Operations and Supply Chain Management - Essay Example

? Case Analysis Consultancy Report on Operations and Supply Chain Management By of Institute Executive Summary This paper is an analytical report on operations and supply chain management of “X” Hypermarket in Australia. The report analyses an ideal location for a new hypermarket business in Australia given that other competitive businesses also exist and are well established. The report will asses some aspects of operations and supply chain management in terms of strategies to be adopted, supply chain design, supply chain planning, inventory and planning in retail and global operations, procurement management sustainable supply chain, demand forecasting, demand management, and product design supply chain. The paper will also asses some aspects of transport and distribution supply chain management, warehousing and material handling service operations, logistics outsourcing financial considerations, lean manufacturing human aspects of operations and supply chain management, quality management pedagogical issues, and maintenance research methodology in operations and supply chain management. It is worth noting that any of the above analysis will be done with an aim of developing a consultancy report to advice the management of the company about an appropriate “layout” for the proposed store. It is in this light that I will discuss the elements of a hypermarket layout plan in order to address all relevant considerations that should be put into practice to make easy the operations of such a business once in force. Introduction Studies have noted that the concept of operations and supply chain management has been emerging as a management issue of concern that organisations have sought to address to its conclusive end (Heiman and Nickerson, 2002, p.97; Singh and Power, 2009, p. 189). Horvath (2001, p. 205) observes that having come out as a dominant theme, supply chain integration is being considered to be of vital importance given the role it plays in business management. An organization's operations are strategically vital in the sense that, nearly all of the firms everyday activities are normally within the operations function. The relationship between a firm’s strategy and its operations is actually the big factor that determines the overall success of the firm in relation to its set objectives either in the short run or in the long run. Other scholars have been for the opinion that supply chain management (SCM) would be best carried out if traders come together and form and co-operate so as to achieve a common goal with an aim of acquiring benefits that may accrue from such integration. In order to determine the best layout and size of a new hypermarket near Sydney, I considered research studies on the Sydney market, consumer behaviors, the market’s potential in relation to local and international competition, international trade barriers, transport costs, local competition, government requirements, and political stability. In addition, I also researched on buyer behavior, competitive practices, distribution channels, media and demographic patterns through research studies about Australian markets, especially Sydney. However, the major discussion will be based on geographical expanse of Australia, especially Sydney, and demographic profile. This will put into consideration reliable data on potential demand, the cost of facilities, and operating costs such as labour and transportation Literature Review Australian Market Studies have indicated that operations and supply chain management (OSCM) assists companies to respond to market factors appropriately and allay any undesirable effect that may impede an organization (Holweg et al., 2005, p. 170; Chen et al., 2000, p. 436). In the sane way, other studies indicate that highly integrated supply chains help firms in building competitive advantages over rival companies (Myhr and Spekman, 2005, p. 180; Themistocleous et al., 2004, p. 393). From studies conducted on Australian internal market, (Chan, 2006, p. 238) has found that Australia represents a scenario of a mixed market where different races are considerably balanced, bringing into consideration the cultural aspect as a factor to consider when setting marketing strategies. Similarly, studies by Rugimbana and Nwankwo (2003) suggest that there is a need to plan also for ethnic markets as part of sales strategies in order to tap from the big culture sensitive consumption patterns. Other researches show that Australian market behavior is associated with buying from firms that have an environmental social responsibility. Methodology As indicated above, this consultancy report is based on an assessment of previous researches carried out about Australian market by different scholars. This is because the Australian market, particularly near Sydney, is affected by so many factors, cultural and buyer attitude for instance, that could not be comprehensively assessed in one survey but a combination of many. Results of these reports summarize the nature of the potential market for the new business, therefore providing valuable information that can be used in establishing the size and location of a new hypermarket business and operations costs such as labor and transportation. Another method used to develop this consultancy report is a critical analysis and relation of business management principles to this case study. Results After a critical analysis on exploring the probability of starting a hypermarket near Sydney Australia, the analysis found out that the ideal location for the store near Sydney would be at Shoalhaven. The analysis also recommends that the ideal size of the hypermarket should be moderate but enough to carry thousands of stock keeping units. The layout of the hypermarket would be as indicated below in figure 1. The layout is meant to facilitate easy shopping and make it convenient for customers to pick items from the shelves. This is because the store is a pilot project whose other major aim is to analyse the characteristic of the Australian market before subsequent phases of heavy investment in the market. During this time, the store will also be used to analyse research findings previously documented by surveyors to assess possible deviations and improvements before a massive response by “X” Hypermarket. Correspondingly, the analysis established that the demographic profile of the residents of Shoalhaven is characterized by a vast majority of the population being between the age group of 55-69 and the least number falling to between 80-84 and over 85. The population of ages 20-24 increases steadily and consecutively up to 65-69 age groups, presenting the vast population in Shoalhaven can be segmented for marketing. This is the target group for marketing (20 years to 69 years) since they form the vast majority as per 2004 estimated population statistics for the year 2010 (NSW Government, DIPNR, Transport and Population Centre, 2004). By the same token, demand pattern has been observed to be based on authenticity of products, appreciation of globalization and value, hyper-information, and personalization marketing that makes customers feel special. The demand for food and non-alcoholic beverages stands as the highest household demand, taking up 20% of the house hold income, household furnishings takes 7.5% on the higher side and clothing and footwear taking 5% for example (ABS, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003–2004) Discussion Analysis Operating cost in Shoalhaven and cost of facilities vary significantly with provisions of the Shoalhaven City Council. A tender for supply of goods and services of bid $9,750 received from a non-local supplier has no price preference discounts while a tender of bid $10,000 received from a local supplier within the City attracts 5% preference discount to the net cost, which is discounted to $9,500. It is not immediately possible to estimate the transport cost as it varies from one point to another, the packaging type, quantity, weight ,length, width, time, and qualifier. Qualifier determines whether it is fragile or packaged. Other factors like insurance value will also determine the cost. The categories for global intelligence system under market statistics and potential has been found to be cultural based in terms of consumer attitudes, spending power behavior and income. Culturally adapted commodities have a good demand from all market segments. Infrastructure and communications are well developed in Shoalhaven to facilitate smooth business management. Human resource for labor is available though trade unions regulate labor cost depending on the nature of the job done. Channels of distribution are majorly freight and the cost of transportation remains unfixed. City council has imposed levy on tenders supplied within its jurisdiction. Economic factors of the environment, in terms of competition, are not price based but value centered. Adding value to commodity and customer entertainment rather than satisfaction is taken to be very important. On a financial category, the currency used for trading is relatively stable against other leading global currencies. Recommendations In light of establishing a hypermarket near Sydney, I would recommend that the first store be established as a pilot project that will be used to asses the viability of other similar stores in other parts of Australia. Given the unsuccessful trend in the past on a new international market, and this store being the first one proposed for operation in Australia, it is advisable not to take huge risks but moderate ones that the chain store can cope up with in case of any eventuality. It is in this light that I recommend the pilot project to be a moderate sized store, but one which will offer a wider range of products as demanded. To counter any challenges, supply chain should be well developed to respond to any shortages incase demand exceeds the store provisions. The store should be used to asses practical market trends for further operation strategies that the management wishes to adopt. The store layout plan should be as indicated below in figure 1. References Chan, A.M., 2006. Tapping the Multicultural Market in Australia, in Rao, C.P. (Ed.), Marketing and Multicultural Diversity, Ashgate, pp. 238-252. Chen, Y.F., Drezner, Z., Ryan J.K., and Simchi-Levi, D., 2000. Quantifying the Bullwhip Effect in a Simple Supply Chain: The Impact of Forecasting Lead Times and Information, Management Science, 46, pp. 436-443. Heiman, B., and Nickerson, J.A., 2002. Towards reconciling transaction cost economics and the knowledge-based view of the firm: the context of interfirm collaborations, International Journal of the Economics of Business, 9 (1), pp. 97-116. Holweg, M., Disney, S., Holmstrom, J., and Smaros, J., 2005. Supply chain collaboration: making sense of the strategy continuum, European Management Journal, 23 (2), pp. 170-181. Horvath, L., 2001. Collaboration: the key to value creation in supply chain management, Supply Chain Management: an International Journal, 6 (5), pp. 205-207. Myhr, N., and Spekman, R.E., 2005. Collaborative supplychain partnerships built upon trust and electronically mediated exchange, Journal of Business & Industrial Marketing, 20 (4,5), pp. 179- 186. Rugimbana, R. and Nwankwo, S. (Eds.). 2003. Cross-Cultural Marketing, South Melbourne: Thomson. Singh, PJ., and Power, D., 2009. The nature and effectiveness of collaboration between firms, their customers and suppliers: a supply chain perspective, Supply Chain Management: An International Journal, 14 (3), pp. 189-200. Tandberg, 2007. Global retail consumers segmented by willingness to pay for products with environmental & social benefits. Themistocleous, M., Irani, Z., and Love, P.E.D., 2004. Evaluating the integration of supply chain information systems: a case study, European Journal of Operational Research, 159 (2), pp. 393-405. Fig. 1. Proposed Store Layout Fig. 2. Household Expenditure between 2003 and 2004 AUSTRALIAN HOUSEHOLD EXPENDITURE ON CULTURE, NT, 2003–04 AVERAGE WEEKLY HOUSEHOLD EXPENDITURE.... TOTAL ANNUAL HOUSEHOLD EXPENDITURE..... NT(a)($) Australia ($) NT(a) ($m) Australia ($m) Literature Books 4.17 3.94 12 1 589 Newspapers 2.70 2.56 8 1 033 Magazines and comics 1.65 1.80 5 726 Total(b) 8.65 8.43 25 3 400 Music Recorded compact discs and records (audio) *3.30 1.60 10 645 Audio-cassettes and tapes **0.08 0.05 – 20 Total *3.38 1.65 10 666 Performing arts Theatre (live) charges *0.56 0.87 2 351 Total(c) *1.38 1.59 4 641 Visual arts and crafts Paintings, carvings and sculptures *0.58 0.70 2 282 Art and craft materials *0.97 0.46 3 186 Total(d) 1.70 1.66 5 670 Broadcasting, electronic media and film video cassette tapes and TV and computer games hire 1.73 1.17 5 472 Pre-recorded video cassettes and video discs 2.32 2.08 7 839 fees and charges for cinema 2.36 1.93 7 778 Pay TV fees 4.78 2.69 14 1 085 Total 11.19 7.87 33 3 174 Other arts Culture course *0.81 1.14 2 460 Total(e) *1.06 1.86 3 750 Heritage(f) **0.28 0.39 1 157 Other culture Audio equipment **2.11 1.26 6 508 Televisions and home entertainment systems *7.77 4.74 23 1 912 Video cassette recorders *0.39 0.36 1 145 Other video equipment *4.29 2.70 13 1 089 video cassettes and video discs (blank) *0.15 0.21 – 85 Equipment for audiovisual and personal computer repairs insurance 0.16 0.09 – 36 Photographic film and chemicals (including developing) 1.34 1.07 4 432 Total(g) 19.82 12.94 58 5 219 Total expenditure on culture 47.46 36.39 139 14 678 Source: ABS, Household Expenditure Survey, Australia: Detailed Expenditure Items, 2003–04 (cat. no. 6535.0); and data available on request. 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