corporate research project on e-supply chain in retail industry of australia
TRANSCRIPT
STUDY OF E – SUPPLY CHAIN
MGMT AND ITS IMPORTANCE IN
RETAIL INDUSTRY OF
AUSTRALIA
Anant Mathur | Prateek Parshwa | Sanket
Golechha
MGB JAN
‘14
AGENDA
Research Objectives
Literature Review
Secondary Research
FMCG Industry
IT Systems
Primary Research
Challenges in e-SCM
What can we expect in future
Research Methodology
Timeline
2
RESEARCH OBJECTIVES
To study e-Supply Chain Management and its
scope
To study the FMCG Industry of Australia
To study the importance of e-Supply Chain
Management in retail industry of Australia
3
WHAT IS SCM?
Management of upstream and downstream
relationships in order to deliver superior
customer value at less cost to the Supply
Chain as a whole (Christopher, 1998).
4
FACTORS IN SUPPLY CHAIN
NETWORK
Inventory
Transportation
Facilities and
Handling
Information
Technology
Response Time
Product Variety
Product Availability
Customer
Experience
Order Visibility
Return Ability
5
COST FACTORS SERVICE FACTORS
ELECTRONIC SUPPLY CHAIN
MANAGEMENT (WHAT)
By operating the overall solution plan via internet,
one integrates the product procedure from the
material supplier, manufacturer, wholesaler,
retailer to customer as a supply chain system
which allows the immediate sharing of
information such as production, stocks and
selling among the enterprise (Chang and Tsia,
2006)
6
EVOLUTION (WHEN)
Phase 1
• Warehousing and Transportation (till 1960)
Phase 2• Total Cost Management (till 1980)
Phase 3
• Integrated Logistics Management (till 1990)
Phase 4• Supply Chain Management (till 2000)
Phase 5• e-Supply Chain Management (from 2000)
7
FACTORS FOR EVOLUTION
OF
e-SUPPLY CHAIN (WHY) Additional cost reduction and improvements in the
process
Introduction of computerization for bettermanagement
Improve efficiency and agility for better demandplanning
Tendency for outsourcing non core activities of thebusiness
Explosive expansion of Global Commerce
To stay connected with the stake holders througha network
Information availability and visibility
8
BENEFITS OF e–SUPPLY
CHAIN
Lower cost by choosing from larger supplier base
Reduction in cycle time and inventories
Increasing efficiency and minimizing bullwhip
effect
Information visibility and sharing with real time
communication
Order tracking and faster delivery
Faster market adaptations with better forecasting
and demand planning
Cost savings and increased profits
9
IMPACT OF e-SCM
IT changes industry structure and rules ofcompetition
Creates competitive advantage
Creates business opportunities
Strategic planning with day to day centralizedoperations
Supply Chains have become less integratedand more market oriented
Change of power from seller to buyer
10
VALUE CHAIN OF SCM
AND e-SCM
Asset Core Competencie
s
Inputs and Raw Material
Product Offering
ChannelsThe
Customer
The Customer
ChannelsProduct Offering
Inputs and Raw Material
Asset Core Competencie
s
Traditional Supply Chain
Electronic Supply Chain
Source: Ivanovaska and Kaleshovaska, 2014
11
CURRENT RETAIL INDUSTRY
More than 133,000 retail outlets across the
country
Employs 1.2 million people; 10.5% of total
employment
GDP of 4.9% in 2009 – 10
13
Retail Environment 2009 2020 Forecast
Supermarket share of
top two players
78% (80-85)%
Pvt. Label share of
Supermarket Sales
25% (2010) 40%
Source: Productivity Commission Interim Report, 2014
PRIVATE LABEL
PERCEPTION ACROSS THE
WORLD
Source: The Nielsen Company, Global Online Survey, Q3 2010
14
STORE-BASED RETAILING
BRAND SHARES
(PERCENTAGE)BRAND COMPANY 2010 2011 2012 2013
Woolworths Woolworths Ltd. 16 16.2 16.7 17.1
Coles Wesfarmers Ltd. 11.8 12 12.4 12.6
IGA Metcash Ltd. 4.3 4.4 4.4 4.8
Metcash
Liquor
Metcash Ltd. 2.5 2.5 2.4 2.4
Bunnings Wesfarmers Ltd. 1.6 1.7 1.8 1.9
Big W Woolworths Ltd. 1.9 1.9 1.9 1.9
K-mart Wesfarmers Ltd. 1.9 1.8 1.9 1.9
Target Wesfarmers Ltd. 1.8 1.7 1.7 1.6
Aldi Aldi Stores 1.2 1.3 1.3 1.4
7-Eleven 7-Eleven Stores 0.7 0.8 0.8 0.8
Amcal Sigma Pharma. 0.5 0.5 0.5 0.6
Source: Euromonitor International from official Statistics, 2012
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RETAIL MARKET STRUCTURE
AND CONCENTRATION
Category Major supermarket chains share of
sales(approx.)
Packaged Groceries 70%
Fruits and Vegetables 50%
Fresh Meat 50%
Bakery Products 50%
Dairy Products 50-60%
Deli Products 50-60%
Eggs 50%
Source: Australian Competition and Consumer Commission, Inquiry into the competitiveness of retail prices of std.
groceries, July 2008
16
INDUSTRY TURNOVER
($Billion)
Source: ABS Catalogue Number 8155.0, Catalogue Number 7503.0, 2008-09
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WORKFORCE
PARTICIPATION
QUALIFICATIONS
Source: ABS Catalogue Number 6306.0, Employee Earnings and Hours, 2010
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SWOT ANALYSIS OF THE
INDUSTRY
Strengths
• Brand recognition of top players
• High exchange rate of AUD
• Greater knowledge of local market, customers and seasons
• Large bargaining power –squeeze the suppliers
Weaknesses
• Confined only to Australia and New Zealand
• Frequent price war due to absence of fixed retail prices
• High labourand occupancy costs
• Trading hours and other regulations
Opportunities
• Social Commerce
• Mobile Commerce
• Global Expansion
Threats
• Threat of new entrants (IKEA Group, Amazon, Costco)
• Rise of Private Label Brands
• Rise of e-Commerce
20
FUTURE OF THE INDUSTRY
Retail market to remain highly concentrated
between Coles and Woolworths and retain a
market share of 80%
Private Label to grow and earn a market share
of 40-50% by 2020
Imports are expected to increase by 25bn to
47bn by 2020.
Labour Costs are expected to increase by
3.6% per annum
21
Source : Australian Bureau of Statistics, 2012
RADIO FREQUENCY
IDENTIFICATION
RFID (Radio Frequency Identification) is a
technology that incorporates the use of
electromagnetic or electrostatic coupling in the
radio frequency (RF) portion of the
electromagnetic spectrum to uniquely identify an
object, animal, or person (Wamba and Boeck,
2008)
Uses in Retail Industry
Security
Real Time Data
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ENTERPRISE RESOURCE
PLANNING
Enterprise Resource Planning (ERP) systems
are software packages composed of several
modules, such as human resources, sales,
finance and production, providing cross-
organization integration of data through
embedded business Processes’ (Parr and
Shanks, 2000)
Uses in Retail Industry
Single control point
Inventory management and carrying cost
Data integrity/Consolidation
Standardization
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ELECTRONIC DATA
INTERCHANGE
EDI is the electronic transfer from computer to
computer of commercial or administrative
transactions using an agreed standard to
structure the transaction or message, data
between two machines’ (Rapporteurs, 1990)
Uses in Retail Industry
Data Security
Reduced paper work and errors
Fast data transfer
Enhanced trade relations
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POINT OF SALE
POS is defined as a system that provides a
unified order, payment and service experience
to customer at field location (Anand, 2009)
Uses in Retail Industry
Internal collaboration
Transactional data collection
Inventory information
Ease of check out
Ease of operations
26
ACADEMIC AND INDUSTRIAL
EXPERTS
Academic expert – Dr. Stephen Waters,
Sydney Business School
Academic expert – Dr. Rama K. Ramanathan,
University of Western Sydney
Industrial expert – Mr. Tarang Jain; Group
Procurement buyer, Woolworths Ltd.
Industrial expert – Mr. Naresh Rao; Owner,
Indian Groceries store
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RETAIL INDUSTRY
Increasing competition – Aldi, Costco, etc
Innovative strategies – Aldi
Low variety
Simplistic design of the store
Cheaper products
Innovative strategies – Costco
Customer lock-in
Bulk buying
Survival of small retailers is difficult
29
PREFERENCES OF
WOOLWORTHS
Contractual buying
Bulk purchasing
IT system compatibility
Minimum lead time
Procure to Pay system
30
ROLE OF ERP AT RETAIL
OUTLET
Product requirement
Communication of requirement list to
Distribution Centre
Communication through Electronic Data
Interchange
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ROLE OF ERP AT
DISTRIBUTION CENTRE
Receipt of requirement list from the retail outlet
Inventory check
Order placement
Generation of Purchase Order
Selection of Vendor
Interaction with Electronic Data Interchange
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ROLE OF EDI
Receipt of Purchase Order
Interact with vendor’s Electronic Data
Interchange
Communication of the order
Interaction with vendor’s ERP
34
ROLE OF RFID/BARCODE
Dispatch of product by vendor with
RFID/Barcode
Real time tracking of product movement
Safety and security of goods
Receipt of product at Distribution Centre
Product scanning through ERP
35
ROLE OF ERP (RECEIPT OF
ORDER)
Inventory update in the system
Assessment of retail outlet’s requirement
Dispatching products to retail outlets
Optimization of transportation
Communication through EDI
Receipt of order at retail outlet with RFID and
Barcodes
Inventory update at retail outlet
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ROLE OF POINT OF SALE
Generation of Sales Receipt
Maintenance of Cash register
Sales tracking
Real time Inventory updates
Interaction with Inventory Management
System/ERP
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OPERATIONS IN SMALL RETAIL
OUTLET
IT systems in use
Electronic Cash Register
Barcode scanning
Lesser inventory
Reliability on Human Resource
Cost conscious
38
CHALLENGES FACED
Obsolesce of existing system and right time to
upgrade
Increasing costs with better technology
Interference of other types of waves (Ultrasonic,
Micro) in RFID transmissions
Drop in efficiency of RFID when in contact with
water or metal
Training along with installation of new system
Dependency on other corresponding systems
Unforeseen IT failures reduces reliability
39
WHAT CAN WE EXPECT IN
FUTURE
Less dependency on Human Resource
Increasing reliance on Big Data
Virtual experience
40
RESEARCH METHODOLOGY
Interview with Supply
Chain Academic and
Industry experts
Interview Supply Chain
Managers of Retail
Outlets
Enquiry on the usage
and relevance of
Information Technology
in Supply Chain
Management
Information through
journals, books and
research papers
Visit to Australian
Statistical Centre
website for Australian
specific statistics
Referring articles on the
web for literature review
Primary Secondary
41
TIMELINE
19th May 2014
Team Formation
20th June 2014
Finalization of statement of Purpose
21st June 2014
Ongoing Literature Review
1st July 2014
Secondary Research
compilation
21st -25th July
2014
Primary Research
August 2014
Final Presentatio
n and submission of the report
42