ASDA Global Supply Chain and Logistics Management - Essay Example

Global Supply Chain and Logistics Management Table of Contents Table of Contents 2 0. Introduction 3 2.0. ASDA Supply Chain 3 3.0. Role of Logistics within the Supply Chain Management of ASDA 6 3.1. ASDA Outsourcing 8 3.2. ASDA Sustainability 10 4.0. Conclusion 11 References 13 1.0. Introduction ASDA Stores Limited is a retail company located in Leeds, UK. The company is often considered as one of the largest supply chains in the UK in relation to its market share. ASDA is a British company initiated in the year 1965 by a group of farmers from Yorkshire. Gradually, it emerged as a super market chain, which is specialised in retailing groceries, merchandises and other financial services. In the year 1999, ASDA started functioning under the Walmart group as its wholly owned subsidiary (Corporate Watch UK, 2004). Presently, the company operates with almost around 568 stores wherein these stores are mainly specialised in retailing groceries and various apparels with a total workforce of around 1,75,000 employees (MarketLine, 2013). With due attention to these facts regarding the size of the organisation, this essay intends to describe the supply chain of ASDA that includes its supply chain networks and its main partners. The discussion henceforth also evaluates the role of ASDA’s logistics within its supply chain along with the approach through which, ASDA intends to achieve its organisational objectives. Subsequently, outsourcing and sustainability have been studied, to appraise the relevance of these factors in the organisational perspective that is ASDA. 2.0. ASDA Supply Chain ASDA, as can be witnessed, has significantly grown in the past few years, in alignment with one of the leading retail companies, Walmart Inc and has been successful to emerge as the second largest grocery retailing company in the UK. It has been revealed that the key to ASDA’s success has been its supply chain network being used by the company globally. Contextually, the supplier sustainability scheme used by ASDA has instigated various innovative measures in the company due to which, it was able to save around £13 million since the past few months. It can be accordingly identified that there are more than 300 suppliers networking with the company to maintain effectiveness in its overall supply chain process. ASDA has been presently using the Sustain and Save Exchange Programme, which has helped both the company and its suppliers to integrate with each other and bring creativeness in their supply chain operations. The company has rolled out products valued at £ 3 billion to its various suppliers in order to collaborate with its suppliers for efficacy in its resources and long-term sustainability in its supply chain network. Through the aforementioned schemes, the company has been able to effectively mitigate its sustainability issues and create a world-class supply chain. However, in the present times, resource scarcity has emerged as a huge problem being faced by retail companies such as ASDA, which has directly influenced the cost of its supply chain management and motivated these organisations to function through outsourcing (Sustainable Process Improvement for Small Businesses, 2014). Thus, in order to tackle this problem the company has been mainly focusing towards maximising the effectiveness of its resources within the internal process of the organisation along with its supply chain network with the expectation to ensure utmost sustainability of the company along with its competitiveness. In accordance to the problem, the company has taken up certain actions to ensure proactivity within the suppliers that would provide continuous support to the organisation. ASDA, as a part of largest retailer in the world, must capitalise on its supply chain competencies, to achieve a competitive advantage and create a better position for itself in the coming future (Dixon, 2014). As can be revealed from the study, the supply chain system used by Walmart was installed within the supply chain system of ASDA by restructuring its distribution network. This in turn helped ASDA in creating a strong distribution network due to which, there was a huge rise in its sales (William Reed Business Media Ltd, 2007). In relation to the partners of supply chain for ASDA, it is considered that the company primarily uses local suppliers who work as the main partners for meeting its supply chain requirements. To be precise, brands such as Young’s Seafood and other local brands, are the main partners for the company. These brands have played a huge role in meeting the supply chain requirements of the ASDA, as they have highly contributed for its success in the UK market. ASDA, by maintain a good relationship with its suppliers, has been able to provide high quality products to its ultimate customers. This has been done effectively through appropriate communication channels being maintained by the company with its partners. It would be worth mentioning that the supply chain partners of ASDA has helped it in ensuring that the products reach the target market at a faster rate without fading the company’s objective of low price distribution of the products. It can be further asserted in this regard that the key behind the company’s market success has been its collaboration and relationship with the local partners (ASDA, n.d.). Through sustainability policies in its supply chain network, ASDA has supported various farmers and its local communities, which in turn has helped the company in sourcing quality products from local suppliers. For instance, in the year 2011, ASDA sourced 6000 products from 600 suppliers, which provides an understanding regarding the extent to which, the company has been supporting its local suppliers to increase its range of products (ASDA, 2012). 3.0. Role of Logistics within the Supply Chain Management of ASDA Logistics is one of the most important parts for retail organisations, as they require moving materials from one place to another. In reaction to the role of logistics in the supply chain of ASDA, it is considered that the process of its logistics is quite vast. The first process of logistics in a supply chain for any company would be procurement of raw materials and manufacturing of the product. This process is likely to be similar with that of ASDA wherein the raw materials for production are procured and then manufactured. After the products get manufactured, it is delivered to the suppliers following which, the goods are warehoused (Macmillan Publishers Limited, n.d.). Finally, these products are supplied to the retail stores of ASDA, which directly depends as per the demand trends in the target market. It is considered that the role of logistics in the supply chain for ASDA is quite important to maintain parity and profitability along with sustainability in functions ranging from the procurement of raw materials to the supply of finished goods to the end customers (Macmillan Publishers Limited, n.d.). It is worth mentioning in this context that logistics has been an important aspect for ASDA as it has helped the company in value creation. It can also be revealed that ASDA’s logistics has helped the company in reducing the extent of carbon emission throughout its logistics chain, which has been a part of its sustainable development. It is also considered that logistics have a direct impact on the UK economy due to which, ASDA has developed certain set of measures in its managerial approaches towards the same. The logistics operations of ASDA can be categorised into two segments of inbound logistics and outbound logistics. Inbound logistics is the process through which the company can procure products from its suppliers. In this regard, the inbound logistics used by ASDA are mainly sourced from local suppliers and global suppliers to an extent. On the other hand, outbound logistics is the process in which the products move from the retail stores of ASDA to the end customers, wherein ASDA due importance towards the channelization of transparent and undistorted messages regarding the quality and other value added features of the product to the ultimate users of the goods (Macmillan Publishers Limited, n.d.). Notably, as these features directly influence company’s sustainability in the market along with its competitiveness in preserving quality throughout the supply and distribution chains, logistics can apparently be witnessed as playing a major role for ASDA in building its brand. As can be observed from the organisational information, ASDA uses a systematic approach in order to achieve its objectives in relation to logistics. This approach includes increase in the overall flexibility of the distribution system used by the company, which in turn has helped the company to save 8 million in the year 2008. Effective usage of trucks has also been a key factor for ASDA to achieve its objectives wherein the company has been focusing on reducing the extent to which the trucks move empty from the suppliers to its distribution channel. Upgradation in the infrastructure of the company along with its operational efficiency has further played a significant role for the company in achieving its objectives in relation to the logistics. It will be worth mentioning in this context that ASDA has been using alternative modes of transportation to maintain its logistics effectively and thereby ensure the accomplishment of its objectives related to sustainability and competitiveness. Likewise, technological enhancements within ASDA have helped the company in improving its supply chain process, sufficing the needs of suppliers having no intermediaries involved and assuring greater significance to customers’ demand for quality products (Deutsche Post AG, 2010). With substantial reduction in its transportation cost through technology enhancements and non-involvement of intermediaries, ASDA has been able to achieve its objectives in managing its logistics through advanced map-based transportation and other optimisation software. For instance, Paragon Software Systems (PSS) has provided adequate support to ASDA, due to which, innovativeness of map reading and scheduling system have been instigated within the ASDA’s logistics specialists. Consequently, it has enhanced the way in which, logistics are transferred form one place to another — from the suppliers to the distribution networks. PSS has been successful in providing effective solution to ASDA logistics department due to which, the mode of transportation has been used effectively and there has been a reduction in the overall transportation cost of maintaining logistics. Therefore, it can be affirmed that these factors has enabled ASDA to achieve its objectives in its logistics requirements (Paragon Software Systems Plc, n.d.). 3.1. ASDA Outsourcing In the present day context, outsourcing process has gained increased importance as it helped the company to earn huge profits and obtain competitive advantages accordingly. In this regard, ASDA has been observed to outsource its manufacturing process to the developing countries in order to reduce its cost of production and to avoid the risks of scarce resources if being focused on self-reliant attributes in its home country of the UK. As it has been revealed that ASDA is one of the largest supply chains in the UK, it has to maintain variety of products that has been sourced from different nations. Outsourcing the production process has also helped the company to a significant extent in maintaining its position in the UK market. It would be noteworthy to state that outsourcing helps the company to attain economies of scale, due to which, it has been possible for the company to maintain lower price of products for its customers. Moreover, outsourcing has helped the company to diversify its investment along with reducing the extent of risks in its business (Berke, 2010). In relation to the strategy used by ASDA for outsourcing, it has been witnessed that ASDA outsources its production process mainly to the developing nations, wherein the cost per unit production is relatively cheaper as compared to developed nations. It has also been revealed that ASDA, through outsourcing its production process, has been able to obtain various benefits in terms of reduced overall cost of the goods supplied, greater flexibility within the company, lesser risk of business and effective supply chain management (Richards, 2009). As mentioned above, ASDA sourced 6,000 products from 600 suppliers in the year 2011, which provides a clear idea regarding the huge demand for its consumer goods in the targeted market, almost impossible to be sufficed being reliant on the home country productions. Moreover, the company also takes a visionary approach to maintain diversity in its supplier network, enriching diversity in its stakeholder group divisions. Correspondingly, it can be argued that to suffice these objectives, ASDA needs to outsource its resources, which helps the company to offer a broad array of products for its worldwide customers to satisfy their varying needs and demands. ASDA mainly sources it products from various developing nations including India, China and Africa as the majors. This in turn helps the company to meet the demand as the second largest retailer in the UK. Being one of the retail giants, it is quite important for the company to outsource its production process, which would ensure that the demand of the customers are met timely, yielding their utmost satisfaction and loyalty towards the brand. It has been viewed that when outsourcing, ASDA emphasises networking with the local suppliers from around the world, which offers the company with a leveraged control on product quality maintaining its ethical responsibility throughout the process (ASDA, 2012). 3.2. ASDA Sustainability ASDA delivers utmost significance to its sustainability objectives when operating its supply chain network, built across the various countries around the world. It has been observed that ASDA highly emphasises on maintaining the sustainability of its business, as it is quite important for the company to maintain its sustenance as the second largest retailer in the UK. Notably, ASDA has been emphasised on creating its sustainability through the effective maintenance of low price of its products that has been achieved by increasing its operational efficiency. Notably, taking such measures to make effective use of its resources and further offering low price quality services to its customers, ASDA has been able to save a considerable proportion of its expenses, which further aided it with financial leverage in its supply chain strategic capabilities. Likewise, ASDA also obtains a degree of control on its pricing attributes offering it with an added competitive advantage to provide high quality products to its customers, obtaining products from sustainable sources with effective use of energy, food and fuel among other resources available (Belmont, n.d.). Correspondingly, the company has been observed to practice effective sustainability measures to provide its customers with a broad array of choices, maintaining a good relationship with its suppliers throughout the entire supply chain. In addition, ASDA has prioritised sustainability to such an extent wherein the company is focused towards environmental emancipation. ASDA has also been highly focused on waste management by cutting down the proportion of food that has been wasted. The company has accordingly practicing the measure of reusing the food materials left over in the stores. Moreover, the company has also used new packaging pattern that increases the life of packaged food products and hence, reduces food wastage, further increasing its sustainability through a green initiative (Belmont, n.d.). According to the Sustainability 2.0 strategy adopted by ASDA, the company plans to reduce the extent of its carbon emission throughout its logistics practices wherein the company has been successful in reducing its carbon footprint up to 11.9% in the year 2011. ASDA also plans to reduce the effect of its supply chain on the environment wherein Sustainability 2.0 strategy of the company has been focused on the responsible networking of its supply chain. ASDA is also committed towards Sustainable Agriculture and Products through which, it can reduce up to 20 million tonnes of greenhouse gas, further enhancing its sustainability position amid the industry and offering it with a competitive advantage in terms of loyal stakeholder groups (ASDA, 2012). 4.0. Conclusion ASDA Stores Limited is the second largest retailer in the UK. As revealed from the study, one of the prominent reasons behind its success has been the policy implementations in its supply chain network used by the company. ASDA has been resourceful in its supply chain operations, as it has integrated with its suppliers. It would be worth mentioning that logistics has played a huge role in ASDA’s supply chain management encompassing the process of materials procurement, product manufacturing and movement of the products from the suppliers to the end customers. As revealed from the key findings of the study, ASDA outsources its manufacturing process to various nations along with local suppliers to meet its demand in the UK market. It was also identified that ASDA, by prioritising its sustainability in meeting customers’ needs and communal demands, has been able to obtain competitive success in the global retail market, which evidently indicates the significance of such measures for a commercial organisation like ASDA. References ASDA, 2012. Sustainability 2.0 Asda’s Environmental Sustainability Targets 2010-2015 Our Public Commitments. System. [Online] Available at: http://your.asda.com/system/dragonfly/production/2012/02/28/09_37_08_670_10_10_26_488_Asda_2_0_Sustainability_Strategy_updated.pdf [Accessed April 29, 2014]. ASDA, No Date. ASDA Shaves Weeks Off Its NPD Process. Creations 01, pp. 1-2. Berke, F. M., 2010. Outsourcing in the Retail Industry. The University of Arizona, pp. 1-12. Corporate Watch UK, 2004. ASDA/Wal-Mart A Corporate Profile. Overview. [Online] Available at: http://www.corporatewatch.org/?lid=800 [Accessed April 29, 2014]. Dixon, J., 2014. Asda Plans Sustainable Supply Chain. 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