International Purchasing - Primark Stores Ltd - Case Study Example

International purchasing Introduction Primark Stores Ltd. is a subsidiary of Associated British Foods. Associated British Foods is a diversified international food, ingredients and retail group with global sales of £6.8bn, and 85,000 employees in 43 countries. Primark, targets young, fashion-conscious under 35's, offering them high quality, fashion basics at value for money prices. Almost half of sales are in Women’s wear. A quarter of sales is dedicated to Menswear and Children’s wear, with other items constituting the remaining sales. Buying and Merchandising teams in Reading and Dublin travel internationally to source and buy up-to-the-minute fashion basics that best reflect each season's key fashion trends. Primark's offer to the customer is one of high-quality merchandise, at value for money, backed by Primark's service promise. Primark prides itself on its loyal customer base. Products Stunningly designed high quality fashion clothes created to take on nature. Primark, targets young, fashion-conscious under 35's, offering them high quality, fashion basics at value for money prices. Almost half of sales are in Women’s wear. A quarter of sales is dedicated to Menswear and Children’s wear, with other items constituting the remaining sales. What does Primark Stand for? The answer is simple the spirit of ever-changing, of course. Their advertising has been created specifically to communicate this spirit to everyone and to encourage them to keep exploring and keep changing. Primark not only believes in making the best quality products but also creating outstanding communication ideas. It’s no wonder then that Primark products have been widely recognized in all over the world. Aim of the Research It is to provide a "Financial Times" style piece of interesting and original work of not more than 1500 words that assesses the supply chain issues facing Primark. To analyze whether the Corporate Strategy applied takes into consideration of all the components of BPM involved, so to improve the efficacy of the models. Objectives To evaluate and analyse the current problems by assessing the supply chain issues facing Primark. How does Primark influence the potential customers in the market? These strategies are formulated and implemented by firms which want to grow. Such firms have to maintain sustainable competitive advantage by delivering superior value to the customer. Although it is difficult for any firm to be an ideal growth business, it is worth attempting to reach that ideal. (W.J. Hopp and M.L. Spearman. Factory Physics: Foundations of Manufacturing Management. Irwin, McGraw-Hill, 1996. ) Depending on the recent ethical issues the company has implemented a new Code of Conduct as: Employment is freely chosen Freedom of association and the right to collective bargaining are respected Working conditions are safe and hygienic Child labour shall not be used Living wages are paid Working hours are not excessive No discrimination is practised Regular employment is provided No harsh or inhumane treatment is allowed Quality-cost Link Another strategy which is very successfully followed by several fast growth small scale enterprises is cost leadership. Developing high quality products is certainly a rewarding strategy under normal conditions, but will be counterproductive unless the market is ready to receive it. In other words, entrepreneurs have to find an optimum mix of quality and cost strategies. Here in the company this turns to be the greatest achievement. Networking Networking should emerge itself as a system to be very effective in the long run. The style and culture of the personnel would influence it. Networks can be built up for both operating and strategic purposes. Primark used the vital strategy and they cannot be opportunistic in developing and maintaining networks. It always has a 'quid pro quo' sense and therefore all the parties involved in a network should stand to benefit materially or emotionally. Time Earlier it was briefly mentioned that a fast growth paced Primark was able to respond to customer requests fast. In these days of increasing competition, entrepreneurs can build competitive advantage based on time, shorter the time, better it is. The Need for Strategic Planning Strategies of one’s own will not make any firm fast growth oriented. Organisation structure and systems also play significant roles in turning a strategy successful. These three things - namely, analysis of the market demand, the competitive situation, and the trade practices — Primark utilised very much are important for sound market assessment. (Jeremy F. Shapiro. Modeling the Supply Chain. Duxbury Thomson Learning, 2001. ) Strength, Weakness and Opportunities of Primark Strengths An excellent team of professionals A manufacturing base in terms of office space, equipment and machinery, Good contacts of partners with business world. Self generated export business and hence first hand knowledge of the foreign buyers and the markets. Weakness Product Portfolio: Though so far has been able to generate sales from only two lines, but the lines have very narrow product-market scope and could prove vulnerable in the long term. A balanced portfolio could be one which would enable Primark to generate sufficient funds to achieve its growth and the present objectives. Opportunities Global Aspiration The existing ethical beliefs that will help Primark push the frontiers of the style and quality to bring you only the best. With a number of showrooms already opened and opening in cities around the world, Primark is truly becoming a global brand. Supply chain management (SCM) Supply chain management (SCM) is a strategic tool employed by present day business to efficiently integrate suppliers, manufacturers, warehouses, and customers so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time in order to minimize system wide costs while satisfying service-level requirements. Here in Primark Supply chain management (SCM) is a strategic tool employed by present day business to efficiently integrate suppliers, manufacturers, warehouses, and customers so that merchandise is produced and distributed at the right quantities, to the right locations, and at the right time in order to minimize system wide costs while satisfying service-level requirements . To minimize wastages meet up with customers demand and reduced lead time goods must be stored in a warehouse at the right quantity and within the right time. (Y. Narahari and S. Biswas. Supply Chain Management: Models and Decision Making) RESEARCH QUESTION: To analyze whether the Corporate Strategy applied takes into consideration of all the components of BPM involved, so improving the efficacy of the models and to evaluate and analyse the current problems associated with the supply of shoes and garments from Primark. EVALUATION: In a competitive environment, maintaining leadership is not easy. New substitutes and products made using new technologies would keep entering the market eroding competitiveness of existing firms. Under such circumstances, constant product improvement becomes essential to maintain product differentiation. Even in fields where competition is limited, it is worth attempting technological improvements either for cost reduction or product improvement. This means that the experience curve of such firms keep shifting continuously. REFLECTION: Looking back on my action with the benefit of data, it can be seen that the following aspect can be well sort out by doing the research. By analysing the Corporate Strategy applied takes into consideration of all the components of BPM involved, so improving the efficacy of the models and to evaluate and analyse the current problems associated with the supply of shoes and garments from Primark. This can be well tackled by applying the given strategies. Inventory allocation and transportation scheduling for logistics of network in Primark Baseline NCL Primark’s Locations of supplies Centralized at BSB Partially distributed—some part types are carried on board Primark’s Supply network Top-down hierarchy Flexible: any truck can serve any supply chain Primark’s Method of distribution Daily batches using only per-battalion dedicated trucks Flexible-size batches using any truck in supply chain Primark’s Decision cycle 24 hours As often as one hour Primark’s Decision criteria First-come first-served and direct to the customer. Mathematical optimization used to maximize vehicle availability Primark’s operation in India Primark’s operation in India is fraught with a number a number of challenges, primarily the issue of child labour. The company can expose itself to using child to produce its products. In two Indian communities, child labor and debt bondage are estimated to impact thousands of children. After many measures that have been taken to end this problem, , child labor continues. In certain parts of the country children can be found working 10-15 hour a days for normally a paltry sum or sometimes no sum at all. Children often gets cuts and bruises on their hands and bodies while putting in that much of work. The company’s operation can be held responsible for human rights violations in the production of their goods. As a result of this greater level of accountability can be demanded from the company in terms of its supply chains, fair pricing to their suppliers, and independent monitoring throughout the entire supply chain. Conclusion The company Primark’s is one of the leading garments manufacturing company and having its own retail stores all over the World. Primark’s has plenty of retail stores, encompassing the urban and rural areas. The media plays a vital role in a product promotion and the fact encountered many a times is lack of the availability of goods after media promotion creating a bad image of the product or products promoted at discounted rates never reach the consumer during the discount periods. The research is to analyze the logistics or business process models adopted by the company. The general overview of the system adopted by the Primark according to information revealed by the supply chain management is that company at present has warehouses located at four different metropolitan cities and supply of the goods happen from these locations to direct retail outlets as per the order placed or anticipated orders. Anticipated orders many a times result into excess inventory. The need of the hour is to have the right inventory .Right inventory leaves more liquid cash into the hands of the company. The problems faced are cities close to the warehouses are able to get the goods, but the cities situated far away from the warehouse aren’t able to get the goods or receive their share of orders in time resulting in lack of sales and bad reputation for the company. The entire purpose is to understand the elements of business process models to develop a corporate strategy that would fulfil the goals of the organisation. The efficacy of logistics understands these elements as, what of the source that company lack need to be outsourced and what company has needs to be strengthened as early as possible. REFERENCES W.J. Hopp and M.L. Spearman. Factory Physics: Foundations of Manufacturing Management. Irwin, McGraw-Hill, 1996. Sridhar Tayur, Ram Ganeshan, Michael Magazine (editors). Quantitative Models for Supply Chain Management. Kluwer Academic Publishers, 1999. R.B. Handfield and E.L. Nochols, Jr. Introduction to Supply Chain Management. Prentice Hall, 1999. Jeremy F. Shapiro. Modeling the Supply Chain. Duxbury Thomson Learning, 2001. David Simchi Levi, Philip kaminsky, and Edith Simchi Levi. Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies. Irwin McGrawHill, 2000. Y. Narahari and S. Biswas. Supply Chain Management: Models and Decision Making Read More