How Can the Warehouse Maximize Its Efficiency of Its Supply Chain Operations?

3226 words (13 pages) Essay in Retail

08/02/20 Retail Reference this

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Contemporary Issues in Supply Chain and Logistics Management

How can The Warehouse maximize its efficiency of its supply chain operations in New Zealand?

The Warehouse is one of leading retail group operating in New Zealand with 251 stores in the country. The Warehouse group was established by Stephen Tindall in 1982.Comprising the market-leading retailers in their category includes five flagship subsidiaries -The Warehouse, Warehouse Stationery, Torpedo 7 Group, Noel Leeming Group and The Warehouse group financial services limited. The group sells a wide rang of grocery and non -grocery items. (The Warehouse Group, 2018). Supply chain plays an integral part of the company’s success. Supply chain is very important because it increases the competitiveness pressure from new product, short period of development, meet the worldwide challenges and customer satisfaction. The efficiency of supply chain is to deliver the goods to the customer immediately at a low price (Myerson. P.2015)

The goal of supply chain is to ensure integration through collaborative work to achieve the visibility upstream to the suppliers and down steam to the consumer (Myerson.P.2015). In efficient supply chain management, supplier plays an important role. The Warehouse customers are looking at lowest cost, right product with the right time period in order to meets their needs. In order to achieve the goal, suppliers have to deliver right material in the correct time and correct quantity, so that supply chain can definitely strengthen the efficiency.

Executive Summary

The main purpose of this report identifies the problems based on the supply chain in this retail industry. The supply chain offers various tools, components and technology that help to improve the understanding and thus can use this competitive tool in their business. The report reflects about the Warehouse increase the efficiency by improving customer satisfaction. As per the annual report 2018, the company decides to make sure that the consumers get the right channels in the depth and range on right time and in good condition at the lowest price (Tindal & Smith,2018).Efficiency of supply chain management is the management of asset, information, product and flow of fund to grow the total supply chain. So that it can maximize the overall value generated. The retail industry is the final step in the efficient process of delivering products to the customers. “The vision of the company is to build a long-term sustainable profit growth and Aotearoa flourish New Zealand (Withers & Smith, 2017, p. 2). The report describes about the different stages of supply chain management. It also revolves about the internal and external integration to ensure the effectiveness and efficiency of supply chain. The finding of the Warehouse was to improve the relationship with the partners like suppliers and manufactures to reduce the inventory in warehouse and to increase the productivity of its efficiency and operation of supply chain (Tindall & Smith, 2016, p. 6).Thus the report concludes with the idea that to increase the supply chain efficiency, continue to develop sustainable business and help New Zealand flourish and improve the supply chain logistics local issues. Therefore, the report recommends considering operational strategies and supply chain integrations – internal and external to utilise the inventory more efficiently and develop the areas proficiently to tackle risk and create value.

Introduction

Industry Background

Retail industry is an important part of the economy that is comprised of individual and firms engaged in selling the products to the end consumers. The Warehouse group is the largest retail group functioning in New Zealand. The success of the company is based on various strategies and elements to deliver a strong and sustainable future for the organization. The warehouse employed over 12000 people in New Zealand and apart from these 241 stores operates two distribution centre and 13 online stores. The Warehouse focus ultimately on two future aspects – “Product and People. Serving people how they wanted to be and having the right product “(The Warehouse Group, 2018). Without integrational approach, supply chain results in inefficiencies, waste and thus end up in high inventory. The main competitor of Warehouse is K- Mart. Even though warehouse is known as the discounted store, K-Mart provide equivalent promotion to compete the warehouse. New methods and innovations are introduced daily in the field of supply chain improve the efficiency and performance. To resolve this situation Warehouse moved to EDLP – Every Day Low Price and away from Hi-Lo pricing model. EDLP is stronger and future focused retail pricing strategy. EDLP allows to remain more competitive with other competitors in a continuously changing environment (The Warehouse Group, 2018). Under EDLP, the productivity increased, profit, less waste, saved the labour cost by reducing the re-pricing needed for the promotions. In order to meet the customers, demand an effective logistics network is required to deliver the goods on time with minimum costs and more profit for the retail store and the whole supply chain (Chopra & Meindl, 2007, p. 30).

Organisational Background

The Warehouse group is one of the leading retail company in New Zealand. Stephen Tindall opened his first store on Auckland’s North Shore. There was a wide rage of products at bargain prices. This challenged the established distributors and retailers. Thus, became famous with customer demand. With effective supply chain and methods of distribution, The Warehouse was an innovator in low cost delivery which allowed maintain competitive price (The Warehouse Group, 2018).The vision of the company is to deliver long term sustainable profit growth and helps New Zealand New Zealand flourish. Supply chain consists of five main stages- Suppliers, manufactures, distributors, retailers and customers. Customer is an integral part of the supply chain and the only source of revenue. The different sources wherein cost includes are products, flow of information, funds between different stages. To meet the requirements of the customers, there should be proper communication between the supply chain partners, aware of current market trends, understand the capabilities of supply chain partners. Since it is dynamic, they change and evolve over time.

With 251 physical stores, an app for the warehouse , five online stores and millions of customers across New Zealand , Warehouse is planning in investing in a world class management system which will significantly develop the process in the distribution and fulfilment transport and centres (The Warehouse Group, 2018).The company focus on developing the local logistics between distribution centres and retail stores in New Zealand (Tindall & Smith, 2016, p. 6).

Operations and Performance

Stages of Supply chain Management – Supplier, Manufacturer and Distributor

Supplier: Supplier plays a significant role towards the success in the fulfilment of supply chain. Suppliers provide the raw materials and subcomponents to the manufacturers, and they indirectly deliver to the Warehouse with products. All the activities are rotating the focal point to serve the customer with long term interest. Interpersonal relationship with the buyer’s partner and supplier is important, since all the operations and communications are done by the individuals of the firm. (Wisner et al., 2016). The warehouse identify the opportunities to reduce the cost downstream and upstream.

Manufacturer: The relationship between the supplier and manufacturer specifies the overall performance of the supply chain. The performance metrics of manufacturing is identified has quality, service, cost, sustainability and customer rating. The Warehouse receives the products from different distributors, in which goods are purchased from the manufacturers. Lean plays a vital role, so that it reduces the wasteful activities from operations (Walters, D. 2007). Manufacturing reduces the total cost of supply chain, provides flexibility in volume and different variety of products (Walters, D. 2007).               

Distributor: Distributors plays an important role in a high volatility environment. They are responsible for delivering materials and goods needed for each under its determined area (Chopra & Meindl, 2013). Distribution is about demand management, it’s not just about Warehousing and Transportation. The process of expectation and fulfilment orders against specified customer goal through Quick Response is known as Demand Management. Quick response helps in achieving reduction cost and enhancement in service (Walters, D. 2007).

Performance Analysis: Facilities, Inventory and Transportation .

Facilities: In supply chain network where product is stored, built in and fabricated in a location. The headquarters of Warehouse is located in Northcote, Auckland. It consists of 251 total stores- 93 the Warehouse stores, 70 Warehouse Stationery stores, 14 Torpedo7 stores, 74 Noel Leeming stores (The Warehouse Group, 2018).

Inventory: This is an integral part of supply chain which facilitating and balancing of demand and supply chain. Inventory consists of goods, work in progress and finished goods. In order to manage the flows of supply chain efficiently warehouse has to deal with the downstream customer demands and upstream customer exchanges. Inventory affects, responsiveness, costs and material flow time. Inventory improves the product availability.

Transportation: Supply chain utilises different modes of transportation, which are air, sea, land, rail and pipeline. The main purpose transportation in supply chain is to move inventory from one point to another. Transportation affects responsiveness and efficiency of delivering products on time to customer. Inventory also allows to find the right balances which is cross function and cross vendor between responsiveness and efficiency.

Integration Considerations

Integration is a process of giving ideas, objects, people together into a project form to deliver a product or service in a particular instance of inventing and integrating satisfactory elements (Langford. O.G, 2012). The contents of integration in supply chain is linked in forming the road rules (Harrison, Hoek, & Skipworth, 2014, p.303). The demand of integration is multifunctional. The elements of integration are specifying as the degree of integration and direction of integration (Harrison, Hoek, & Skipworth, 2014, p.303).

Internal Integration

Internal integration refers to sharing of information between the strategic inter-functional cooperation, internal function and working together. Internal integration is a combination of two functions in an organization – Material management and physical distribution. In Material management the flow of raw materials is inward, production and theses move through operations level. Physical distribution is mainly aligned with flow of finished goods in outward along with marketing and distribution. Thus, internal integration combines both the functions into a single function which will be responsible for the mobility of all materials into through and out of organization. The suppliers provide the materials to the manufacturers and thus is finally distributed to the warehouse (Harrison, Hoek, & Skipworth, 2014, p.303).

Internal integration can provide the good understanding about the current scenario of an organization’s internal integration. The organization is large, and it consists of many divisions and global structures. The company should have proper access to planning system. The production plan should be shared so that the company can improve the efficiency and productivity. Proper planning and information sharing will result in less duplication of effort (Harrison, Hoek, & Skipworth, 2014, p.303). The lack of coordination may result in various costs such as inventory cost, manufacturing cost, transportation cost, replenishment lead time and labour cost.

Information integration plays a significant role in internal integration. Enterprise resource planning system provides a good understanding on resource movement within the organization and the information is passed on to the location and quantities of resources. (Wisner.et.al.,2016, p.469). Thus, the sharing of information in warehouse will have a smooth operation and results in lower stock. The ERP is a database which consists of details about the data warehouse. This system will be more helpful to the warehouse for making the internal integration process more efficient and managing the resource.

Faster and flexible responses to customers needs result in high demand. The organization need to have good awareness about the customers requirements. New trends, low cost, quality, right time are main factors which customer focus on. It is the responsibility of supply chain have a significant role in delivering the goods on time, right quantity, and the price meets on their request.

Based on the two facts, warehouse includes the internal integration of upstream supply chain such as synchronous production and integrated process. Warehouse should concentrate to form a supplier development team, to have a good result in the material flow. For this warehouse should concentrate on downstream demand with the upstream production schedules (Harrison et al., 2014, p.311).The upstream suppliers which has high level of integration is one of the important way to improve the responsibility in supply chain (Harrison et al., 2014, p.311)

External Integration

External integration is the process in each organization, the supply chain joins their hands and work together to get the same goal to satisfy customer’s needs. the main approach towards the external integration is that there are unnecessary and unforeseen boundaries outside the company. External integration includes retailers, end consumers, warehouses, suppliers, warehouse, financial institutions and distributors.

External integration process can be an extremely a difficult task, it requires trust, competent trading partners, compatible information system, proper training and a successful internal integration. The improvements received through internal integration will reflect up to a greater extend in external integration.

In external integration proper communication and the way information is passed out plays an important role. The company measure the performance in section and analyse and make proper adjustment to make the process more competitive. Good software and applications coupled with internet can enable the flow of information between the supply chain partners and help the organisation to take quick decision making, supplier and customer operations and performance metrics data (Wisner et al., 2016, p.471)

Electronic integration is used for the fast-moving customer goods (FMCG) sector and between manufacturers and retailers. Electronic data interchange is important since it is used has a traditional method to deliver information and orders are exchanged (Harrison et al., 2014, p.314). This can help warehouse undertake electronic integration and thus improve the method exchanging the information. Due to this warehouse can remain competitive among its competitors.

Logistics merge along with supply chain externally to reduce the boundaries. The upstream and downstream stages is linked to focal company. The role of logistics is important as it their responsibility to deliver the products on time to the customers warehouse. Proper timing, right quantity and the price are considered as the main facts. Since these facts are main elements which can increase or decrease the customers demand. Warehouse has to determine the right supply relationship. To have a good relationship, there should be mutual benefits, trust, risk sharing and proper coordination and planning. Considering these facts Warehouse can result in a successful process company. Warehouse can undertake these integrations for operations of its supply chain.

Value Generation

Value stream mapping is very important to consider at the initial stage to see the operations process of the organization. It consists of set of sequential activities which fulfils according to customers demand (King & King, 2015). It is a tool that specifies the key components of a production system based on the principles of lean manufacturing. Value chain is easily tracked by a value stream mapping. Warehouse focus on value creation in both context, which helps to display the working of production system ,how the flow of material and information are related to provide on proper time when an customer initiates an order until it is delivered (Shararah, 2013).Value stream mapping can be viewed in three levels- Factory level, process level and enterprise level. The performance in each stage in supply chain increases the final product value. The most important stages of value stream mapping consist of:

  • Material flow
  • Information flow and
  • Timeline

Information Flow

In value stream mapping, information flow always flows in the opposite direction of the flow of material. The flow of information starts from the customer through all key process which flows backwards. Information flow demands to the end customer and proceeding to the organization in the network. Information flow represents different icons in the form of signs representing

Material Flow

Material flow is a journey that map the materials which board on, receiving the materials on right time in manufacturing site and the point where customers receive the finished item on right time. Throughout his journey material flow has to be recorded.in order to prevent the increase in inventory, material flow should be well organised and streamlined. Each stage of material flow in supply chain is identified properly. Material flow of Warehouse consists of products from different parties

Conclusion

The conclusion of this report is that The Warehouse can maximize its efficiency of its supply chain operations in New Zealand.

The report demonstrates in the integration part that usage of Electronic data interchange

References

Appendices (if any: Tables, Figures, workings or other relevant data)

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