnel staff in the mailroom while cutting printing and mailing costs significantly
• Increased supply chain efficiencies
• Accelerated payments to suppliers
• Delivered merchandise to the selling floor faster, by using EDI Advance Ship Notices
(ASNs), which has reduced receiving costs
• Facilitated the management of UPC data
• Improved EDI data integrity so that both retailer and trading partners have the capability of integrating EDI into their application.
In summary, we are proud to say that our company handles its supply chain management efficiently. After the success they have achieved, we can just recommend them to keep the good job.

Project

An example of a project for JcPenney is its Wedding and Gift Registry which offers one of the nation’s largest wedding and gift registries, boasting an expansive collection of proprietary and national brands with timeless style, exceptional quality and contemporary appeal.
Tasks: from the engagement ring to luggage for the honeymoon, registry customers find that JcPenney is a one-stop destination for nearly all their wedding needs. Along with a selection of merchandise offering style and quality at a smart price, registry customers are also treated to a variety of services such as expert advice and planning tools on jcp.com, complimentary gifts and special offers, as well as in-store services such as salon and portrait studio. JcPenney is the official wedding registry partner of David’s Bridal, the nation’s largest bridal retailer.
After extensive research we have come to discover that Jc Penney dose not utilize either one off the project schedulers.

Managing Quality

Identifying critical points, deciding on the type of measurement, deciding on the amount of inspection to be used and deciding who should do the inspection are the four dimensions of quality applied to service or products. Our company, JcPenney utilizes all of these to provide superb service. Since the company provides mostly products from clothing to household items to photography services to beauty salon, it uses both the attribute measurement as well as the variable measurement to manage control. Inspections are done on a routinely basis because the company needs to live up to their high standards. These inspections are completely by not just anybody, but highly qualified inspectors before products arrive at their designated locations. Inspections are also done by visual by customer service representatives who are not trained but could see if a product or service is unsatisfactory. Critical points include making sure that the customer is satisfied with the quality of the product or service. In addition to the in-store service, the company needs to ensure that top notch service is provided to customers using online services as well. Without excellent quality, the company can see a decrease in customers.

Quality Control

Quality control j.c.penney use the upper control level and lower control level.JcPenney is well known for its high standards of quality throughout the world. Trained factory evaluators perform factory evaluations on all factories that will be used to produce exclusive JcPenney’s brand products. This factory evaluation is a determination of a factory’s ability to produce a product that will meet the company’s quality standards. The evaluator will visit the factory and follow the flow of the production from the receipt of the raw materials to the warehouse where the finished product is shipped. During this visit to the factory, the evaluator verifies that quality controls are in place at every stage of production. The evaluator will then examine key points where strong quality control systems are required. These are the areas analyzed and recommendations for improvements are prepared for the factory.

Workers that are performing the inspections are interviewed to determine if the factory’s quality control system is being followed. Quality control records of inspection are reviewed to see if the inspector is recording the results of the inspections accurately. A quality audit of finished products to determine the quality level of the factory is performed by the evaluator.

After the evaluation has been completed, a written assessment report of the factory’s quality system will be done. If the factory is found to have a satisfactory quality control system, production can begin. If the factory is found to be unsatisfactory, the evaluator will prepare a list of recommendations and a “corrective action report” that the factory can utilize to improve their quality control system. When completed, the factory can request another evaluation.

Throughout the world, many factories have taken advantage of the JcPenney evaluations because improved quality means less defects and an increase in profits. Because of the high quality levels these factories have, many manufacturers prefer to use the JcPenney approved factories.

For document transmission, JcPenney uses EDI solutions offered by DiCentral to be more compliant. This web-based process enables clients to send to JcPenney their documents easily and effectively knowing the proper data would be processed. Such documents include: UCC 128 Bar Code Labels, Request for Routing, Response to Request for Routing, Invoicing, Debit/Credit adjustments, etc. It also provides a broad range of cost-effective, we-hosted software solutions enabling suppliers, buyers, and logistics providers to exchange data throughout their supply chain network. DICentral also offers a host of services that will ensure JcPenney their shipping process will run smoothly. This service is offered to JcPenney at a nominal setup cost and there is no additional software or special equipment required.

Service Process Design

Our company, JC Penney’s is a well-known large retail department store throughout the United States. JC Penney’s has over 1,000 stores in existence today after being founded by James Cash Penney in 1902. The company serves their many customers well, and they treat their employees exceptional too. To identify with the explicit service of the Service Product Bundle, Penney’s offers one-stop shopping and other intangible services. These services include: their salon services, the optical department, custom decorating, watch repair, wedding and baby shower gift registry and a supply chain that moves about 2 billion items a year to satisfy the customer’s perception of fast delivery with great service. Customer service is a top priority for the company. An example of the Implicit Service Product Bundle would be for instance, someone who had their hair done at the salon felt really good and pleased about how they were treated, or the customer was really please with the designs of their custom decorating and the service they received from the representative or pleased with how the well they were treated in the optical department. Pleased with the hairdo the customer received or the new pair of glasses that looked good on the customer are examples of the Facilitating Goods Service Product Bundle. The cell they would operate in on the service matrix would be selling of goods, whether by a customer service representative or online, co-routed through a supply chain and then the purchased product would be the provider routed service.

Some of the service contact that customers may encounter would be interacting with a front office customer service representative when making a purchase, or speaking to a manager when there is a problem with a product or service. The customer may encounter contact with a back office customer service representative with speaking to them over the phone in some instances. They may also come in contact with technology such as checking the price of an item or using self service machines to pay on their credit card bills. Technology plays an important role in our company. Inventory can be managed through technology. For instance, if a customer is looking for a particular item in a particular size, one store can contact another store who has it in inventory. Also, for employees, time clocks are utilized to indicate whether the employee started and ended work on time. Technology is also a plus when it comes to online ordering. JC Penney’s offers all services via the internet for convenience, which is great customer service without speaking face-to-face with a representative.

JC Penney’s stands behind their products and service and if for some reason, a customer is not happy, they will give them a full refund. On some occasions, the company may offer additional discounts on future purchases.

Consumer Article

The article talks about the power of the social web in revealing stories of both poor and good customer service. To meet today's consumer vigilantes, more and more customers are arming themselves with video cameras, computer keyboards, and mobile devices to launch their own personal forms of insurrection. Technology helps the uprising, empowering consumers to do much more to make themselves heard, for instance, online video. Consumers frustrated by the regular fix-it channels are increasingly employing vigilante tactics. Whether they’re making YouTube videos or posting account numbers on blogs filled with digital rants, more and more consumers are getting companies to respond on their terms. They are no longer just shouting out, they also can gather spots for sharing call-center secrets and trouble-shooting tips. For companies that don’t tend to their customers, the consequences can be dire. And the biggest challenge for companies is dealing with consumers who are hard to mollify, because some of them have really bad customer service experience. However, most consumers just want an apology when they are not satisfy with the company's service. And I think the main reason to cause a service insurgency is that companies can't sent out an apology immediately.

Process selection

1) What type of product flow do they use?

JCPenney use batch flow, because they have large and different type of product.

2) What type of customer order do they process?

JCPenney use make-to-stock (mts) process. Which is specifies by the manufacturer. Make-to-stock (mts) also provides faster customer services. They even keep updating their inventory for customer demand. And they also use make-to-order to. They give customer choice to make special order on almost all the items

3) Which cell do they fall into in the process characteristics matrix?

Jcpenney falls under batch flow.

4) What are some of the factors influencing their process selection?

If store is out of stock we order items from online or we get item from other jcpenney for customers.

5) Can they adopt any of the mass customization methods discussed?

I believe the company already has great customer services by organizing product on right department and in right location so it’s make it easy for customer. And they have store all over in United States so customer has choice to shops and they have choice to order their items online too.

Process selection

1) What type of product flow do they use?

JCPenney use batch flow, because they have large and different type of product.

2) What type of customer order do they process?

JCPenney use make-to-stock (mts) process. Which is specifies by the manufacturer. Make-to-stock (mts) also provides faster customer services. They even keep updating their inventory for customer demand. And they also use make-to-order to. They give customer choice to make special order on almost all the items

3) Which cell do they fall into in the process characteristics matrix?

Jcpenney falls under batch flow.

4) What are some of the factors influencing their process selection?

If store is out of stock we order items from online or we get item from other jcpenney for customers.

5) Can they adopt any of the mass customization methods discussed?

I believe the company already has great customer services by organizing product on right department and in right location so it’s make it easy for customer. And they have store all over in United States so customer has choice to shops and they have choice to order their items online too.