Supply Chain Management - Omnichannel - Case Study Example

SUPPLY CHAIN MANAGEMENT Name Course Tutor University Date Supply chain management Supply chain management is the oversight process of the movement of goods and services, i.e., materials information and finances from one the supplier to the manufacturer then to the wholesaler and finally to the retailer (Ellram, Tate, and Billington, 2004). The primary role of supply chain management is usually to do away with the inventories as well as coordinating the flows within and among the companies involved. It is divided into three main stages that are the product, finances, and information flow. Product flow mainly concentrates on the movement of goods and services from the supplier to the final consumer. Financial flows involve credit terms, consignments and the tittle ownership arrangements made. Information flow always involves the transmission of orders. This is illustrated in the diagram below Technological advancement in mobile computing has brought about numerous changes in the way business is conducted nowadays in the retail industry (Christopher, Lowson, and Peck, 2004). It has clearly defined a path so different from the old school brick and motor retail stores. Internet retailing has brought all products and services close to the customer saving the consumer both time and energy that could have been taken to walk downs the street to the stores. With the current rise in the use of mobile phones and tallying statistic of about 50% of cell phone owners in the United States have smartphones; online retailing has grown with remarkable speed (Geuens, Brengman, and S’Jegers, 2003). It is notable that various service delivery models have been adopted by both online and brick-mortar retail stores. Pure online focuses its efforts in a conversion of experience goods to searchable ones, provision of low prices and emphasize on well-curated content and provision of local points for picking up products purchased. On the other hand, pure brick and motor retailers concentrate majorly on the delivery of services, information, and instant rewards, charging of some amount of premium for products due to its close locality and easy accessibility. In addition to that, inventory is availed online so as to reduce the chances of not getting the quoted goods in the store. Online retailing has revolutionized the way of service delivery posing a great threat and competition to the traditional systems of retail. (Esper, Jensen, Turnipseed, and Burton, 2003) This has been made possible through enabling technologies such as location-based applications. Both opportunities and challenges face the dynamic retail changes one of the possibilities beings, helping both online and offline retailers access new customers and expand their market base. There are seven main supply chain principle theories that are prime in supply chain management. They are namely, one, adaptation of the supply chain regarding the service needs of each sermon. It focusses on the customer needs to make the business understand the customers better. The customers are divided into portions or segments based on the volume of sales and the profitability ratio. To the age of omnichannel retailing, there is a stiff competition noted in the scramble for customers through the provision of the most suitable and appealing services. For example, Amazon has made it possible for customers to compare its prices of goods and services to other retailers at no cost and also offer a discount on shipping products in large numbers. This has created a large customer base since most clients opt for cheaper products but still of good quality. The second principle is the customization of the logistic network (Meade and Sarkis, 1998). Upon segmenting of customers regarding their service needs, resources must be allocated to cater for the logistics network so as to serve the different segments. Other companies seem to prefer to open various outlet spread within different regions to make it readily available to their client. The third principle is paying attention and studying the market signals and making it in line with the demand planning all across the supply chain. This practice enables the practitioners of supply chain share necessary information with the trading partners. This is to ensure that none of them keeps unwanted stock. It is vital for each party to effectively utilize the information given to them by the trading partners. For firms to be very competitive in omnichannel retailing, they adopt various strategies that make them realize their goals. As noted, the companies make proper use of data and analysis. Through the data received, they can not only understand the customer's transactions but also the frequency of the client visits to those stores. This information turns to be invaluable to the success of the company or firm. Some company has even gone extra miles to set up Wi-Fi in their stations to monitor the visiting patterns of the customer to the stores. Another strategy is putting more stress on product knowledge. Omnichannel retailing is making the customers possess vast knowledge of particular products. I.e., the size, quality, color, and even real content. They are in a position to learn this from one channel and make the purchase in another channel. The Retailers, therefore, need to concentrate on product differentiation to avoid confusion. If this is not considered, the customer loyalty shifts to the "experienced" goods than for the searched ones. Differentiation, therefore, adds to the main strategies to be implemented by retailers. When the products are differentiated close to the customer, it allows more room for variety since the customers make orders of what they want and how they expect them to be. For example, a motor company making Lamborghini adopts this strategy, therefore, designing the car to customer specifications. The car gives the company a competitive advantage and improves the customer base and loyalty. None the less, accepting and welcoming completion among retailers also is a good strategy. This is because the retailers selling high-quality products through channels of low-cost search engines are most likely to prosper. The customers will prefer them since they are driven by the good cost ad high quality of the product. Those companies that cannot embrace change but instead they continue offering cheap and low-quality substances face extinction with time. Alongside welcoming competition, pricing of commodities in a more pleasing and attractive way gives the company an upper hand in business (Johnson, 2010). An example of Amazon, it is known for it is relatively low pricing and curated merchandise. Low pricing is its core competency over other online retailers. Consumers get attracted to Amazon for that sole reason and not any other. These have made Amazon a very great and fruitful online retail company. Never at any single point has it ever outsourced its core competency. Creation of switching cost by retailers reduces the competition they face for example the Amazon subscribe and save program offers discount to a customer who makes their purchases at certain set intervals.( Klemperer, 1995).Such measures reduce the competition. Other companies decide on giving free packs to their customers who are loyal. The art of selling niche products strategically propels omnichannel retailing (Smiley, 2016). Online stores posses an advantage over the physical stores in the sale of outputs that are narrowly faced, i.e., ones which are costly to the physical stores regarding storage. The middle of the tail products that are mostly available in local stores faces a challenge of low demand. Demand makes it the stores record low volume of profits and sales. Delivering goods and services that the company is the best fit for making it more superior and outstanding in the industry since the customers know what they want. As much as the strategies place the firms in a better position to reap from the market, there are challenges that on the other hand are faced by the party players. Taking a look at the retailers, when they adjust to the omnichannel side of business, a shortage of a lot of same supplies by the manufacturers to the retailers is seen. It is because the retailers demand more sophisticated, unique, and customized materials that the manufacturer will not be in a position to deliver meet (Tsay, 1999).This will force the manufacturers to respond by producing customized products but in low quantity. In the long term, the margin between the manufacturers and the retailers widens When retailers decide to integrate back instead of collaborating with other companies, for example, Amazon, it makes the company have a strong tenacity of purpose. Amazon, in this case, stretches borders to acquiring its domain and directly contacting authors. Omnichannel by the use of smartphones has exposed the consumers to a pool of information when making purchases (Jude, 2015). This makes them have vast knowledge on what is bought and also provides a variety of options and substitutes of the product. Advancement in technology has made the impossible possible by breaking the geographical barriers at the same time expanding by reaching a broad market area. Retailers get introduced to new or foreign products they had no idea. Utmost transparency leads to customer loyalty. This makes both the manufacturers and the retailers identify an area they are good at specializing in it. Omnichannel retailing will result in the increase in competition. This leads to increase in service delivery making firms possess their competitive advantage (Barney, 1997). Omnichannel retailing has several impacts to the supply chain management. These are like one, processing of customers orders. Instead of the older method of moving goods from the factory to the customers, the customers are exposed to an environment where they are I apposition of making huge orders of different things, they get them delivered all at once. These leads to the implementation of business to business (b2b) channel which substantially changes the number of orders being handled. The volatility that online ordering has also requires the company to widen its stock portfolio so as to meet the growing demand to the fullest. Some of the positive impacts include benefits for connected customers. They can compare the product details such as price, quality, size, and color preferences; consumers are provided with a choice in that they can choose from a wide variety of retailer products, convenience in that the consumers can do their research and receive the goods at their own time. Concerning the market, it shapes and expands the market. This is through promotion of additional sales and redistribution of sales. It also raises the awareness of brand. This is through web knowledge built with the help of web searches. The benefit to the retailers is that it opens up the opportunities of cross-border for example; in the EU the total number of consumers buying cross-border products has doubled since the year 2008. Consumer aggressiveness and technology has changed the experience of shopping by discovering new products and doing research on the availability of products and pricing. Retailers views on omnichannel depict that for an effective strategy to be in place then strong leadership must be formed. For all channels to be integrated, concentration needs to move to the brand itself and not the channel where they work. This is easily achieved through changing ways in which staffs remuneration takes place and how the revenues collected are attributed. In the supply chain, retailers have an obligation to ensure that the product information is standard and uniform in all channels though take advantage of each of the channels to market their products as well as engaging consumers. Retailers have the responsibility of monitoring how users accept or reject the changes and advancement of technologies. They have to introduce technology that adds loyalty to the products. Retailers stand a position to benefit more by adopting the new trends and adjusting to the technology changes that influence the customer behavior. In this dynamic environment, retailers who have moved fast to embrace this trends are reaping big. Omnichannel strategies have enabled other companies to secure international markets in a cost effective way. They have achieved this by incorporating various shopping channels to one plan over a period. References: Ellram, L.M., Tate, W.L. and Billington, C., 2004. Understanding and managing the services supply chain. Journal of Supply Chain Management, 40 (3), pp.17-32. Christopher, M., Lowson, R. and Peck, H., 2004. Creating agile supply chains in the fashion industry. International Journal of Retail & Distribution Management, 32(8), pp.367-376. Geuens, M., Brengman, M. and S’Jegers, R., 2003. Food retailing, now and in the future. A consumer perspective. Journal of Retailing and Consumer Services, 10(4), pp.241-251. Esper, T.L., Jensen, T.D., Turnipseed, F.L. and Burton, S., 2003. The last mile: an examination of effects of online retail delivery strategies on consumers. Journal of Business Logistics, 24(2), pp.177-203. Meade, L., and Sarkis, J., 1998. Strategic analysis of logistics and supply chain management systems using the analytical network process. Transportation Research Part E: Logistics and Transportation Review, 34(3), pp.201-215. Smiley, J.L., 2016. Creation of Social Retail Spaces through the Integration of Omni-Channel Retail Practices and Branding. Jude, G., 2015. Who is the Omnichannel Shopper? (Doctoral dissertation, Macquarie University Sydney). Johnson, M.W., 2010. Seizing the white space: business model innovation for growth and renewal. Harvard Business Press. Barney, J.B., 1997. Gaining and sustaining competitive advantage (pp. 134-175). Reading, MA: Addison-Wesley. Klemperer, P., 1995. Competition when consumers have switching costs: An overview with applications to industrial organization, macroeconomics, and international trade. The review of economic studies, 62(4), pp.515-539. Read More