Essays on An Element of Control over the Supply Chain Case Study
An Element of Control over the Supply Chain
Gap Inc. chooses to diversify its suppliers so that it can retain an element of control over the supply chain. If a company decides to streamline suppliers in order to reduce costs or with the objective of improving efficiency, they must consider that this can sometimes give the supplier more power in the purchasing marketplace. The advantage of doing this, having multiple suppliers, is to make it so that Gap does not have to worry about supply interruptions or the level to which incorrect deliveries could slow business operations by a single, relied-upon supplier. Sourcing in this way also gives Gap Inc. the ability to diversify its product options as being in an international supply chain gives more unique product varieties to choose from.
Yet another advantage is in terms of cost. Because the labor market does not require high salaries, the cost of doing business with many international suppliers can be minimized. Also, if the supplier relied on a single set of suppliers, they could have their business operations impacted in the event of increased instability in areas of the political environment.
The disadvantages to this type of system could be higher import tariffs having to be paid on large volumes of shipments being sent to the company from overseas. By streamlining suppliers, larger quantities can be delivered which saves on cost. Another disadvantage is the negative publicity which the company can receive when they begin selling cheaply-procured merchandise and selling it in a new market with a higher price tag.
Because there are no special standards set in relation to documentation (Case Study, p.604), this makes it easier to move merchandise into the UK. This can improve response time or lead time when sending finished apparel into the UK and be able to replenish in-store inventories at a faster rate in order to introduce new fashions quicker than competition. This can give Gap a high competitive edge. The free trade regions are great cost savings opportunities both short- and long-term. The time saved in processing documented paperwork can also improve the response time within the resource network.
NAFTA has opened new lines of distribution between Canada and the United States, giving Gap more supply options to diversify their existing raw materials varieties. This gives them flexibility to provide better quality fashion merchandise to international companies at a lower price due to the infrastructure which exists in North American countries. It makes the process less-expensive to be able to move goods successfully across the Canadian/American border.
In the future, NAFTA can develop marketing relationships with many different suppliers, which fit the company’s overall methodology in supply chain, to improve all aspects of value related to product purchasing and distribution. In the future, opening relationships with Mexican suppliers or retailers could give the business a new, relatively easy to negotiate, business relationship and market opportunity in a new country with large consumer markets.
One way to keep Gap’s competitive edge in the Canadian marketplace is to be more proactive about fashion trends and order merchandise which is relevant to shifting consumer demands regarding style and function. All of Gap’s main competitors have different marketing strategies to promote their products, using different strategies to position the business differently in the consumers’ minds. Gap has relied on a single, headquartered marketing team which is based in the United States. Diversifying the employees who handle marketing for Canada, by hiring Canadian citizens, would not only give positive publicity for positive corporate social responsibility but also be more relevant to Canadian consumer needs. A domestic, rather than foreign, marketing division would bring new insight into what drives social trends, thus allowing the business to order product faster and produce merchandise which satisfies a unique cultural market.
Competitive edge could also come in the frequency of sales offered in the Canadian business. Gap brand products in this country could be offered at doorbuster prices, in limited selection and style, to improve the incentive for consumers to enter the store and make a purchase. A Garment of the Week sale could reintroduce excitement into the consumer mindset which is likely skeptical because of current economic conditions.
Gap Inc. could appeal to this buying trend by offering discounts under incentives marketing and conduct research about what types of fashion merchandise Canadians prefer. Involving them in the decision-making process could provide more top quality fashions and give them a good competitive edge. The business has the diverse supplier network necessary to respond in faster time to consumer needs for new fashions and in-store replenishment.
Using promotional tools to reinforce the long-term value of the products, by discussing their long-lasting quality and durability, can make consumers get the impression that clothing at Gap Inc. is a good buy for a wardrobe piece which will last. If done properly and with the right tools, consumers could see The Gap in a new light, giving the business new flexibility about long-term strategy and apparel options for the Canadian consumer.
Gap somewhat relies on governments to ensure that knock-off activities are curbed. This would involve setting up more in-depth business relationships with foreign governments to work together to create a campaign against the practice. Devotion of corporate funds to this activity would act as an incentive to governments to explore assisting, especially if the health of the local economy is impacted by decreased consumerism and black market product sales.
If the problem is severe enough to the company’s profit expectations, creating a new system of tagging could be developed so that consumers who might be skeptical can recognize a legitimate from a knock off. For those consumers who would rather buy the knock-offs, Gap can put marketing representatives into each territory where they currently operate to conduct research about potential knock-off products. This would have to be coordinated with governmental officials and corporate leadership with Gap representatives conducting research into how these networks might be established.