ASSIGNMENT

25-12-2022
Course: Strategic Marketing And Consumer Psychology
Student Name: Ayesha Mobin
Student ID: 11109

Question 1: Discuss the key concepts and theories of SCM and their application to
fashion retailing?

Answer: Supply Chain:

A supply chain is an entire system of producing and delivering a product or service,
from the very beginning stage of sourcing the raw materials to the final delivery of
the product or service to end-users.
Key concepts and theories in SCM are:
The thrust of all these theories is how to gain competitive advantage by managing
the supply chain more effectively. The concept of the value chain was originally
mooted by Porter (1985) and his ideas have been further developed by logisticians,
especially by Christopher (1997). A supply chain model is illustrated which shows
how value is added to the product through manufacturing, branding, packaging,
display at the store and so on.
■ The value-chain concept
■ resource-based theory (RBT) of the firm;
■ Transaction cost economics;
■ Network theory
It was in fashion markets that the notion of ‘time-based competition’ had most
significance in view of the short-time window for changing styles.
Application to Fashion:
Fashion industry is a fast paced industry which needs efficient supply chain
management.
The factors combined to make off which have to be made in SCM.
•How to develop closer relationships with supply chain partners. Cristopher
mentioned the example on the limited in the US to illustrate his accelerating “time to
market”, the apparel supply chain philosophy by designing and ordering products
from South East Asia to store in weeks rather than months of its competitors.
•Kurt Salmon Associates (KSA) in the 1980s commissioned US garment suppliers to
investigate how they compete with Far East suppliers. After the study he came to
know that the supply chain is long, inefficient and badly coordinated, so, the QR
(Quick Response) concept came into being and in Europe has been applied on
clothing brands to have an efficient response and have better coordination.
•Companies dramatically reduce the suppliers and focus on the remaining suppliers
to ensure more responsiveness to the market.
Question 2: Outline the history of ECR and discuss its implementation in the
markets of different countries?

Answer: HISTORY:
•Arrived in early 1980s
•KSA produced another supply chain in early 1993
•ECR has stalled in USA during the last decade
•ECR has taken off in Europe for the creation of a European executive board in
1994, during which the European studies were carried out which improved the
supply chain performance.

IMPLEMENTATION:
•The ECR prime objective is to develop best practices and to disseminate these
benefits in Europe
•The event in the 21st century have attracted over three thousand people
•Each company will have a different starting point and a different agenda depending
on the current nature of supplier–retailer relationships
•A common theme applicable to all retailers is the limited number of relationships.
•The large grocery retailers deal with thousands of suppliers and have only formal
partnerships or initiated pilot projects with a small number of suppliers, for example
J. Sainsbury has supply chain forums which bring together senior supply chain staff
with 19 of their counterparts (suppliers) which account for a large part of Sainsbury’s
volume business.

Question 3: Comment on the four stages of the evolution of grocery logistics in the
UK, to what extent will FGP negate the collaborative efforts by suppliers and retailers
in the relationship (4th) stage?

Answer:The implementation of ECR initiatives has been identified as the fourth and
the final stage of the evolution of the grocery logistics in the UK
The UK is often mooted to have the most-efficient grocery supply chain in the world.
There are the four stages that help to increase the efficiency and growth of the
organisation:
•The first stage, supplier control, is widespread in many countries today and was the
dominant method of distribution to stores in the 1960s and 1970s in the UK.
•Centralisation, the second stage, is now becoming a feature of retail logistics in
many countries and was prominent in the UK in the 1980s. The grocery retailers took
the initiative at this time in constructing large, purpose-built regional distribution
centres (RDCs) to consolidate products from suppliers for onward delivery to stores.
•In the third stage, the JIT phase, major efficiency improvements were achieved
•The fourth stage is defined as the relationship stage, which relates to a more
collaborative approach to SCM after decades of confrontation.
For example, The last grocery store to centralise its distribution was Asda
the company stocked more lines, including non-food lines, than its competitor. The
decision to centralise its buying and distribution functions was made because of the
huge administration cost of dealing with thousands of suppliers. Throughout the
1990s Asda developed more distribution centres and re-structured its network as
store numbers increased from 130 to 230 in a decade. Wal-Mart purchased Asda
and embarked on the further development of general merchandise products. In
September 2001 Asda re-launched its Home and Leisure business, introducing up to
5000 new lines, around 2000 of which were sourced through Wal-Mart’s global
network.
FGP is the price retailers are willing to pay excluding transport costs from the point at
which the product is ready for shipment to the RDC of retailers.
In theory, FGP optimises the entire transport network throughout the supply chain.

Question 4: With the aid of examples show how logistics best practice/principles are
being applied internationally?

Answer: The gist of our discussion on differences in logistics cultures was to show
that implementation of best practice principles has been applied differentially in
various geographical markets. Nevertheless, the impetus for internationalisation of
logistics practice has been achieved through the formal and informal transfer of
‘know-how’ between companies and countries. ECR Europe conferences, their
sponsoring organisations and national trade associations have all promoted best
practice principles for application by member companies. Many of the conferences
initiated by these organisations have included field visits to state of-the-art
distribution centres to illustrate the operational aspects of elements of ECR. At a
more formal-level companies transfer ‘know-how’ within subsidiaries of their own
group or through formal-retail alliances. To illustrate how logistics expertise is being
transferred across international boundaries, we will look at two European case
studies, Tesco and Ahold. Both are global players although their history of
internationalisation is very different. Tesco internationalised late and concentrated
primarily in Europe; Ahold has around 60 percent of its sales in the US and is only
beginning to refocus its attention on the European market.

Tesco in Ireland and Poland:

Tesco’s most recent acquisitions in Europe (in Ireland and Poland) offer an insight
into how changes in logistics practice can be implemented in different markets. In the
wake of its acquisition of Wm Low in Scotland, Tesco plc turned its attention to
Ireland in 1997 54 International Retail Marketing with the acquisition of 110
supermarkets from Associated British Foods. In the South, Power Supermarkets
were part of this acquisition and at the time Power had plans to consolidate
distribution. With the takeover, Tesco inherited a ‘push’ logistics system:
■ only 12 percent of volume was centralised;
 ● high stockholding levels at store (2 weeks)
● high stockholding levels at depot (4 weeks)
● up to 600 deliveries per week per store
● unknown supply chain costs.

Hold In Europe Ahold:

Has benefited from the transference of logistics practice because of its relationships
in retail alliances in addition to synergies developed with its expanding web of
subsidiaries. During the 1990s Ahold partnered with Casino of France and Safeway
of the UK in the European retail alliance. In 1994, a ‘composite’ distribution centre
was very much a UK phenomenon; now it has been developed by Safeway’s
European partners. Not only have these logistics practices been applied in France
and the Netherlands but also in the parent companies’ subsidiaries in the US,
Portugal and the Czech Republic. In the Netherlands, Albert Heijn (Ahold’s Dutch
subsidiary) has developed a state-of the-art distribution system based on a modified
UK ‘composite’ model. Since Heijn’s stores Retail logistics 55 are much smaller than
those of the superstore operators in the UK, these composite distribution centres
comprise three independent units unlike in the UK where all products are stored in
one facility. The three centres have a fresh centre dealing with the cool chain: an
RDC for ambient and non-food products and a returns centre for reallocation and
recycling of returned products and handling materials.

Question 5: Review the advantages and disadvantages of the two main fulfilment
models for grocery e-commerce and discuss some of the solutions proposed for
overcoming the ‘last mile’ problem?

Answer: There are two main logistics models for grocery e-commerce:
1. The store-based order-picking model
2. The dedicated order-picking model.

Advantages:
The quick setup and relatively modest initial investment costs of this system are
advantages. This strategy gives customers access to the full selection of products
that are offered in the neighbourhood store, but "out of stock" situations do arise
because online shoppers are competing with in-store customers. Additionally, it
enables the sharing of retail stock between offline and online markets, enhancing the
ratio of stock sales.

Disadvantages:
The fulfilment centre's size and service region are additional problematic elements.
The ideal pick centre size and, thus, the necessary number of pick centres to service
the country's market have been hotly contested topics. One substantial UK retailer
estimated that 18 of these facilities would be needed to give nationwide coverage,
while another e-grocery company suggested that five to six carefully chosen facilities
might be adequate. Pick centres and distribution centres at a higher level of the
supply chain both use the same warehousing planning techniques. The capital
investment and inventory levels will be lower the more centralised the system is.
However, fewer pick centres result in lengthier average travel times to customers'
houses and more expensive delivery fees. By adding an additional tier of satellite
depots between the pick centre and the residence, the cost of shipping orders across
greater distances can be decreased. Orders destined for the same district can be
trunked in a combined load to a nearby "satellite" depot (or "van centre"), where they
are disassembled for subsequent delivery in small vans. A network of 10–12
satellites connected each pick centre in Webvan's hub–satellite system, which
supplied orders to customers. It's not necessary for the satellites to be different
structures. Demountable vehicles allow the local break-bulk operation to be "depot-
less" and therefore more cost-effective, as suggested by the UK e-grocery Ocado for
the south-east of England, provides for a "depot-less" and more cost-effective local
break-bulk operation.

Solutions to the last mile problem:

According to estimates, the average cost of processing, selecting, and delivering a

grocery order in the UK is about £13. Given that customers typically pay £5 per
order, it is obvious that retailers will lose money on every delivery they make unless
the order value is very large.The length of the "time windows" within which orders
are delivered to customers' houses has a significant impact on the cost of the
delivery operation. E-tailers must find a balance between consumer convenience
and delivery efficiency in order to remain competitive when determining how large of
a time window to provide online buyers. The ideal situation from the customer's point
of view would be a guaranteed delivery within a very constrained time frame,
reducing the interference with his or her way of life. It is really expensive.Normally to
achieve this degree of flexibility, it must be possible to deliver orders when no one is
at home to receive them. Unattended delivery can take various forms. According to
market research, the preferred option for around two-thirds of British households is
to leave the goods with a neighbour (Verdict Research, 2000). This applies mainly to
nonfood items, however. Owing to their bulk and the need for refrigeration, few
online grocery orders are left with neighbours. Instead home-based reception (or
‘drop’) boxes are being promoted as a technical solution to the problem of
unattended delivery.

These boxes can be divided into three broad categories:

● Integral boxes – generally built into the home at the time of construction.
● External fixed boxes – attached to an outside wall.
 ● External mobile (or ‘delivery’) boxes – moved to and from the home and
secured there temporarily by (e.g. a steel cable linked to an electronic
terminal).

These boxes are available in a range of sizes and provide various kinds of electronic
access. Most are sufficiently insulated to keep the temperature of chilled and frozen
produce constant for 6 to 12 hours. Punakivi et al. (2001) compare fixed and mobile
boxes and find that their operational costs are comparable, assuming that the latter
are only collected at the time of the subsequent delivery. However, because they are
shared by numerous consumers and have substantially greater usage rates, mobile
boxes provide a capital cost advantage.