Name Alex Du Rand
NetID adur846
Group Number: 19
Website Link: http://infosys1102014fcgroup19.blogspot.co.nz
Tutorial Details
Tutor: Day: Time:
Claris Monday 12pm
Time Spent on
29 hours Word Count: 1639


Out of stock items in stores, not just in New Zealand, but globally, is becoming a problem that is causing
problems for many groups of people. In NZ alone last year, the average supermarket lost around $750,000 as a
result of out of stock items. Personally, I can say that there have been many occasions when I have gone into a
store to find that what I am looking for is not there, or out of stock. Furthermore, this is not just affecting
customers, but other groups such as producers and retailers who are losing sales as a result. Company X
however can now offer a solution and help all these people.
3.1 Vision
Company X’s vision is to make shopping more accessible and efficient for customers, along with helping out
retailers and producers increase their efficiency and sales.
3.2 Industry Analysis:
Industry: Retail Industry. Company X works with retail stores.
Force: High/Low: Justification:
Buyer power: LOW
In this industry for this specific service, buyer power will be
low as there are very few alternative, similar options to this
idea. The buyers (retailers) will hence have no or few
alternatives when buying this service. Much the same,
producers will also have few or no alternatives and there
buyer power will also be very low.
Supplier power: High
Supplier power on the other hand will be reasonably high as
there are not many companies who can provide this service
or a close substitute. (Solving the out of stick problem in
retail. Brian numainville,2009)
Threat of new entrants: LOW The threat of new entrants will be low in this
specific industry as it takes a lot of time and


money to enter into this industry. Many retailers
will use Company X’s service and so it will not be
attractive to new entrants as they will most likely
not have success due to no customers.
Threat of substitutes: LOW Threat of substitutes in this industry is also very
low as there are very few or no alternatives or
similar services like Company X.
Rivalry among existing
LOW There are none or very few exisiting competitors
in this industry. (Why we Buy,1999)
Overall attractiveness of the industry: The overall attractiveness of the industry Is fairly low as a lot of time is
required to enter. Also other companies will not find the industry attractive as it will be very hard to compete
with an exsisting firm carrying out this service as most retailers and manufacturers will already be using this
3.3 Customers and Thei r Needs
Company X’s customers will be the retailers that they provide their services to as well as the suppliers of many
different products. Both these two customer groups have specific needs that this service will have to solve.
Retailers need to reduce the amount of money they lose through out of stock items, as well as retain a larger
amount of their customers. Producers who supply these retailers with products, will need to increase there
sales. “In battling today's uncertain economy, retailers are taking a risk by dramatically reducing inventory
levels and creating dreaded stock-outs that disappoint customers and threaten their continued loyalty.” Very
few similar projects have been offered such as this. In Kansas, America a similar service was tried and brough
good results for customer satisfaction- "Our customer satisfaction and loyalty is much improved”. “Retailers
are walking a fine line in the current economy, trying to balance reduced inventory levels while delivering a
superior shopping experience," said Jim Bengier, Retail Industry executive at Sterling Commerce. Retailers
global are looking for a service such as the one Company X is carrying out.
3.4 The Product and Service
Company X will sell their service to both retailers as well as suppliers. A new company X app will be free for
customers to add to there smart phones. Once they have got the app, they can simply scan out of stock
barcodes in stores, where there order will then be sent to the manufacturer of the product which will then be
sent directly to there house. However, this will only apply with manufacturers who have purchased the
Company X service and only work in retail stores that have purchased the service. For example, this service
will not work in Countdown if this retail store has not purchased the service. Furthermore, if Rebel Sport
purchases this service, then the customers may use this service in this store. However it will only work with
manufacturers that have purchased the service too i.e. brands like puma or Arnotts.



3.5 Suppliers and Partners
Company X’s partners would include firstly retailers and manufacturers who are sing our service. For example
Super Market groups such as Foodstuffs. Our other partners will also include logistic companies, which provide
us with delivery services when delivering our products to our customers.
Company X’s suppliers will include software companies, telecommunication companies and hardware
companies that provide the company with the technology they require to carry out there service.
3.6 Strategy:
Company X will aim there service at the broad market as many retail stores will benefit further from this
service especially supermarkets including New Worlds, Countdowns and Pak’n Saves. By looking at porters
generic strategies Company X will implement a ‘broad cost leadership’ strategy. A cost leadership strategy
involves the product or service offering low prices to a large market segment. Hence this will apply to
Company X’s service. There service is very affordable as delivery is free (for orders over $40), and orders under
this amount will require a very small delivery fee. As a result of this chosen strategy, Company X will be very
competitive as there are few or no close alternatives and they are offering there service to a a large market
The overall strategy is therefore Broad Cost Leadership
3.7 Value Chain Activity:
The most important value chain activity for this business is delivery of the product or service, which comes
under operations.

3.8 Business Processes
There are two key business processes that take place within this value chain activity of delivery of the product
or service.
3.8.1. PI CK AND PACK PROCESS- The first process is called ‘pick and pack’ process and consists picking and
packing the product once the order has been received. This includes receiving the order and then choosing the
order, verifying it in the system and then getting it ready to be despatched. This is an important process, as all
the correct items need to be placed and ready to get dispatched to the customers.





3.8.2. ACTUAL DELI VERY PROCESS- Process two includes the actual delivery of the product to the
customers. This is important as the customers are relying on speed and convenience and so the company will
need to pick the best route that is the fastest in delivering all products to the customers as well as being
efficient on fuel.


3.9 Functionalities
 Making sure all orders are received from the customers.
 Ensuring that all the right products are picked from the warehouse and match the orders.
 Ensuring that the driver knows what route to take when delivering products to the
 Ensuring that the customer has firstly received their product and are happy with it.
3.10 Systems

3.10. 1. WIFI SYSTEM - This is very important as this ensures that the manufacturer can receive orders from
the customers via the internet. This will also enable the driver of the delivery to use a GPS which require WiFi
so he can see what route to take when delivering products to the customers.
3.10. 2. GPS SYSTEM - This system is also very important to the company as it allows the driver to follow the
best most time and petrol efficient route as planned by the route planner. This will improve the speed at which
customers receive there products as well as being fuel efficient.
3.10. 3. RECEI PT PAD SYSTEM - This system is important as it shows that firstly, the customer has received
there product as well as secondly, being happy with the product they have received i.e. it is the correct item.
The customer simply signs the receipt pad when receiving their product and then there is proof of the delivery.


3.11. Summary Table: Value Chain to Systems

Value Chain
Processes Functionalities Specific Information
Broad Information

Delivery of
the product
and service
1. Pick and
1. Making sure all orders are received from the

2. Making sure all the right products are picked
from the warehouse and match the orders
WiFi System

TPS (transactional
Processing System)

2. Actual
1. Ensuring that the customer has firstly received
there product and are happy with it

2. Ensuring that the driver know what route to
take when delivering the products to the

Receipt Pad system

GPS system

CRM (Customer
Relationship Management)


Overall Company X will offer a service, which will help many groups of people and should be implemented in
all retail stores as well as company manufacturers in New Zealand and then become a global service. It will
vastly increase retailers profits as they will not lose any profits due to out of stock items. Further more it will
help manufacturers who will increase there sales. And lastly it will be more convenient for customers who will
be provided with a very convenient and efficient service.

1. Julie Redard and Jamie Leicht Fleishman-Hillard. Sterling Commerce Solves Retailers' Out-of-Stock
Dilemma. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a5U24xYbPMOA

2. Paco Underhill. Why we buy, the science of shopping. 1999. Pages 95-96, 104-114.

3. Lars Thomassen, Keith Lincoln, Anthony Aconis. (2006). Retailization Brand survialin the age of retailer
power. Pages 51-68

4. Solving the out of stick problem in retail. Brian numainville