Purchasing and Supply Chain Management - Essay Example

College: Purchasing and Supply Chain Management Introduction Blacks Leisure group is a British outdoor retailer that deals with a range of leisure products and services encompassing horse racing, casinos, water sports, fitness classes, bird watching, cinemas, land sports, music concerts, videogames, among others. These products falls into four major categories, namely, recreation, tourism, sports and hospitality. The group is currently running in one of the most competitive industries. In order for the Blacks to remain the market leaders, it is absolutely necessary for it to get acquainted with consumer preferences, industry trends and competition and also consumer preferences. This article shall focus on the matters regarding the competitive edge in the industry with respect to the group’s purchasing and supply chain management. Body Purchasing and supply chain management entails the performance and coordination of numerous activities that takes place both inside and outside an organisation. Research reveals that besides the supply chain that exists within an organisation, there has to be at least one supply chain with another organization. Further, studies reveal that “the structure of activities within and between companies is a critical cornerstone of creating unique and superior supply chain performance” (Lambert 2005). For Blacks Leisure Group to have an effective purchasing and supply chain management, key players of the chain should be incorporated with the business processes. The company’s processes should be standardised to ensure that there is harmony in linking up processes by purchase and supply chain managers of different organisations. As earlier mentioned, Leisure industry is very competitive and like any other business in the leisure industry, it is critical for Blacks to develop and sustain competitive advantage. To begin with, Leisure companies throughout the world are now facing enormous challenges because of the globalisation as a result of the enhanced connectivity brought about by the improved technology and the use of internet in doing business. Consequently, Blacks is currently facing very stiff competition from companies from the rapidly industrialised nations like the United States and those from Asian continent. These rival companies, most of which began less than two decades ago, are now tapping into the Blacks market in their quest to spread out their operation base. This may be mainly attributed to more efficient customer service and better distribution channels, networks and transportation as well as enhanced inventory management, material handling and effective communication on the side of the rival companies. Initially companies were mainly concerned with their customers alone. However, it is rather obvious that the markets have now evolved and Blacks need to change its approach accordingly. Considering that competition may have dire effects on the group like profit declines and being driven out of the business, efforts should be geared towards effective management of their brands and setting up proper market positions. The modern society is a “now society” in that just like other customers, leisure consumers also want services and products instantly and in the most convenient means possible. As a result, majority of the customers have opted for internet business involving online transactions and thus abandoning tangible companies such as the Blacks Leisure Group. To remain relevant and profitable in the market, Blacks should exploit more on the online business given that marketing environment has changed substantially. Companies that have ventured into online marketing are now posing real competition to Black’s market and are in fact threatening to force them out of the business. It is therefore critical for the Blacks to uphold competitive edge over the online companies by broadening its distribution base in an economical manner, a strategy which is utilised by the rival companies. In addition, the Blacks should diversify their products and brands to enable it compete effectively with bigger leisure companies which have stronger company image and bigger brand names (Grant 2005). Considering that such an industry, with monopolistic competition, faces challenges of diverse dynamics, exit and entry barriers should first be considered cautiously. The fact that the capital needed to venture into a leisure industry is relatively low and patent issues being of no major concern to the industry has made the entry barriers to the leisure industry to be very minimal. On the other hand, the exit barrier is quite high as a result of a significantly low value of the assets when a company decides to move out of the industry. For blacks to be the market leader, they should consider these dynamics and align itself appropriately. Globalisation has had major influence on the leisure industry. Consequently, competition in leisure companies is now done on an international platform. Globalisation has shaped most of the key business undertakings including marketing approaches, services and other company activities. Since Black Leisure Group also relies on foreign markets, its marketing techniques should consequently be modified to fit with the needs of the globalised market. By doing so, the company would be able to effectively compete with other players within the leisure industry by penetrating other market divisions (Aaker 1984). Competition as defined by marketers, means any entity that addresses similar customer requirements. Therefore, for Blacks Leisure Group, the competitors are not only the companies that offer leisure services but also those that address similar consumer needs like music companies, movie companies, tennis operators, movie companies, casinos among others. It therefore becomes absolutely necessary for the Blacks to view the competitors in a broader perspective especially in the modern society whereby there is a significant change in the marketing environment. A crucial step after ascertaining the competitors is to assess the strong points, tactics and goals that are required by the Blacks Leisure Group to uphold a competitive edge within its sphere of influence (Barney 1991). It is also vital for the company to establish competitor companies that apply strategies that are similar to its own. A competitor that has a wider line, excellent services, same costs and price ranges as compared to the Blacks Leisure Group, would certainly pose a greater competition and in most cases tends to have similar strategies. Recommendations and Conclusions The black Leisure Group’s initiative to make investment in new stores has yielded positive results. This strategic move has seen the company increase its outdoor business by 12.9% with 10.2% increase in like-for-like sales. Upon implementing its turnaround strategy, the group opened 12 new stores that have had strong sales representing approximately 10% of the overall group sales. Going by the Blacks impressive performance which is largely attributed to the restructuring and new stores, it is highly recommended that the Group goes ahead with the plan of opening another new store and the conversion of one of the millets into the latest Blacks store format in February 2011. (Neil Gillis, Retailbulletin) Furthermore, Blacks needs to ensure that proper logistics strategy is developed to enhance excellent customer service. In fact ‘the main objective of logistics in retail purchasing and supply chain management is to satisfy the customers’ (Christopher 2005). To achieve outstanding customer service standards, the manufacturer, in its line of customers that ends up with the shopper, needs to regard the wholesaler as the initial customer. On the other hand, the wholesaler needs to consider the retailer as the customer. To stand out from its competitors, Blacks needs to identify the customer service needs and objectives then ascertain the lifetime value of its customers as well as to set priorities and customer service standards in designing an effective logistics system. In addition to that, Blacks needs to carry out an in-depth analysis of its distribution channels, networks and transportation. Distribution channel should be put in place in the initial stages of distribution planning and marketing policy to ensure that products are conveniently available to potential consumers. Different modes of transport including road, rail, air and water have to be evaluated carefully. A strategy that provides an effective and efficient transportation system is then formulated and adopted. Finally, Blacks Leisure Group needs to streamline the material handling procedures in order to realise significant cost reduction by properly packaging goods in standard loads. The group also needs to assess its stockholding situation, ordering situation and future demands to ensure that both the minimum stock to meet the immediate customer requirement and the fluctuation in demand are well catered for through an effective inventory management. It is also crucial for Blacks to make sure that adequate investment is made on its information and communication technology systems such that there is an effective communication and sharing of data in all parts of the business. Besides acting as a triggering mechanism in the supply chain and the company, communication would also increase significantly the efficiency of the warehouse management systems, transport management systems as well as stock management system. Studies have found that the most efficient supply chains are being driven by information rather than inventory. 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