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CIT & ECOMMERCE

REPORT

ON

SOURCING STRATEGIES

Submitted to:

Prof. Rajneesh ChauhanFORE School of Management, New Delhi

Submitted by:

GROUP7: The Imperials, FMG 22A

Aditya Jain (221012)Bhavnik Mittal (221037)Divya Gandhi (221041)Divya Sharma (221043)Drashti Desai(221044)Jodhbir Singh (221059)

FORE School of Management, New Delhi

December 10, 2013


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ACKNOWLEDGEMENT

We would like to take this opportunity to express our sincere thanks and gratitude for the help

and valuable guidance given by Prof. Rajneesh Chauhan, our faculty for CIT & Ecommerceat Fore School of Management, in completing our project successfully. We would also like to

place on record the sincere efforts taken by him in giving all minor details and practical

knowledge about the subject. We also wish to thank our batch mates of FMG 22 - A for their

invaluable motivation and support.

Group7: The Imperials

FMG 22 - A


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TABLE OF CONTENTS

TOPIC PAGE NO.

INTRODUCTION 4

EXECUTIVE SUMMARY 5

FRITO LAY 7

UNITED COLORS OF BENETTON 10

ZARA 13

MARKS AND SPENCERS16

WAL-MART 19

APPLE Inc. 22

COMPARISON 27

REFERENCES 28


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INTRODUCTION

Sourcingstrategy is an institutional procurement process that continuously improves and re-

evaluates the purchasing activities of a company. In a production environment, it is often

considered one component of supply chain management. Sourcing techniques are also

applied to non-traditional areas such as services or capital.

It is focused on the Total Cost of Ownership (TCO) incorporating customer needs,

organizational goals, and market conditions. Getting the best product/service at the best value

is the main aim. Sourcing strategies are driven by a rigorous and collaborative approach and

addresses all levers for savings. The Decisions are based on fact based analysis analysis and

market intelligence. It is a continuous process.

Advantages of sourcing strategies:

Best practice sharing Cost Saving Increase quality Standardize pricing Improve operational efficiency Access to new suppliers Create partnerships with suppliers

Objectives of sourcing strategies:

Reduction of cost while maintaining or improving quality Improve the value-to-price relationship Examine supplier relationships across the entire organization Leverage entire organizationsspend Understand category buying & management process to identify improvement

opportunities

Develop & implement multiyear contracts with standardized terms and conditionsacross the organisation

Share best practices across the organization


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EXECUTIVE SUMMARY

To understand the sourcing strategies in the industry, each member of the group has chosen a

company and thoroughly studied a companys sourcing strategies. A company always tries to

implement the best possible strategies for a given budget level. Integration of technology to

sourcing has made the companies reduce costs at various points and increase revenues to a

greater extent. We have chosen three Apparel Merchandising companies, a renowned multi

brand Retail Company, a Food and Beverages Company and a Consumer Electronics &

Software company who already have some diverse features in sourcing.

Frito-Layis the division ofPepsiCo that manufactures, markets and sellscorn chips,potato

chips and othersnack foods.The primary snack food brands produced under the Frito-Layname includeFritos corn chips,Cheetos cheese-flavored snacks,Doritos andTostitos tortilla

chips,Lay'spotato chips,Rold Goldpretzels,Rufflespotato chips andWalkerspotato crisps.

United Colours of Benetton, Benetton Group S.p.A. is a global fashion brand, based in

Treviso, Italy. The name comes from the Benetton family who founded the company in 1965.

Benetton Group is listed in Milan. Benetton has a network of over 6,500 stores in 120

countries.

Zarais aSpanish clothing and accessories retailer based inArteixo,Galicia,and founded in

1975 byAmancio Ortega andRosala Mera.It is theflagshipchain store of theInditex group,

The world's largest apparel retailer, the fashion group also owns brands such asMassimo

Dutti,Pull and Bear,Uterqe,Stradivarius andBershka.

Marks and Spencer plc is a major British multinational retailer headquartered in

theCity of Westminster,London, with 703 stores in the United Kingdom and 361 stores

spread across more than 40 countries. It specialises in the selling of clothing andluxury food

products. M&S was founded in 1884 byMichael Marks andThomas Spencer inLeeds.

Wal-Martis an Americanmultinational retail corporation that runs chains of large discount

department stores and warehouse stores. The company is theworld's second largest public

corporation,according to theFortune Global 500 list in 2013, thebiggest private employer in

the world with over two million employees, and is thelargest retailer in the world.Walmart
http://en.wikipedia.org/wiki/PepsiCohttp://en.wikipedia.org/wiki/Corn_chipshttp://en.wikipedia.org/wiki/Potato_chipshttp://en.wikipedia.org/wiki/Potato_chipshttp://en.wikipedia.org/wiki/Snack_foodshttp://en.wikipedia.org/wiki/Fritoshttp://en.wikipedia.org/wiki/Cheetoshttp://en.wikipedia.org/wiki/Doritoshttp://en.wikipedia.org/wiki/Tostitoshttp://en.wikipedia.org/wiki/Lay%27shttp://en.wikipedia.org/wiki/Rold_Goldhttp://en.wikipedia.org/wiki/Ruffleshttp://en.wikipedia.org/wiki/Walkers_(snack_foods)http://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Arteixohttp://en.wikipedia.org/wiki/Galicia_(Spain)http://en.wikipedia.org/wiki/Amancio_Ortegahttp://en.wikipedia.org/wiki/Rosal%C3%ADa_Merahttp://en.wikipedia.org/wiki/Flagshiphttp://en.wikipedia.org/wiki/Chain_storehttp://en.wikipedia.org/wiki/Inditexhttp://en.wikipedia.org/wiki/Massimo_Duttihttp://en.wikipedia.org/wiki/Massimo_Duttihttp://en.wikipedia.org/wiki/Pull_and_Bearhttp://en.wikipedia.org/wiki/Uterq%C3%BCehttp://en.wikipedia.org/wiki/Stradivarius_(Inditex)http://en.wikipedia.org/wiki/Bershkahttp://en.wikipedia.org/wiki/City_of_Westminsterhttp://en.wikipedia.org/wiki/Luxury_goodhttp://en.wikipedia.org/wiki/Michael_Markshttp://en.wikipedia.org/wiki/Thomas_Spencer_(Marks_and_Spencer)http://en.wikipedia.org/wiki/Leedshttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/List_of_companies_by_revenuehttp://en.wikipedia.org/wiki/List_of_companies_by_revenuehttp://en.wikipedia.org/wiki/Fortune_Global_500http://en.wikipedia.org/wiki/List_of_largest_employershttp://en.wikipedia.org/wiki/Retail#Global_top_five_retailershttp://en.wikipedia.org/wiki/Retail#Global_top_five_retailershttp://en.wikipedia.org/wiki/List_of_largest_employershttp://en.wikipedia.org/wiki/Fortune_Global_500http://en.wikipedia.org/wiki/List_of_companies_by_revenuehttp://en.wikipedia.org/wiki/List_of_companies_by_revenuehttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Leedshttp://en.wikipedia.org/wiki/Thomas_Spencer_(Marks_and_Spencer)http://en.wikipedia.org/wiki/Michael_Markshttp://en.wikipedia.org/wiki/Luxury_goodhttp://en.wikipedia.org/wiki/City_of_Westminsterhttp://en.wikipedia.org/wiki/Bershkahttp://en.wikipedia.org/wiki/Stradivarius_(Inditex)http://en.wikipedia.org/wiki/Uterq%C3%BCehttp://en.wikipedia.org/wiki/Pull_and_Bearhttp://en.wikipedia.org/wiki/Massimo_Duttihttp://en.wikipedia.org/wiki/Massimo_Duttihttp://en.wikipedia.org/wiki/Inditexhttp://en.wikipedia.org/wiki/Chain_storehttp://en.wikipedia.org/wiki/Flagshiphttp://en.wikipedia.org/wiki/Rosal%C3%ADa_Merahttp://en.wikipedia.org/wiki/Amancio_Ortegahttp://en.wikipedia.org/wiki/Galicia_(Spain)http://en.wikipedia.org/wiki/Arteixohttp://en.wikipedia.org/wiki/Spainhttp://en.wikipedia.org/wiki/Walkers_(snack_foods)http://en.wikipedia.org/wiki/Ruffleshttp://en.wikipedia.org/wiki/Rold_Goldhttp://en.wikipedia.org/wiki/Lay%27shttp://en.wikipedia.org/wiki/Tostitoshttp://en.wikipedia.org/wiki/Doritoshttp://en.wikipedia.org/wiki/Cheetoshttp://en.wikipedia.org/wiki/Fritoshttp://en.wikipedia.org/wiki/Snack_foodshttp://en.wikipedia.org/wiki/Potato_chipshttp://en.wikipedia.org/wiki/Potato_chipshttp://en.wikipedia.org/wiki/Corn_chipshttp://en.wikipedia.org/wiki/PepsiCo


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remains afamily-owned business,as the company is controlled by theWalton family,who

own over 50 percent of Walmart. It is also one of the world's most valuable companies.

Apple Inc., formerly Apple Computer, Inc., is an Americanmultinational

corporation headquartered inCupertino,California,[2]that designs, develops, and

sellsconsumer electronics,computer software and personal computers. Its best-known

hardware products are theMac line of computers, theiPod music player,

theiPhonesmartphone,and theiPadtablet computer.Its consumer software includes theOS

X andiOSoperating systems,theiTunes media browser, theSafari web browser, and

theiLife andiWork creativity and productivity suites.
http://en.wikipedia.org/wiki/Family_businesshttp://en.wikipedia.org/wiki/Walton_familyhttp://en.wikipedia.org/wiki/List_of_corporations_by_market_capitalizationhttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Cupertino,_Californiahttp://en.wikipedia.org/wiki/Californiahttp://en.wikipedia.org/wiki/Apple_Inc.#cite_note-Waymarkmark-2http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-Waymarkmark-2http://en.wikipedia.org/wiki/Apple_Inc.#cite_note-Waymarkmark-2http://en.wikipedia.org/wiki/Consumer_electronicshttp://en.wikipedia.org/wiki/Macintoshhttp://en.wikipedia.org/wiki/IPodhttp://en.wikipedia.org/wiki/IPhonehttp://en.wikipedia.org/wiki/Smartphonehttp://en.wikipedia.org/wiki/IPadhttp://en.wikipedia.org/wiki/Tablet_computerhttp://en.wikipedia.org/wiki/OS_Xhttp://en.wikipedia.org/wiki/OS_Xhttp://en.wikipedia.org/wiki/IOShttp://en.wikipedia.org/wiki/Operating_systemhttp://en.wikipedia.org/wiki/ITuneshttp://en.wikipedia.org/wiki/Safari_(web_browser)http://en.wikipedia.org/wiki/ILifehttp://en.wikipedia.org/wiki/IWorkhttp://en.wikipedia.org/wiki/IWorkhttp://en.wikipedia.org/wiki/ILifehttp://en.wikipedia.org/wiki/Safari_(web_browser)http://en.wikipedia.org/wiki/ITuneshttp://en.wikipedia.org/wiki/Operating_systemhttp://en.wikipedia.org/wiki/IOShttp://en.wikipedia.org/wiki/OS_Xhttp://en.wikipedia.org/wiki/OS_Xhttp://en.wikipedia.org/wiki/Tablet_computerhttp://en.wikipedia.org/wiki/IPadhttp://en.wikipedia.org/wiki/Smartphonehttp://en.wikipedia.org/wiki/IPhonehttp://en.wikipedia.org/wiki/IPodhttp://en.wikipedia.org/wiki/Macintoshhttp://en.wikipedia.org/wiki/Consumer_electronicshttp://en.wikipedia.org/wiki/Apple_Inc.#cite_note-Waymarkmark-2http://en.wikipedia.org/wiki/Californiahttp://en.wikipedia.org/wiki/Cupertino,_Californiahttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/Multinational_corporationhttp://en.wikipedia.org/wiki/List_of_corporations_by_market_capitalizationhttp://en.wikipedia.org/wiki/Walton_familyhttp://en.wikipedia.org/wiki/Family_business


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FRITO LAY

COMPANY PROFILE

Frito-Lay North America is the division of PepsiCo that manufactures, markets and sells corn

chips, potato chips and other snack foods.

The primary snack food brands produced under the Frito-Lay name include Fritos corn chips,

Cheetos cheese-flavored snacks, Doritos and Tostitos tortilla chips, Lay's potato chips, Rold

Gold pretzels, Ruffles potato chips and Walkers potato crisps (Europe)each of which

generated annual worldwide sales over $1 billion in 2009.

Frito-Lay began in the early 1930s as two separate companies, The Frito Company and H.W.

Lay & Company. The two merged in 1961 to form Frito-Lay, Inc. Four years later, in 1965,

Frito-Lay, Inc. merged with the Pepsi-Cola Company, resulting in the formation of PepsiCo,

Inc. Since that time, Frito-Lay has operated as a wholly owned subsidiary of PepsiCo.

Through Frito-Lay, PepsiCo is the largest globally distributed snack food company in the

world, with sales of its products in 2009 comprising 40 percent of all "savory snacks" sold in

the United States and 30 percent of the non-U.S. market. Frito-Lay North America accounts

for 31 percent of PepsiCo's annual sales.

COMPETITORS

FritoLay has competition in the snack food and potato chips category. Some of the major

competitors of FritoLay are:

ITCs Bingo ITCs Hippo Haldirams Chips Haldirams Boletos Haldirams Takatak Nachos


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TECHNOLOGY

FritoLay uses the following technology in its production and operations:

Uses automated machines to ensure efficient Inventory Management and low costso Automated machines helps FritoLay to reduce labour costs and time spent on

checking inventory and stocking it.

International patent for a method to reduce oil content in chips by a thirdo FritoLay uses worldclass technology that reduces the oil content in products to

give the image of healthy products to its customers.

Built Knowledge Management Portal on corporate intraneto This helps the employees to share information with each other in real-time

basis

Uses automated inspection machine to ensure qualityo Robotic machines check whether the product is upto quality or not at every

stage of production

Uses robotic machines to ensure fast and efficient productiono The whole production is automated which ensures that the product is produced

in 5 minutes from raw materials to final product.

Uses Java and IBMs DB2 database Technology

SUPPLIER ENVIRONMENT

Encourages Women and Minority owned suppliers Plants located close to farmers fields to reduce cost of transportation Long Term contracts with suppliers to reduce cost Spent over $2.1 Billion with M/WBEs Supplier Diversity Program for economic development of communities


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SOURCING STRATEGY

Frito Lay enters into contracts with farmers and provides seeds, saplings etc. All produce is planned 100-120 days in advance based on forecasting model. Technical team conducts regular supervision of the crops It buys the produce at a predetermined rate, at a predetermined time and according to

its specifications

This is a win-win for both company and the farmer as it ensures quality and sale of allproduce


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UNITED COLORS OF BENETTON

THE GROUP

Benetton Group is one of the best-known fashion companies in the world. Present in 120 countries with a network of over 6,500 stores. It is a responsible group with a watchful eye to the environment, to human dignity,

and to a society in transformation.

The Group has a consolidated identity characterized by color, authentic fashion, quality at

democratic prices and passion for its work. These values are reflected in the strong, dynamic

personality of the Groups brands:United Colors of Benetton,Undercolors of

Benetton, SisleyandPlaylife.

BUSINESS MODEL

The Group identifies sales locations using a flexible operational approach, applying market

development strategies through two different distribution channels: Wholesale and Retail.

WholesaleThe wholesale channel is based on a network of independent partners,

coordinated by independent sales representatives (agents) and a dedicated team of area

managers directly employed by Benetton Group.

RetailThe purpose of the retail distribution channel is to develop a presence in areas of high

growth potential not yet covered by partners and to open iconic sales outlets that are

attractive to end consumers and serve as a benchmark for the partner network.

LOGISTICS

Benetton Group has direct control of the logistics phase for both own-manufacturedand sourced products.

It has invested in modelling, organization, and automation of logistics processes inorder to completely integrate the entire production cycle, from client orders to

packing and delivery.


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Automated Sorting System

The state-of-the-art logistics operation at Castrette (Italy) has an innovative, fully automated

sorting system, whose propulsion is based on electromagnetic fields. Castrette alone can

handle individual orders for over 6,500 Benetton shops worldwide.

Folded and hanging garments are automatically sorted, packed into boxes and sent through a

one-kilometre tunnel to the Automated Distribution Centre.

Automated Distribution Centre

The Automated Distribution Centre covers an area of 30,000 square metres, with a total

capacity of 800,000 boxes, and can handle 120,000 incoming/outgoing boxes daily with a

workforce of only 28.

The finished product is sent directly to the Group's over 6,500 stores in 120 countries

worldwide.

SOURCING PLATFORM

The sourcing platform is characterised by the flexibility with which it responds to the Group's

production needs and by absolute levels of efficiency and effectiveness.

Benetton's production system has sites in Italy, Tunisia, the Mediterranean basin, Eastern

Europe and Asia, divided into industrialised and commercialised production.

Industrialised Model (~50% of the total)

(Italy, Eastern Europe, Tunisia and India).

Within the industrialised organisation, the most labour-intensive production phases(tailoring, finishing and ironing) are outsourced to small and medium-sized

enterprises (SMEs), directly controlled by our production sites in Italy and abroad.

Strategic and operational activities requiring large-scale automation (dying, weavingand quality control) are kept in-house.

Significant investments have been channelled into two areas of intervention in recent years:


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Expansion of production centres in Tunisia and Croatia, with complete productioncycles (from raw materials to the finished product).

Development of quality control systems to fully meet the strict standards required, inkeeping with the characteristics of the commercial offer.

Commercialised Model (~50% of the total)

(China, Southeast Asia, India and Turkey).

In addition to the industrialised part, the production platform also includesoutsourcing of production to China, India, South-East Asia and Turkey.

The constant search for new third-party suppliers allows the Group to maximise thebenefits and optimise costs, while maintaining a strict control of quality levels, thanks

to continuous checks and production coordination through locally based personnel.

PRODUCTION FLEXIBILITY

Benetton's industrial structure is based on a double supply chain, combining efficiency with

speed. The aim is to offer high-quality products at accessible prices, fulfilling the

expectations of increasingly sophisticated and demanding consumers, while optimising the

timing of the offer on the markets.

These key factors have been achieved through implementation of the double supply chain,

an industrial organisation combining efficiency with speed through two types of planning.

Sequential planning: a more measured and efficient system of activity, based on a sequential

approach aimed at minimising costs and optimising efficiency.

Integrated planning: a more rapid system of activity, with better response times, capable of

optimising R&D, product design, production activities and sales, through a response based on

parallel activities.


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ZARA

INTRODUCTION TO THE BRAND

Zara is a flagship brand of the Spanish retail group, Inditex group. Inditex is the world's

largest fashion group, which owns other fashion brands such as Pull & Bear, Massimo Dutti,

Bershka, Stradivarius, Oysho, Zara Home, Lefties and Uterqe. It was founded in 1975 by

Amancio Ortega, when he decided to expand his factory in Arteixo by opening a store in La

Corua. Zara has expanded since and currently operates a total of 1,671 stores in continents

such as Europe, America, Africa, Asia and Oceania, of which 333 of them are in Spain.

In The Beginning:

Founded by Amancio Ortega in 1975, Zara opened its first store in downtown La Corua,

Galicia, Spain. Its first store carried low-priced lookalike products of popular, higher-end

fashion brands. The store proved to be a success in the early 1980s, and Ortega began

opening more Zara stores throughout Spain.

Global Expansion:

It was only in 1988, Zara decided to venture into the international market. This was spurred

by Portuguese youths crossing the border into Spain to shop in Zara. Hence, Zara responded

by opening its first store in Oporto, Portugal. The expansion strategy proved to be a success.

Subsequently, new stores popped up in New York (1989) and Paris (1990), the fashion

capitals of the world. Since then, more stores have opened globally to a standing of 1,671

stores. Zara Company has become an icon for Spanish fashion. The corporation went public

in 2001.

Financials:

The Inditex group currently boasts revenue of 13.79 billion euros (2012), with profits

standing strong at 1.932 billion euros (2012).

COMPETITORS

H&M Mango United Colors of Benetton


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GAPSUPPLY CHAIN FACTS

Zara controls most of the steps on the supply-chain, designing, manufacturing, anddistributing its products

Zara set up its own factory in la corua in 1980, and upgraded to reverse milk-run-type production and distribution facilities in 1990

If a design doesn't sell well within a week, it is withdrawn from shops, further ordersare cancelled and a new design is pursued

Internet retailing is followed The product life cycle is short ZARA plans to achieve toxic-free production by 2013

SOURCING STRATEGY

Zaras method of sourcing product is very different from the traditional methods used in the

fashion industry because the company controls every part of the supply chain. Instead of

using an outsider to design the clothes, the firm uses 300 in-house designers and relies

heavily on store manager input. Using information technology the store managers track

selling trends real-time through IT systems connected to headquarters. Store managers detect

what customers are looking for but do not find in the stores. This collaborative effort between

store managers and the company designers results in an industry record: new products are

designed and placed in the stores within two weeks. Using e-collaboration tools, from store to

corporate design offices in Spain, Zara employees help forecast fashion trends instantly

giving Zara a competitive advantage in speed.

Speed it not limited to the design of new product. Vast quantities of neutral fabric are

stocked at production facilities, which can quickly be dyed or printed to speed up production

of better selling colours. While a small amount of fashion basics like tee shirts are ordered

from other sources, the vast majority of products are manufactured in Europe at Zara owned

facilities. All of the fast-fashion clothing going to Zaras stores passes through its own

distribution center in the Northern part of Spain, helping to consolidate shipping. Zara copied

JIT methods from Toyota and shipping on the continent takes only 24 hours. Asia and the


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US shipments take 48 hours. While shipping cost are higher using commercial airlines,

versus sea transportation, batches are smaller making this type of shipping cost effective.

The difference is not only fast, but fresh. Rather than the traditional six seasons each year,

the stores change clothing about twice a week. The collections are small and often times sell

out creating an air of get it now with shoppers and require few price reductions. Some best

selling items are reordered by store staff and replenished quickly. Store managers have a

vested stake in the sharing of ideas, since store sales weight heavily into their salaries.

However, while there is some localization, the majority 85 percent of product line up is

standard from country to country, with about 15 percent varying for local tastes.

A sophisticated inventory optimization model developed by faculty, graduates and a student

intern from MIT Sloan, supplements the managers intuition. The forecasting model is an

information system based on historical data that can calculate a demand estimate for

individual stores to maximize sales as a whole. Predictive modelling systems combined with

a strong fashion sense helps ZARA remain one of the most sought after brands.


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MARKS & SPENCER

ABOUT MARKS & SPENCER:

Marks and Spencer plc (also known as M&S; colloquially known as Marks and

Sparks, Marks's or, simply, Marks) is a major British multinational retailerheadquartered in theCity of Westminster,London, with 703 stores in the United

Kingdom and 361 stores spread across more than 40 countries. It specializes in the

selling of clothing andluxury food products. M&S was founded in 1884 byMichael

Marks andThomas Spencer inLeeds.

In 1998, it became the first British retailer to make a pre-tax profit of over 1 billion,

though a few years later it plunged into a crisis which lasted for several years. In

November 2009, it was announced thatMarc Bolland,formerly ofMorrisons,would

take over as chief executive from executive chairmanStuart Rose in early 2010; Rose

remained in the role of non-executive chairman until he was replaced by Robert

Swannell in January 2011.

SUPPLY CHAIN MANAGEMENT

a) Integration:The common objectives for Marks & Spencer and its suppliers are to:

increase sales minimize stocks

minimize commitment Maximize flexibility.

The key to doing this has been to manage, or integrate, the supply chain so that bothMarks & Spencer and its suppliers are working towards the same business objectives.Communication is therefore important between all parts of the chain to ensure that thedifferences between demand from customers and the suppliers ability to meet such

demand can be minimized.

b) Developing supplier relationships:Marks & Spencers ability to respond quickly to changing customer needs lies with

mutually advantageous relationships developed with suppliers throughout the supplychain. Many of the suppliers have seen their businesses grow alongside that of Marks& Spencer. The strength of these relationships and the mutual trust and support each

provides is a critical element for the development of each business.An important element in managing this supply chain is fairness. Working closelywith a limited number of suppliers involves helping each of them to meet their own

business aspirations, but not at the expense of other key suppliers. The starting pointfor managing the supply chain is to coordinate Marks & Spencers business strategywith each of the suppliers business plans. This will provide the structure and

direction for each supplier to follow.

Marks & Spencers strategic objectives are to develop all new products so that they:
http://en.wikipedia.org/wiki/City_of_Westminsterhttp://en.wikipedia.org/wiki/Luxury_goodhttp://en.wikipedia.org/wiki/Michael_Markshttp://en.wikipedia.org/wiki/Michael_Markshttp://en.wikipedia.org/wiki/Thomas_Spencer_(Marks_and_Spencer)http://en.wikipedia.org/wiki/Leedshttp://en.wikipedia.org/wiki/Marc_Bollandhttp://en.wikipedia.org/wiki/Morrisonshttp://en.wikipedia.org/wiki/Stuart_Rosehttp://en.wikipedia.org/wiki/Stuart_Rosehttp://en.wikipedia.org/wiki/Morrisonshttp://en.wikipedia.org/wiki/Marc_Bollandhttp://en.wikipedia.org/wiki/Leedshttp://en.wikipedia.org/wiki/Thomas_Spencer_(Marks_and_Spencer)http://en.wikipedia.org/wiki/Michael_Markshttp://en.wikipedia.org/wiki/Michael_Markshttp://en.wikipedia.org/wiki/Luxury_goodhttp://en.wikipedia.org/wiki/City_of_Westminster


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fully satisfy the customer in terms of comfort and fit are available at the required time are clearly specified so that they can be launched into any manufacturing site provide the maximum benefits permitted by each design.

The beginning of season strategy meeting provides suppliers with the opportunity to

discuss their expectations with Marks & Spencer, such as the areas of business theywould like to grow. It also enables Marks & Spencers decision-makers to providesuppliers with a realistic assessment of where they need to develop. Discussions atthis stage may broach issues such as how to encourage others to take their productsfurther forward and how to spread knowledge.At the heart of this process is integrity. It is important that all parties are dealt with ina fair and equitable way which sustains relationships to provide long-term businessopportunities and developments.

c) The buying process:Members of the buying team work with either primary suppliers who manufacturegarments or secondary suppliers who provide the fabrics as part of the range building

process. By working with suppliers throughout the buying process, Marks &Spencers contribution to the finished product is all encompassing. The buying team

comprises:1. Selectors - work closely with Marks & Spencers design group and suppliers,

and are responsible for offering choice to customers and delivering it intostores on time. Doing this involves considerable research in order to keep up-to-date with the latest trends.

2. Merchandisers - are responsible for profitability. Their role involvesnegotiating prices, estimating the quantities needed, sales analysis andscheduling the production with manufacturers and suppliers.

3. Technologists - develop and monitor specifications and quality controlsystems. They act as technical advisors to the selectors and merchandisers, aswell as to manufacturers. They also work on long-term projects withsecondary suppliers which provide the business with advances inmanufacturing and fabrics.

Plan A:

Marks & Spencer believes the five key areas that represent the biggest challenges itfaces as retailer are: Climate change, waste, natural resources and being affair partner.

In the five years since they launched Plan A, theyve managed to reduce the carbon

footprint even as the business has grown. And now theyve taken one step further; by

offsetting their remaining emissions to become carbon neutral in their Irish and UK

operations.

Under Plan A, since 2007, M&S has cut back its non-glass packaging across food,

clothing and home ware by an average of 26 percent. The weight of glass used in food

packaging has also been reduced, saving 1,100 tons a year. And clothing packaging

has decreased by 46 percent, including reductions achieved through hanger recycling.


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At M&S, they have very high standards when it comes to animal welfare, sustainable

fishing, and farming. All our fresh turkey, duck and Oakham chicken are grown on

specially selected farms in UK. In addition to higher welfare and free range turkey,

we also sell a range of organic and devon bronze whole birds.


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WAL-MART

Wal-Mart began with the goal to provide customers with the goods they wanted when and

where they wanted them. Wal-Mart then focused on developing cost structures that allowed it

to offer low everyday pricing. The key to achieving this goal was to make the way the

company replenishes inventory the centerpiece of its strategy, which relied on a logistics

technique known as Cross Docking. Using cross docking, products are routed from suppliers

to Wal-Marts warehouses, where they are then shipped to stores without sitting for long

periods of time in inventory. This strategy reduced Wal-Marts costs significantly and they

passed those savings on to their customers with highly competitive pricing. Wal-Mart then

concentrated on developing a more highly structured and advancedsupply chain

management strategy to exploit and enhance this competitive advantage.

Asuccessful supply chain management strategy can lead to lower product costs and highly

competitive pricing for the consumer.

Wal-Mart is the worlds largest and arguably most powerful retailer with:

1. Highest sales per square foot2. Inventory turnover, and3. Operating profit of any discount retailer.

Wal-Mart owes its transition from regional retailer to global powerhouse largely to changes

in and effective management of its supply chain.

Wal-Mart has been able to assume market leadership position primarily due to its efficient

integration of:

1. Suppliers2. Manufacturing,3. Warehousing4. Distribution to stores

Its strategy has four key components:

1. Vendor partnerships2. Cross docking and distribution management3. Technology
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4. Integration

1. Vendor Partnerships: Wal-Marts supply chain begins with strategic sourcing tofind products at the best price from suppliers who are in a position to ensure they can

meet demand. Wal-Mart establishes strategic partnerships with most of their vendors,

offering them the potential for long-term and high volume purchases in exchange for

the lowest possible prices.

Recently Wal-Mart announced its strategic partnership with Li & Fung, a Hong Kong

sourcing company.

2. Cross docking and distribution management:Suppliers then ship product to Wal-Marts distribution centers where the product is cross docked and then delivered to

Wal-Mart stores. Cross docking, distribution management, and transportation

management keep inventory and transportation costs down, reducing transportation

time and eliminating inefficiencies.

3. Technology: Technology serves as the foundation of their supply chain. Wal-Marthas the largest information technology infrastructure of any private company in the

world. Its state-of-the-art technology and network design allow Wal-Mart to

accurately forecast demand, track and predict inventory levels, create highly efficient

transportation routes, and manage customer relationships and service response

logistics.

A new global sourcing strategy adopted by Wal-Mart is been designed to reduce costs of

goods, accelerate speed to market, and improve the quality of products.

The strategy involves the creation of Global Merchandising Centers (GMCs), a change in

leadership and structure, and a strategic alliance with Li & Fung, a global sourcing

organization. Li & Fung is forming a new company to manage the Wal-Mart account, and is

expected to build capacity that would enable it to act as a buying agent for goods valued

around US$2 billion within the first year. The company believes that these centers will create

alignment between sourcing and merchandising and drive efficiencies across various

merchandise categories.

The company said the core of its overall global sourcing strategy would be to continue

increasing direct sourcing for the company's private brands.


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CONCLUSION

Wal-Marts sourcing strategy has provided the company with several sustainable competitive

advantages including lower product costs, reduced inventory carrying costs, improved in-

store variety and selection and highly competitive pricing for the consumer. This strategy has

helped Wal-Mart become a dominant force in a competitive global market. As technology

evolves, Wal-Mart continues to focus on innovative processes and systems to improve its

supply chain and achieve greater efficiency.


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APPLE Inc.

COMPANY PROFILE

Apple Inc., formerly Apple Computer, Inc., is an American multinational corporation

headquartered in Cupertino, California, that designs, develops, and sells consumer

electronics, computer software and personal computers. Its best-known hardware products are

the Mac line of computers, the iPod music player, the iPhone smartphone, and the iPad tablet

computer. Its consumer software includes the OS X and iOS operating systems, the iTunes

media browser, the Safari web browser, and the iLife and iWork creativity and productivity

suites.

The company was founded on April 1, 1976, and incorporated as Apple Computer, Inc. on

January 3, 1977. The word "Computer" was removed from its name on January 9, 2007, the

same day Steve Jobs introduced the iPhone, reflecting its shifted focus towards consumer

electronics.

Apple is the world's second-largest information technology company by revenue after

Samsung Electronics, and the world's third-largest mobile phone maker after Samsung andNokia. Fortune magazine named Apple the most admired company in the United States in

2008, and in the world from 2008 to 2012. As of May 2013, Apple maintains 408 retail stores

in fourteen countries as well as the online Apple Store and iTunes Store, the latter of which is

the world's largest music retailer.

COMPETITORS

Apple has competition in its smartphone, tablet, TV and MP3 player category. Some of the

major competitors of Apple are:

Samsung Microsoft Dell Nokia Sony HP


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Intel IBM Acer

SUPPLY CHAIN MANAGEMENT

A report by AMR research has named Apple as the company with the best supplychain practices in the world.

In a feature exploring the secret behind Apples success, it was found companysability to bring together two sides of the supply chain (digital and physical) efficiently

and at low cost.

DIGITAL SUPPLY CHAIN

It is a new media term that encompasses the process of the delivery of digital media, be it

music or video, by electronic means from the point of origin (content provider) to destination

(consumer).

1. The main processes of a digital supply chain are as follows:2. True on-demand product availability3. Ease of use and speed for content search and activation.4. Pricing and subscriptions5. Quality management built on licensing and refunds


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APPLES SOURCING STRATEGY - HOW DOES APPLE DO IT?

Hot products, $60 billion in cash, and it's a big company. Those three factors allow it to get

more of its fair share of components, and ultimately market share.

Apple aggressively uses its size and vast array of resources -- including its very deep pockets

-- to get the deals it wants with component makers. The company sends executives to its

Japanese suppliers literally with cash in hand to make sure supply remained adequate.

But Apple's key to supply-chain success isn't as simple. Part of the reason Apple wins in the

supply chain is simply because Apple is so successful overall.

In times of a shortage, suppliers are going to sell to their biggest customers first," said Tom

Dinges, senior electronics manufacturing consultant at IHS iSuppli.

Sales of Apple's devices have risen astronomically over the past several years, and the

company has grown to become one of the world's biggest component purchasers. But there

are lots of big companies out there. What separates Apple from the rest is its ability to sell a

lot of products while selling remarkably few different kinds of products.


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Apple predominately sells just five different gadgets -- iPad, iPhone, iPod, Mac and Apple

TV -- and a combined total of 15 different variations of those devices, excluding

modifications like the amount of available memory. That small handful of products shares

many parts common to all the devices. That makes Apple's supply chain among the most

precisely honed in the world.

For a company of Apple's size, no one out there sells so few different products. As a result,

Apple's sourcing strategy can be much more finely tuned than other companies with very

disparate products.

Further, in the electronics industry, most telephone handset vendors rely on one main source

for certain key components Apple has sourced its iPhone touchscreen display from four

suppliers, who bid each time Apple releases a factory order. By pitting suppliers against each

other, Apple maintains the upper hand and keeps its costs low.

In 2012 alone, Apple sold more than 120 million iPhones, 60 million iPads, 35 million iPods,

15 million Macsstaggering numbers, to say the least. The success of the worlds biggest

technology company has come on the back of a robust supply chain network. Foxconn, a

Taiwanese company, is one of its strategic supply partners that churn out tens of thousands of

its flagship products each day. Manufacturing for Apple isnt easy. Sales estimates are

difficult to forecast, and for such complex products, the time to market is extremely short. As

Apple needed Foxconn and Foxconn needed Apple, the relationship was mutually beneficial.

It was a fine example of procurement playing an instrumental role in managing growth.

Furthermore, Apple is planning to award more business to a relatively unknown company

called Pegatron. This company already manufactures iPad Minis and some versions of the

iPhone. It is perceived as a step towards achieving better stability in Apples supply chain in

the form of following pointers:

Risk Diversification: Addition of a new supplier will provide a greater flexibility andApple can react faster to supply chain disruptions, should they arise.

Capacity Management: Since Apples proprietary OS is closely linked to itshardware design, it needs to manage handset capacity issues as well. To succeed in

emerging markets such as China and India (one the worlds largest user base), Apple

needs to ramp up its production capacity rather quickly.


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Margins sustenance: With the advent of Android and successful market penetrationof Samsung and other competitors, Apple is planning to introduce stripped down

versions of its flagship products at reduced prices to increase market share.

Supplier Innovation: A new supplier (Pegatron) will also be more willing to investin capital to fund growth as opposed to a long serving incumbent who may have

reservations on the returns on such an investment.

Apple has been seen to willingly tweak procurement strategy and align with the larger

organizational strategy. It strongly underlines the companys commitment to innovation. This

is a classic example of procurement playing an instrumental role in managing growth.


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COMPARISON


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REFERENCES

1. http://ast.umich.edu/pdfs/What-is-strategic-sourcing-102811.pdf2. http://en.wikipedia.org/wiki/Zara_(retailer)#Manufacturing_and_distribution3. http://prezi.com/rgb8tcgpggj_/zara/4. http://zarafashion2013.wix.com/zara#!brand-position/c1q1p5. http://www.benettongroup.com/group/business/stores

ast.umich.edupdfsWhat-is-strategic-sourcing-2.pdf

6. www.fritolay.com7. filamentgroup.com/portfolio/frito_lay_inc/8. prezi.com/lho3iargxhwt/copy-of-frito-lay-business-model9. www.nytimes.com/.../business/frito-lay-strategy-aims-for-top-and-bottom-o. ..10.www.marketresearch.com/.../Frito-Lay-North-America-SWOT-7825429/11.http://www.benettongroup.com/value-chain/index.html
http://ast.umich.edu/pdfs/What-is-strategic-sourcing-102811.pdfhttp://en.wikipedia.org/wiki/Zara_(retailer)#Manufacturing_and_distributionhttp://prezi.com/rgb8tcgpggj_/zara/http://zarafashion2013.wix.com/zara#!brand-position/c1q1phttp://www.benettongroup.com/group/business/storeshttp://www.fritolay.com/http://www.nytimes.com/.../business/frito-lay-strategy-aims-for-top-and-bottom-ohttp://www.marketresearch.com/.../Frito-Lay-North-America-SWOT-7825429/http://www.marketresearch.com/.../Frito-Lay-North-America-SWOT-7825429/http://www.benettongroup.com/value-chain/index.htmlhttp://www.benettongroup.com/value-chain/index.htmlhttp://www.benettongroup.com/value-chain/index.htmlhttp://www.marketresearch.com/.../Frito-Lay-North-America-SWOT-7825429/http://www.nytimes.com/.../business/frito-lay-strategy-aims-for-top-and-bottom-ohttp://www.fritolay.com/http://www.benettongroup.com/group/business/storeshttp://zarafashion2013.wix.com/zara#!brand-position/c1q1phttp://prezi.com/rgb8tcgpggj_/zara/http://en.wikipedia.org/wiki/Zara_(retailer)#Manufacturing_and_distributionhttp://ast.umich.edu/pdfs/What-is-strategic-sourcing-102811.pdf

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