A Strategy for Co-op Supermarket - Essay Example

 A Strategy for Co-op Supermarket Introduction With the increase in competition and the growing awareness within consumers concerning business ethics, organizations have taken conscious steps to improve upon their supply chain management in order to achieve competitive advantage. A good supply chain allows the organization to reduce the cost for its products without compromising on the quality and the relationship they maintain with their suppliers. To overcome this challenge, organizations have moved on to outsource their suppliers to developing countries just as China, Brazil, and Poland etc. But even as outsourcing allows organizations to develop cost-efficiency; it increases certain issues of ethics and corporate social responsibility for the organizations. Outsourcing has to be properly managed since it raises ethical concerns such as the misuse of labor and the impact on the environment as pollution increases as a result of transportation. In this proposal, we attempt to present a strategy for Co-op Supermarket to develop an environmental friendly approach while remaining competitive in terms of price and choice. Supply Chain Management and Ethics Before we proceed further, we first need to understand the concept of supply chain management and its relation with ethics. ‘Supply chain management has been defined as “the management of upstream and downstream relationships with suppliers, distributors and customers to achieve greater customer value-added at less total cost” (Wilding, 2003). The term relationship within the context of supply chain management is vital since it pertains to relationship with not just the suppliers but also the customers. The customers demand that the supply chain management be ethically sound or else the organization runs the risk of losing its loyal customers. The concept of ethics in supply chain management was activated when BBC Panorama exposed the unethical supply chains of sports and clothing companies such as Nike and Gap. These companies hired under-aged Cambodians at minimum wages in order to keep down prices for the end users. However, the end users after realizing the real cause behind the low prices revolted and soon organization began to explore the concept of ethical supply chain management. Along this issue, the issue of increased pollution as a result of outsourcing suppliers was raised. Though managers cannot control all aspects of the supply chain manager, they still are accountable for the issue and thus the responsibility lies with them. With respect to ethical supply chain management, the concept of green supply chain management has emerged. Green supply chain management understands the environmental impact of the supply chain and takes steps to ensure that the negative impacts are kept to a minimum. For example, Wal-Mart introduced a new packaging scorecard for its suppliers including Unilever, Proctor & Gamble, and Walmart in order to reduce waste production (Basu and Wright, 2007). The Current Dilemma The biggest challenge that Co-op Supermarket is facing at this time, with regard to its supply chain management, is the lack of integration between its supply chain management and ethical policy. Currently Co-op’s fashion products being sold in the supermarket are outsourced from China which raises the issue of pollution through increased transportation. Outsourcing may reduce costs for the organization but at the same time, it is increasing the impact on the environment. Since fashion products are basically innovative products, the organization needs a responsive strategy in its supply chain management which is able to deal with the changing demands of the customers. When the fashion changes, demand for the products also change and thus the organization cannot hope to reduce transportation costs by shipping finished products in bulk. Proposal When adopting a green supply chain management, the first step for every organization is to take responsibility of the environmental issue and to develop accountability towards its customers. When taking responsibility organizations have to account for not just their practices but also the practices of their suppliers. In the case of China, Co-op should work on developing a code of conduct and ethics. This code will guide and instruct the suppliers to adopt a sustainable practice in order to keep down the impact on the environment through pollution. Once the code has been established, Co-op will have to ‘conduct periodic ethical audits to ensure that outsourcing companies are adhering to (their) expectations’ (Kildow, 2011). Another issue that arises when taking responsibility for the suppliers is the proper training of the suppliers. Suppliers in developing countries are often unaware and unconcerned about the impact of their practices on the environment. Co-op in such cases will have to provide training to these suppliers and enforce their own voluntary standards on the suppliers. Companies such as Gap, Levi’s, Disney, Walmart and H&M have developed a vender compliance department that ensures the compliance of suppliers to the organizations’ ethical code of conduct throughout their global supply chain (O’Rourke, 2003). Co-op needs to develop collaboration with its suppliers, distributers and governmental agencies in order to achieve this aim. To develop a good supply chain for apparels, one also has the advantage of studying the model of two good supply chains of apparel organizations: Zara and Gap. Both Zara and Gap have created product lines for different kinds of customers. Each product line caters to a different kind of market. Co-op can also create two different categories for its target customers. The first would cater to the low-end consumers who are price conscious. For these customers, Co-op will have to continue outsourcing to China, but they will ship finished products in bulk. Shipping in bulk will reduce the negative impact on the environment. The second category of customers will be the high end consumers whose shopping preferences change with the changing fashion. Zara has created a revolution in terms of its superior supply chain and many organizations are trying to learn from its supply chain. Though Zara does not outsource its production, it outsources components of its apparels such as un-dyed cloth, buttons, zippers, rhinestones etc (Christopher, 2009). Co-op can also develop a similar strategy where they ship raw materials in bulk amount for the second category of customers. Once the raw materials are stocked in the inventory, the designers at Co-op can create finished products according to the latest fashion. While the proposed strategy for Co-op will allow the organization to keep down its transportation costs to a minimum, they would still be incurring transportation costs when outsourcing the production of low cost apparel and raw materials. This calls for a need to take action against the negative impacts of pollution caused by the transportation. Apple Inc. has developed an environmental policy where they have decreased the impact on environment through transportation by 5 percent. They have done this by introducing efficient packaging that reduces not just materials and waste but also reduce the emissions that are produced during the transportation of the products (Apple, 2011). Co-op can take an example from this and develop an efficient packaging system. Conclusion The proposed strategy for Co-op is specifically focused on ensuring that the supply chain is improved while also improving on the ethical practices for Co-op and its suppliers. Once Co-op takes responsibility for the issue they would be able to ensure that suppliers follow their code of conduct. The supply chain would have to be revised to a great extent but also the superior supply chain is installed, it will bring down costs and waste for the organization. Finally, the supply chain will have to be monitored for implementation of its ethical practices as well as continuous improvement in the green supply chain management. References Apple, Inc (2011) Apple and the Environment. Available at: http://www.apple.com/environment/ (Accessed: 11 July 2011). Christopher, M. (2000) The Agile Supply Chain: Competing in Volatile Markets, Industrial Marketing Management, 29(1), pp. 37-44 Basu, R. and Wright, N. (2007) Total Supply Chain Management, United Kingdom: Butterworth-Heinemann Kildow, B. A. (2011) A Supply Chain Management Guide to Business Continuity, New York: AMACOM Division American Management O’Rourke, D. (2003) Outsourcing Regulation: Analyzing Nongovernmental Systems of Labor Standards and Monitoring, The Policy Studies Journal, 31(1), pp. 1-30 Wilding, R. (2003) The 3 Ts of Highly Effective Supply Chain Practice, Supply Chain Practice, 5 (3), pp. 30-39 Read More