Australian Online Retail Store - Case Study Example

LOGISTICS MANAGEMENT ASSESSMENT 1 NAME: COURSE INSTRUCTOR: SUBJECT: DATE: Case Study Online Store Table of Contents Table of Contents ……………………………………………………… 2 Introduction …………………………………………………………… 3 Low Cost ……………………………………………………………… 4 Place Utility and Value Addition …………………………………….. 6 Time Utility and Value Addition ……………………………………… 7 Conclusion …………………………………………………………….. 8 References ……………………………………………………………… 9 Introduction The retail industry is a very important industry to the economy of any country. It is a service that introduces consumers to innovative products and helps them make choices through assessing and comparing products and their prices. Consumers are thus enabled to make purchases at their opportune tie in their convenient locations in quantities that are suitable to their needs (Commonwealth, 2011). Retailers do not only sell goods and services, they also arrange for auxiliary services such as after sales warranty and financial services issues. According to the productivity Commission Report of 11th August 2011, the online retailing represents 6% of total Australian retail sales. Broken down, this translates to 4% domestic online ($4.2 billion) and 2% from overseas ($4.2 billion). These figures are expected to escalate higher in the next few years as imported goods have become attractive to the Australian consumer. “Change is inevitable, but growth and improvement are optional”, (Coyle, 6). Organisations the world over have had to adjust and transform their business models in order to fit in in a competitive global economy. As a result, traditional organisational boundaries in business management are quickly fading with the changing nature of the market place, (Coyle, 8). Consumers have greatly affected the operations of retail supply chain while at the same time demanding for fast delivery service that is flexible and convenient. They are more aware than ever of the meaning of ‘value’. This has led to a well-informed consumer who can now compare and contrast prices with ease through the internet as well as compare delivery schedules and track shipments. Today’s consumer is able to shop for any merchandise and make orders on-line from the comfort of their homes. But with this ease in filling in the orders comes the challenge of making quick deliveries by on-line retailers. This has given rise to the re-assessment of the running of logistical systems in many re-tail stores in order to satisfy consumer needs, (Gordin, 15). Thus logistics plays a vital role in the success of any on-line business venture as it is a powerful management approach that ensures that the needs of the customer are met, (Gordin, 16). Logistics refers to the systematic management of various entities required to move tangible and intangible benefits from point of production (Manufacture or service) to the final consumer, (Gordin, 2). Thus logistics can be said to be a continuous process of ensuring that customers’ needs are met by availing the right goods and services to the right consumer in the condition and quality desired at the convenient time and place to the customer at the right price. Components of a logistics system include functional activities such as customer service, inventory management, transport storage and material handling, packaging information or data processing, demand forecasting among others, (Godin, 5). Online retail store logistics activities such as Chinese sourcing operations, supplier selection, evaluation and procurement International transportation from China to Australia and Australian customs Quarantine and Inspection clearance can contribute to low product costs and add value to place and time utility. This paper will address logistics management for a case study of an Australian online retail store that will source car accessories and tools, boating leisure products and electrical household appliances from collection centres in Hong Kong and Shanghai, China. Low Cost The three logistics activities of Chinese sourcing operations, supplier selection, evaluation and procurement, international transport from China to Australia and Australian customers, quarantine and inspections clearance can contribute to low product costs in Australia. This is mainly due to the fact that in the sourcing operation, supplier selection, evaluation and procurement, the cost of obtaining manufacturing goods from China will be low leading to Minimum product prices. The Australian online retail store will link up with prudent and efficient supply organizations in Hong Kong and Shanghai to supply the goods thus making savings in purchasing costs resulting to a reduction of product price. It is vital to select the right service provider, (Trent, 98). The international transportation from China to Australia will be at minimum charges due to the fact that China joined the World Trade Organisation hence the trade barriers in China no longer exist. This enhances trade relations and will also lead to reduced costs in transport. Transporting goods in bulk means that the online retail store in Australia will benefit from costs cuts during shipping resulting in minimise product costs, (Coyle, 9. The lead time will also be minimised due to making bulk or consolidated goods transport thus further reducing the costs incurred in transporting the goods to Australia. This means that the product cost will also be low, (Coyle, 9). While using the Australia customs, quarantine and inspection clearance, the cost of the product will be minimised mainly due to the fact that Australia has a highly reputable and sophisticated quarantine service that maintains the quality of goods getting into the country. This will enable the lowering of the cost of the goods leading to reduction of product costs. This means that the Australian online retail store will not need to spend more money on advertising thus further minimizing the costs of the products. The cost of inspection into the Australian market will also be reduced due to the liberal regulations on tests, measurements and diseases. This will lead to further reduction of product costs, (Commonwealth, 2011). The Australian customs have a highly regulated clearance on imports ensuring that correct procedures are used in the preparation and completion of imports hence lowering the final costs of the product. As Coyle, 9 puts it, technology has enabled under developed countries such as China to participate in global economy, and since Australian customs are linked to other government departments electronically, this facilitates the clearance service enabling the Australian online Retail store provide low product costs to their clients. Therefore , the logistics activities of Chinese sourcing operations, supplier selection, evaluation and procurement, international transport from China to Australia and the Australian customs quarantine and inspection clearance will provide a platform to offer quality products and low products costs thus having a competitive advantage over the other firms. Definitions of utilities Place utility and value addition Place utility refers to moving goods and services from product surplus points to points where demand exists, (Coyle et al, 36). The movement of the products to higher demand markets result in the adding economic value to the goods. Chinese sourcing operations selection, evaluation and procurement will enable attainment of place utility for the Australian online retail store as the goods produced will be able to meet demand market. The goods will have been sourced from Chinese distributors and delivered to customers in Australia. The sourcing operations, supplier selection, evaluation and procurement will enable the Australian online retail store select the best suppliers who will produce quality goods for the Australian market. This will ensure that the online retail store will obtain place utility for the goods produced. Under the international transportation from China to Australia, the Australian online retail store will obtain place utility due to the fact that China is now a member of World Trade Organisation hence trade barriers to foreign countries have been greatly minimised, (commonwealth, 2007). This move has also led to the emergence of retail supply chains that make sure that goods reach to the target market at the right time thus enabling the Australian online retail store achieve place utility for its products since the goods will reach the target market at the right place, (Commonwealth, 2011). International transportation from China to Australia enables the Australian online retail store achieve place utility as the goods are moved by mode of transport be it shipping or other, from China to Australia. Thus the supplies arrive in Australia on time which is the right market place. Australian customs, quarantine and inspection clearance enables the Australian online retail store achieve place utility due to the fact that the Australian customs, quarantine and inspection ensures that goods are transported to the right destinations thus minimising on errors and enabling the retail store to deliver to the target market. They also carry out inspection of goods while heavily fining goods that are not on proper transit routes or those that do not follow correct procedures. This enables the Australian retail store achieve place utility, (Commonwealth, 2011). The Australian customs, quarantine and clearance are highly sophisticated and regulated thus ensuring movement of goods to the right place and that proper completion and preparation of clearance procedures are followed. This enables the Australian online retail store obtain place utility. The extension of the market boundary plus the place utility increases the availability of the product and lowers product prices, (Coyle et al, 36). Time utility and value addition Time utility refers to the availing of goods and services where the customer needs them and at the point of customers demand. Chinese sourcing operation, supplier selection, evaluation and procurement enhance time utility for the Australian online retail store as the goods will be delivered to the customer when needed. Maintaining proper inventory of the goods sourced will enable the utility of time to be achieved as the target customer will always find the required goods when needed, (Coyle et al, 36). International transportation from China to Australia is a logistics management tool that can add value to the goods and services provided by the Australian online retail store. This is because the transportation of the goods will be done so on time reaching the target customer at the right time. Due to omission of trade barriers in China, china having joined the World Trade Organisation, there will be minimal challenges faced in the transportation hence enabling the online retail store achieve time utility. Consolidation of sea freight and moving goods in bulk goes a long way in saving time wastage thus enabling the Australian online retail store achieve time utility as the goods will get to the customer on time, (Anlges R and Nath R, 16). Australian customs, quarantine and inspection clearance will help the Australian online retail store achieve time utility by ensuring that the value of the goods coming into the country is as required and that the goods are delivered on time, (John J & Langley, 90). The Australian customs, quarantine, inspection and clearance are highly sophisticated and reputable as they ensure that the product gets to the customer without delays hence the customer gets them on time. They ensure that proper preparation and completion procedures are followed thus ensuring minimum wastage of time and enabling the Australian retail store obtain time utility for its products. Conclusion The three logistics activates of Chinese sourcing operations, supplier selection, evaluation and procurement, international transport from China to Australia and Australian customs quarantine and inspection clearance are vital in the advertising, marketing and delivery of the product for the Australian online retail store as they ensure that products are sold at an affordable cost price in order to achieve a competitive advantage over other firms. Sourcing for products from China enables the Australian retail store obtain them at low cost as China has an abundant workforce, with an improving infrastructure and a government that highly promotes production of industrial goods that are susceptible to low labour costs, (Trent, 2010). The choice of the Australian online retail store to select low cost labour markets will enable the firm gain a competitive advantage over the other firms and over its competitors, (Meeker and Mortensen, 93). References Angeles R & Nath R, 2001, Critical Success Factors for Implementation of e-procurement, Faculty of Administration, University of New Brunswick, p16. Commonwealth 2007, Australian Manufacturing: Today and Tomorrow, House of Representatives Standing Committee on Economics Finance and Public Administration, Commonwealth of Australia, viewed on 5th December 2011 from: http://www.aph.gov.au/house/committee/efpa/manufacturing/ Commonwealth 2011, Economic Structure and performance of the Australian Retail Industry July 2011, Australian Government Productivity Commission, Commonwealth of Australia, viewed on 5th December: 2011from: http://www.pc.gov.au/projects/inquiry/retail-industry/draft Coyle J et al, 2008, Supply Chain Management, a Logistics Perspective, Cengage Learning Inc., USA, viewed on 13th December 2011 from: http//www.google/books.com, PP6-36 Gordin K, 2006, Global Logistics Management. Blackwell publishers, Carlton Victoria, Australia, PP5-16. John J and Langley J, 2002, Management of Business Logistics, South-Western Educational publishing, New York, P90. Meeker D and Mortensen J P, 2011, Outsourcing to China-A Case Study revised seven years later, P93,Viewed on 6th December 2011 from: www.dfma.com/truecost/revisited.pdf. Trent R and Roberts L, 2009, Managing Global Supply and Risk Best Practices, Concepts and Strategies, J Ross Publishers, United States of America, P98 Read More