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Strategic Supply Chain Management

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ABSTRACT

Supply chain is one of the most important concerns for any organization. It is the best way through which firms can effectively cover required market area and also set the availability of products at the particular location. Further, it is being determined that for any company pursuing global growth today, supply chain is becoming important for competitive advantage. In this regard, the present study is based on the case study of Londis which is mainly a convenience stores franchises operating in UK. Moreover, study also analyses the strategic role of Londis within its supply chain and assesses its operation in terms of its supply chain strategy. Convenient store of Londis supply chain management strives to control the product quality as well as their inventory level, time and expenses. This market is facing a profound change within their area of field. In this, consumers are more demanding and the competition is increasing on rapid pace.

The total business operation of Londis is very similar to the group of Premier and family shopper network. For this, they have developed their supply chain strategy on the basis of their business operations. There are mainly three types of supply chain strategy i.e. the lean supply chain, agile supply chain and Leagile supply chain strategy. Londis stores all the goods and services of different retailers within their warehouse. From these warehouses the total products are transferring to the main store location by the central hub. This is the very smooth process followed by Londis and helps in ensuring smooth running of business. Further, this study also concludes that Londis follows agility approach through which they are able to compete against the giant retail stores of UK. They serve all their business operations as a premier and family shopper network.

CHAPTER 1

1.1 Background

The global landscape has changed dramatically as strategic supply chain management has established itself as the authority on creating value and achieving higher competitive advantage from their supply chain management process. This process is becoming more challenging and critical to the bottom line due to shorter economic cycles, more frequent natural disasters and higher costs in low cost countries. Further, it is being determined that for any company pursuing global growth today, supply chain is becoming important for competitive advantage (Mentzer, Myers and Stank, 2006). In this regard, the present study is based on the case study of Londis which is mainly a convenience stores franchises operating in UK. Moreover, study also analyses the strategic role of Londis within its supply chain and assesses its operation in terms of its supply chain strategy.

1.2 Introduction to supply chain management and logistics

Supply chain is one of the most important concerns for any organization. It is the best way through which firms can effectively cover required market area and also set the availability of products at the particular location. Londis became a part of Booker group in the year 2015. The company was established in the year 1959 by a group of progressive independent retail grocers (Bååth, 2008). Now they are providing value added services to their customers and attract them on a large scale. The main aim behind establishing company is to develop a fully operational delivered wholesale company. The whole firm is jointly owned by different retailers which they serve. The main objective of the company is to serve best marketing, store development, purchasing, IT and supply chain support. It also allows different firms to grow their businesses and secure their futures in today’s rapidly expanding convenience market.
Convenient store of Londis supply chain management strives to control the product quality as well as their inventory level, time and expenses. This market is facing a profound change within their area of field. In this, consumers are more demanding and the competition is increasing on rapid pace (Shah, 2009). Booker is one of the leading food wholesalers of UK and they are committed to grow the Londis and Budgens brands. Supply chain is the total network of facilities and distribution options. It mainly ensures reaching right product at right place at right time as well (Berman, 2007).

1.3 Introduction to Londis

In this regard, the present study is based on the case study of Londis. It is chain of convenience stores franchises operating in UK and serve high class services to their customers from several different fields as well. The name Londis is a contraction of “London District stores” which is a kind of different departmental stores. They mainly work with in a partnership with independent convenience retailers. Londis is a retail chain of almost 1,630 convenience stores. It helps in growing sales as well as maximising profitability as well. Further, the present study is based on proper evaluation of a supply chain organization. It is a part of supply network and helps in attaining most suitable results (Giunipero, 2009).

CHAPTER 2

2.1 Londis Current SCM operations model

Supply chain management basically operates in three levels i.e. strategic, tactical and operational level. At the level of strategic supply chain, management team of company makes high level of strategic supply chain decisions (Coyle and et.al, 2008). Within the supply chain of Londis they must take decisions that are relevant to the whole organization. This whole supply chain must reflect the overall corporate strategy which the organization is following.

Londis is a retail chain of almost 1,630 convenience stores and on the other hand, Budgens is a franchised chain of different grocery stores. Booker the UK's biggest cash-and-carry operator plans to develop both these stores alongside its retail brands premier and family shopper as well (Sople, 2000). Their supply chain will be used to deliver various items and goods to Booker retail customers and improving utilization. Basically, the company wants to retain their customers by maintaining their quality of services.
They have set a clear supply chain strategy with differentiated service offerings. The main concern of company is to provide different services to their customers so that they can easily enhance their sales as well as profit margin. In addition to this, it can be determine that delivery is the main term of service and it is essential for companies to optimize the balance of cost (Delfmann, 2007). Londis have set a trend as their strategic role in which they can determine the logistics for fast moving consumer goods and retail. Within this trend, they need to enable appropriate collaboration between all their partners such as Budgens. It requires proper collaboration for their appropriate supply chain. In this, they need to involve vendors, production plants, transportation and retail as well. Within this area of field it can be determine that retail supply chain covers up the major issues such as risk management, response and lead-time (Shah, 2009).

Further, company need to set best strategies through which they can identify quick wins and potential improvements. Some of the most commons steps are follows:

  • Aligning the supply chain with whole business strategy of company
  • The core strategic vision
  • Use of supply chain to compete
  • Key elements of strategic role of supply chain
  • Test of a good supply chain strategy

2.2 Pros and cons of current model

There is a main role of strategy evaluation within the supply chain of organization. With the current supply chain model of Londis there are some pros and cons which are still available such as:

Pros

Supply chain strategy of Londis mainly results in value creation for the organization and maintains their higher market share (Giunipero, 2009). It is quite essential for the company to understand their business strategy and decide how they compete with other brands as well. In this way, it can be determined that Londis can select best supply chain strategy. Strategic role of Londis can be presented by the implementation plan. Under this, supply chain strategy is directly tied with the business strategy. The whole development of implementation plan should include several steps under which all the activities must be briefed out. In addition to this, roles and responsibilities as well as a corresponding timeline and performance metrics need to be identified. In addition to this, efficient supply management of Londis helps them in running out the tangible business and sharp focus on revenue growth, better asset utilization as well as cost reduction.

The company is quite efficient in performing their role and maintain appropriate supply chain of their firm (Rushton and Walker, 2007). In this way, it can be determine that they can easily provide value added services to their customers and maintain their profit margin as well as sales. Londis need to assess its business operations in terms of supply chain strategy. This can be defined as a critical backbone of business organizations today. They mainly serve their business operations in different departments.

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The total business operation of Londis is very similar to the group of Premier and family shopper network. For this, they have developed their supply chain strategy on the basis of their business operations. In this, the whole layout of the company has been set with the fresh goods and grocery products display (Li, 2007). The store has been set within the convenient location so that people can easily reach out to them. The whole business operations are quite smooth and they can easily maintain these operations on the basis of their set strategy. The whole premier and family shopper network presents the ambience in which more number of customers is attracted towards it. They totally owned on a franchise based in which they use to present different outlets of different retailers as well. In addition to this, the total store is controlled by grocer-owned wholesaler ADM Londis Plc. An operation manager is handling all the queries regarding the supply chain process of Londis. Different store managers give their different rating to this store and keep their concern on the top shop as well.

Cons

While delegating their responsibilities it is quite essential for company to establish sub team in order to sphere the execution and provide project management responsibilities. It is the best way through which company can easily resolve any type of issues and maintain their track status as well.
Managing risk is one of the major issues assessed in their supply chain operational model. Due to the, increasing complexity is one of the major issue that continuous to increase the number of ways. Within the supply chain process of Londis it has been founded that company needs to go through the greater quality with faster and efficient ways to beat the competitors. In this context it can be determine that supply chain operational model of Londis includes the whole process related to the material flows, information flows as well as financial flows. In case of having issues in the overall process the information and financial flows might get hampered. It is the main issue which might leads to decrease the overall market share of company. Further, the true integration as well as customer management is not defined appropriately.

CHAPTER 3

3.1 Comparison of Londis supply chain strategy against a comprehensive Literature Review

According to Mentzer, Myers and Stank (2006) supply chain management is a challenging concept as well as critical success factor for today’s business. It helps the companies in attaining higher competitive advantage as well as maintaining higher profit margin. As per the importance of supply chain management, most of the companies nowadays are looking for various ways through which they can improve their performance. Ross (2013) in his article stated that company can easily specify their profit margin by the way of selecting best supply chain management strategy. From this statement, it has been founded that by making partnership with the Budgens, Londis is able to provide high class services. In addition to this, the total supply chain process is quite authentic and the total storage of good takes place at the warehouses of company. Different retailers can supply their products on the warehouse of Londis. According to Munson (2013) the whole supply chain management process encompasses the planning and management of all the activities involved in sourcing and procurement. It highly involves total collaboration with the channel partners and it can be suppliers, third party service providers and customers. However, the sales plan of Londis is based on the collaboration with suppliers, retailers as well as customers. The most important asset is customers and it is essential to provide them value added services as per the needs and demands of all the customers (Rhee and Mehra, 2006). The whole essence of Londis supply chain management integrates the supply and demand within and across the companies. The boundaries cover all the conventional retail stores and they can supply their goods in order to produce it within this store only. According to Plambeck (2012) demand management is the most important concept which helps the suppliers to understand the customer’s buying process as well as to build better customer relationship. By identifying the needs and demands of all the suppliers can easily provide them quality services and goods as per their needs. Rhee and Mehra (2006) in his study presented the basic four decisions and activity area which within the integrated supply chain process such as:

  • Appropriate configuration of product and network which mainly consist of various decisions of the main rules of company
  • Formation of the product network which involves the warehousing locations and their capabilities
  • Proper product designing and abilities of suppliers as well
  • Process optimization and the total inventory level in the cost effective way as well

Further, companies are required to take appropriate strategic decisions that stay long term and deal with the high complexity and future risks as well. Poirier (2000) in his study founded that there are some of the most important criteria which help in determining supply chain includes:

  • Product
  • Demand
  • Replenishment lead times
  • Product life cycle
  • Nature of pull based supply chain

One of the most important processes is to go through the nature of business. Londis provides convenient facilities of their entire customer where they can shop any type of item from one store (Packowski, 2013). At the time of purchasing there are various factors which attract them most towards the company. Within this area, it can be determine that the most crucial factor is maintaining better customer supplier relationship. By going through the needs of customers Londis can easily provide appropriate services and products to their customers. According to Munson (2013) there are mainly three types of supply chain strategy such as:

The lean supply chain strategy: This strategy clearly defines the enhancement of value of the firm by eliminating of waste. The present strategy is highly focused with the cost reduction in their total operating process. In this way, most of the companies are using most basic form of data communication on inventories, delivery plans and fluctuation within the framework. According to Anderson (2011) within this strategy customers are delivered supply chain through the low production cost. It helps the company in maintaining their cost as well as sales and profit margin. There are several firms who are benefited from the lean strategies. However, most of the time they have been criticised due to the lack in human integration and being characterised by repetitive manufacturing.

Agile supply chain strategy: This strategy defines the appropriate response to the business challenges of profiting from rapidly changing global markets. Within this globalized world companies can continuously go with the high quality, high performance and customer oriented services (Bååth, 2008). This is the best form of approach through which companies can is easily supply high quality products as per their customers’ needs and demands. The main aim of this strategy is to build defence against the competitors and a step forwards towards the innovation. Moreover Mentzer, Myers and Stank (2006) stated that agility is a most effective approach which is not only respond towards the changing market condition but also exploit several changing opportunities. In context of supply chain management it highly focused on “responsiveness”. Packowski (2013) stated that it defines the agility of supply chain as a whole and align the proper network and its business operations within these dynamic requirements of the customers. It is the most effective process by which company can measure their success growth and easily determine that how well the relationship involved in the process can be enhanced. It should be widely accepted and go through the business growth of company. Further, this strategy is considered to be a most suitable strategy for business firms.

Leagile supply chain: It can be described as a hybrid of lean and agile supply system which provides the appropriate advantages from both of these combinations. Poirier (2000) in study defines that one of the main objective behind this supply chain is to infuse the competitiveness within an organization in a cost effective manner. It can also be define as an integrated approach to supply chain design which is mainly focused with the supply chain re-engineering process.

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From the whole above process of different supply chain strategy it has been identified that lean strategy focuses on the waste elimination and achieving low cost delivery of a stable product (Delfmann, 2007). On the other hand, agility mainly responds to complexity and unpredictable changes. Further, from the whole above process it has been founded that Londis follows agility approach as it helps in seeking out various new and emerging opportunities. This process helps them in winning strategy for the growth and company can easily expand their area of sales and profit as well. Booker is the biggest food retailer which is buying the Budgens and Londis retail brands in Great Britain (Rhee and Mehra, 2006). Within this deal total supply has been shifted by the changing attributes of British consumers who increasingly prefer to do smaller trips to convenience stores rather than weekly visit the town markets. This is the place where customers can get all the required services. The best supply chain process is followed by Londis through which they have proven to managing the successful business operations. In addition to this, they are also helping all the independent retailers to come across and enhance their sales margin. With having this convenience store different retailers can sell their products to different customers throughout the Great Britain (Sople, 2000). An appropriate supply chain has been maintained among both the brands Budgens and Londis. With having proper supply chain in the UK they are able to increase their scale of working and efficiency. It might leads to resultant in the lower prices and enables their brand to compete against the rapid expansion of bigger supermarkets operator into the convenience market as well.

3.2 Conclusions

From the above report it has been concluded that maintain appropriate supply chain is the most important concern of any organization. With the help of this, they can smoothly run their business operations and provide value added services to their customers. Londis stores all the goods and services of different retailers within their warehouse. From these warehouses the total products are transferring to the main store location by the central hub. This is the very smooth process followed by Londis and helps in ensuring smooth running of business. Further, this study also concludes that Londis follows agility approach through which they are able to compete against the giant retail stores of UK. They serve all their business operations as a premier and family shopper network. It has been identified that strategic development plays a most important role within the supply chain process of Londis.

CHAPTER 4

REFERENCES

  • Bååth, H., 2008. Supply chain management ethics: conceptual framework and illustration. Supply Chain Management: An International Journal. 13(6). pp.398 – 405.
  • Berman., 2007. Retail Management: A Strategic Approach. Retail Management: A Strategic Approach. Pearson Education India.
  • Coyle and et.al., 2008. Supply Chain Management: A Logistics Perspective. Cengage Learning.
  • Delfmann, W., 2007. Managing Supply Chains: Challenges and Opportunities. Copenhagen Business School Press .
  • Giunipero, L., 2009. Supply management ethical responsibility: reputation and performance impacts. Supply Chain Management: An International Journal. 14(2). pp.99 – 108.
  • Lawrence, D. and Hill, E., 2000. Basics of Supply Chain Management. CRC Press.
  • Li, l., 2007. Supply Chain Management: Concepts, Techniques and Practices Enhancing the Value Through Collaboration. World Scientific.
  • Mentzer, T. J. Myers, B. M. and Stank, P. T., 2006. Handbook of Global Supply Chain Management. SAGE Publications.
  • Munson, C., 2013. The Supply Chain Management Casebook: Comprehensive Coverage and Best Practices in SCM. FT Press.
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