Aspects of Logistics Services between Supercheap Auto Retail Stores and Motorquipe Online - Case Study Example

Case Study Name Tutor Course Date Executive Summary This report will present an analysis of various aspects of logistics services between two retail services. The services are online retail and in-store retail. These services are offered by two companies; Supercheap Auto retail stores and Motorquipe Online, all based in Sydney. Online retail has been on the rise with the development of the internet. On the other hand, there are goods that have to be traded in in-store retail. Each of the methods has its own merits and demerits. However, the main objectives to be achieved are customer satisfaction and this is consistent for both online retail and in-store retail services. Analysis of the country’s geography and population density revealed that there is need to have more warehouses between DC and the end customer. Introduction Background For any retailing and distribution firm, the logistics in handling of goods is a key aspect that has to be done efficiently. Often, customers require that handling of their goods be done in a manner that will justify their choice for the particular firm as their logistics provider. This implies that the firm has to get its operations right for effective retailing and distribution of the goods. To achieve this, the firm has to deploy the best methods for management of the orders made by their clients as well as ensure that the customer service provided is the best. In addition, the distribution has to be done right by the firm. Order management varies depending on the type of retail that the firm uses. The retail services that are offered could be online store retail or in-store retail services. In addition, proper execution of the services requires use of various information system software and equipment. In either case, the choice for the information systems tool used for order management and the services provided have one objective of ensuring customer satisfaction in the type of service provided. In the case provided, the firm intends to merge both the in-store and online retail services chain. This will ensure effective supply and distribution of car accessories and tools. Aims The aim of this report is to critically analyze the optimal design for the following logistics activities: Order management and customer service Australian distribution center packaging and materials handling Physical distribution within Australia The analysis is done with the view to providing advice on the important practical logistics issues that the company has to consider. Scope The report shall use various sources including journals and professional sources in supporting the point of view. In addition, the logistics theory shall also be used in analyzing the business. Research shall be done on how the two retail services handle their order management. In addition, the Australian market shall be analyzed based on how distribution of goods flows. The critical analysis of order management in online retail and in-store retail shall be done through comparing and contrasting the two services with respect to order management. Online retail vs. In-store retail In an article by Wang (2013), it was stated that there lies a difference in the manner in which the logistics in online retail and in-store retail are handled. This difference was stated to be in the traits of distribution. While there exists many logistical activities and functions in both of the retail services, online retailing entails smaller orders while in-store retail involves larger orders (Wang, 2013). In addition, order management and information management systems in online retail involve handling of large volumes of orders while the system in in-store retail handles resell orders and not consumers. Wang (2013) further pointed that online retailing involves packaging of products in small envelops, cartons, and bags that are suited for the small size of the product. This implies that online retailing has to be based on small-sized products. For the in-store retail, the goods are packaged in cartons that can hold orders of large volumes. In other cases, the packaging is not necessary and only tags are used to indicate the specification of the product (Fernie and Sparks, 2004). Having purchased the products by whichever means, the means of transporting them varies depending on the type of retail used. In most cases, online retailing involves use of transportation companies that are well known to the client and to the selling company. Such companies have extensive networks that they use in delivering the products to their clients. In addition, the companies have extensive experience in shipment of parcels. On the other hand, in-store retailing entails transport services that are varied depending on the choice of the customer. In fact, there are instances when the customer could select their own means of transport. This implies that there is a difference in the type of transport service that the customer is given between the two types of retail services. While the attention shall be focused more in the details of the service in online retail, the in-store retail could be handled by the customers themselves if they choose to. Finally, the rates of return vary for the two types of retail services. For the online retail service, there are higher rates of returns than the in-store retail service. In fact, the returns emanate from ultimate customers for online retailing while for in-store retailing they come from resellers (Reiner et al, 2013). Analysis of the differences between these two sets of services was important in three aspects. To begin with, it creates an understanding of the activities involved during execution of the services. This involves packaging and transportation of the products after purchasing. In addition, it gives an understanding of the amount of infrastructure to be invested. This includes the amount of space that can be used for warehousing and the size of packaging to be done. Finally, the differences highlight the difference in logistics while executing the selling and distribution of the goods. Differences in logistics for in-store and online retailing Rao et al (2009) appreciated the importance brought to business as a result of internet expansion. This opportunity has been grabbed and well utilized by businesses that sell and distribute goods. When selling a product to any client, it was revealed that the distribution method gains a similar crucial attention just like the design of the product. This implies that the logistics in supplying goods to the customer has a very crucial role (Tsay and Agarwal, 2004, pp. 106). Online retailing has realized rapid development. Even so, logistics in online retailing proves to be the bottleneck (Wang, 2013). The logistics involved in online retailing is different from that involved in in-store retailing. This difference is seen in the traits of retailers. This can be attributed to the size of commodities in online retailing as compared to in-store retailing. In addition, there is a difference in variety and volume of commodity that is ordered between online retail and in-store retail. Logistics involves distribution of goods. The networks of distribution used for online retail and in-store retail are different. For online retail service, the main distribution objects were noted to be distribution network sites. Usually, the commodity is placed at the network of distribution. This commodity is supposed to consign to the mode of distribution that the users choose. When executing the distribution, the choice of the distributer can be made between either the distributer or a third party logistics company. The means is selected by the client based on the volume of product they have and analysis of the most convenient means. In using logistics distribution networks during online retailing, the consumers can select their terminals. This can be done through the terminal sites that the supplier company offers to the clients. The clients get to the site and select the places where they want their goods supplied to (Rao et al, 2009). For in-store retailing, the logistics is based on products that can be seen physically by the client and the supplier. The process involves handling of products physically from the dock, through the shelves and to the client (Reiner et al, 2013). Handling of these goods requires a lot of physical documentation and presence of the seller and the client. Elements of logistics in this case have to be handled carefully since they could be expensive. Expenses are incurred in the cost of holding the stock in inventory. Since the products in in-store retail are generally larger in size as compared to online retail, the warehouses are bound to be larger and therefore more expensive. While there are these differences between logistics in online retail and in-store retail, the main objective of the two services is to ensure that the client is satisfied with the service provided and that the service is provided at an effective cost to both the client and the supplier. This would require a good logistics system for either service. Fernie and Sparks (2004) noted that the beliefs in consumers have changed and that their willingness to wait for satisfaction has reduced or changed. This meant that clients now expect instant availability of their products and instant gratification. The general observation from the trends in logistics service expectation is that the services should be availed on time and they should be done in a safe manner. The issue of safety has called for the need to insure the goods of clients. Insuring these products during transportation has not only come as a safety measure but also serves as an advertising strategy since clients will be assured of the safety of their products. According to Wang (2013), logistics has realized a general demand in cost and service. There is need to reduce the costs incurred during execution of logistics. At the same time, there is also need to ensure the service provided is of good quality. On the aspect of time and convenience, online retailing was found to be the better service since the client selects the item online and the distribution terminal from which they expect their products. For companies that have their channels spread across a wider network, these products are availed at the click of the mouse. Order management and customer service Order management has been reported to be a key aspect in ensuring customer satisfaction. One of the indicators of effective performance for a logistics business is stated to be the time taken in handling the goods of the client (Amazon.com). This is the time from the placement of the order to the time of delivery. It is referred to as the order cycle time. It has been reported that the expectation of the customer is to have the goods arrive in time. This is a key concept in order management since the service provider will have to ensure that they avail the goods in time. Management of orders in online retailing services and in-store retail services have similarities in the way they handle their orders. One of the processes in management of orders is order transmittal. Logistics theory suggests that this is the number of events that are bound to happen between the time when the client has sent an order to the time when the order is received by the seller (Fernie and Sparks, 2004). Therefore, the means to be used could be similar at some point and different at another. For instance, use of emails and other electronic means could be done for both online retail and in-store retail. While online retail is limited to this mode of communication, in-store retail could use other means like presenting the order in person or sending it via fax machines. In addition, it has been revealed that other customers use telephone to place their orders (Reiner et al, 2013). The means selected will therefore depend on the client. Whichever the means, the idea is to ensure that the order is received in the most convenient way and in the shortest time possible. Some of the methods used would not be very appropriate for business record keeping. Such an example would be made from use of telephone. Therefore, the most appropriate means to be used limit the methods to email, and other electronic media. This brought to attention the effectiveness of online retail. Further to that, other processes that were followed in order management entailed processing of the order, picking and assembly of the order and order delivery. The processes used were found to be similar for both retail services. The difference lied in the manner in which the execution was done. This involves the facilities that were used in responding and executing the order. The execution had to involve use of software packages for both online and in-store services. The software used could be enterprise resource planning tools along with other order management software like the “Easydirector” that is used by Amazon. These software are meant to ensure that the retailer meets the important issues which include reduced order cycle time and order delivery. All of these aspects are considered by the retailer so as to effectively meet customer service (Amazon.com, 2013). As was revealed by Kerwin et al (2009), the concept of customer service in logistics was meant to ensure that users are satisfied in the aspects of time, communication, dependability and convenience. While this seemed simple and easy targets, the duty of the retailer is to ensure that they use resources that would enable them meet these targets. Customers would not mind having other gains that would arise from the type of service they select. For instance, the finding by Commonwealth (2011) was that customers would be attracted to online shopping because of lower prices, wider goods’ range and convenience. Similarly, customers who chose in-store retail would like to be at the warehouse and select the type of goods they want physically. This would guarantee them a clear conscience on the products they select. In the event that complaints arose, the seller is tasked with ensuring that the customer’s complaints are noted and addressed. The means used would be electronic for either of the methods or telephone communication for in-store retail. Developments in communication technology provide a variety of methods for use by clients who choose online retail services. Such methods could involve use of online chats sessions or communication tools like Skype (Kerwin et al, 2009). Australian Distribution Centre (DC) Packaging and Materials Handling Packaging of goods would entail preparation of goods for shipment to the buyers. Among the key aspects to be considered while handling the goods is their safety (Linde Engineering, 2011). This calls for handling with care. For either method of retail selected, the client expects the goods to be in good condition. In addition, packaging of the goods should be done keenly to ensure that the right product is packaged. After the goods have been packaged, labeling is done so as to ease the process of identification. During the process, there are various considerations that have to be made. One of the considerations is the regulatory considerations. The regulations could be based on the designer’s limitations on how the goods should be packaged. The specific instructions on how the goods should be packaged have to be considered. The specifications could be made on the packaging materials or the standard sizes of the products. In other cases, consideration has to be made on the means of transport to be used in shipping the product to the client. Another consideration that was found out was the type of product (Linde Engineering, 2011). Different products would require special ways of packaging that are different from other products. The type of materials used in packaging of the products was found to have an influence on the equipment used in handling the goods. There are materials that would stand harsh handling by the material handling equipment. However, there are other materials that would not be able to stand rough handling and would therefore require careful handling. From the article in Linde Engineering (2011), the main objective is to ensure that the packaged goods are safe. Therefore, the handling equipment to be selected for would have to be specified based on the type of material they are meant to handle. Physical Distribution within Australia Supply of goods requires transporting them to the customers. For Australia, the geography of the region indicates a country with a broad variety of biogeographic regions. The country is reported to have a population of about 20 million people with a population density of about 2.9 people in every square kilometer (ABS, 2013). This indicates that the country is not densely populated. In fact, people in the country are sparsely populated. The interesting finding is that the country has a variety of people living in the regions. Majority of the population is reported to be concentrated in two coastal regions that are widely separated. These are the south west and the south east. Of the two, the south east is generally the more populated. In these regions, majority of the population is found in the urban centers and more particularly in the capital cities (ABS, 2013). This indicates that the distribution of goods will have to be focused on the urban areas where there will be most people for the business. Infrastructure in Australia has been set to meet the 21st century requirements. The roads are efficient and can allow effective transportation of goods within the country. The National Ports Strategy was completed and this implies that shipping of goods to the country would be done more effectively. With the regulations by the government to have the roads constructed to meet the effective standards and to have the port operating effectively, Australia has a wide potential in logistics. This can further be enhanced by the closeness of the country to the Indian Ocean (Commonwealth, 2011). Conclusion and recommendations Whether online retail or in-store retail service, there exists a relationship in order management and provision of service to customers. The two could differ in the structure of service. However, the main objectives of the two are similar for both cases. The key performance indices are similar in terms of ensuring customer satisfaction. Since Australia is a country whose main activities are based in two main regions, the distribution system of the company should target to have the supply done in the regions. In addition, there is need to have more warehouses constructed between the DC and the end customers because the distance between the supplier and the client could be long in some areas. This is attributed to the sparse population of the country. The warehouses would improve the capacity to provide services and subsequently lead to effective service delivery. Bibliography Amazon.com, 2013, Manage Orders, Accessed online on September, 5, 2013, from: http://www.amazon.com/gp/help/customer/display.html?nodeId=13324351. Australian Bureau of Statistics, 2013, Regional Population Growth, Australia, 2012, accessed on September, 6, 2013, from: http://www.abs.gov.au/ausstats/abs@.nsf/mf/3218.0. Commonwealth 2011, Economic Structure and performance of the Australian Retail Industry July 2011, Australian Government Productivity Commission, Commonwealth of Australia, viewed on http://www.pc.gov.au/__data/assets/pdf_file/0019/113761/retail-industry.pdf. Fernie, J. & Sparks, L.,2004, Retail Logistics: Changes and Challenges, Kogan Page, London. Kerwin, R., Hartley, S. and Rudelius, W., 2009, Marketing, 9th ed. Boston, MA: McGraw-Hill/Irwin, Chapter 16. 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