Supply Chain and Operations Management: A on Deliveroo Company - Case Study Example

Word Count: 2576

Table of Contents

Introduction3

Objective of the Paper3

Operation and Supply Chain Management: An Overview4

What is Supply Chain Management?4

Importance of Logistics and Supply Chain Management:4

Principle of Supply Chain Management4

E-Commerce and Supply Chain6

Role of supply Chain in Present Retail and E-commerce6

Models of Supply Chain6

Importance of Modelling in Supply Chain:7

An Analysis of Deliveroo Company: Supply Chain Management and Development of the Process8

Overview of the Organisation8

Process Excellence of Deliveroo9

Challenges:9

Implementation of SCM Model to Meet Challenges9

Conclusion11

Reference List:12

• Introduction

Modern day business operation is growing at a fast pace and every day there are number of changes associated with the process. A successful business operation is based on a number of interrelated factors; that is, a well organized business strategy, an updated business process and man management, up-to-date supply chain as well as business operation strategies. The supply chain management process is one of the most integral parts of any organisation’s business operations and it is evolving with every passing years. In the modern era, both logistics and supply chain management go hand on hand, so as to ensure that the organisation is able to get a competitive advantage in the market (Christopher, 2016). Moreover, with the increasing demand of online marketing system, the process of supply chain started to gain more and more importance. Success of the organisation in the e-commerce industry is largely dependent on how effective and advanced their supply chain model is and how much they are able to use technology into this. An effective supply chain management model, not only helps to reduce the operational cost of the organisation, but at the same time it helps in increasing profitability and creating a better brand value among the consumers.

• Objective of the Paper

The main focus of this paper is to analyse and discuss the supply chain and operation management from a critical point of view. The paper is considering the case of Deliveroo Company- which is one of the well known online food delivery company in UK. The main focus of this paper is on strength of the supply chain management process of Deliveroo alongside suggesting how the organisation can improve the overall process to make it more effective and profitable not for their own business but at the same time for benefits of the consumers as well.

• Operation and Supply Chain Management: An Overview

• • What is Supply Chain Management?

The definition of supply chain management has changed and modified over the course of time. In modern era the subject is an important one for research, as experts all over the globe are continuously observing the changes associated with the process in industries. “Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement…and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers (USAID, 2011, p.1)”. In very general terms, supply chain helps the management to integrate demand and supply of the product within and across the organisation of any particular sector. Likewise, the process of operation management can be defined as an integral part of the supply chain management which helps to “plans, implements, and controls the efficient, effective forward and reverses flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers’ requirement. (USAID, 2011, p.1)”

• • Importance of Logistics and Supply Chain Management:

There are 3 important keys associated with the process of logistics and supply chain management and those are

• Increasing the quality of customer service
• Increasing the quality of product and services that the organisation is delivering and
• Increasing the cost efficiency and thereby, improving the operating and net profit of the organisation (USAID, 2011, Coyle et al, 2008).
• Principle of Supply Chain Management

There are some key principles associated with supply chain management and those have been developed in the modern era, keeping in mind all the changes that have recently taken place in the global business operation process. According to Anderson et al. (nd), the seven key principles associated with supply chain management are:

• Differentiating consumer on the basis of their needs and adopts proper supply chain policy to serve customers.
• Customising the network of the logistic process according to service requirements of the industry and ensure profitability of the organisation
• Aligning the overall supply chain management process according to the changing marketing trends, so as to ensure optimal resource allocation and profitability for the organisation
• Ensure product differentiation close to the consumer and implementing sped conversion across the supply chain.
• Managing source of supply strategically, so that the organisation can reduce the total cost associated with materials and services.
• Developing a technology based strategy; which supports multiple levels of decision-making and at the same time ensures a proper flow of product, service and information from the suppliers to manufacturers and then to the consumers.

Image 1: Key aspects associated with Supply Chain Technology Strategy

(Source: Anderson et al., nd)

• • E-Commerce and Supply Chain

In modern era, E-commerce is playing a significant role in supply chain management model. With the development of E-commerce, the cost associated with supply chain has continued to reduce at a rapid pace. In modern era, with the development and implementation of the E-commerce, there is a substantial reduction in cost associated with various operational processes like distribution, transactions etc. and time interval associated with product development also reduced. This will add a value to the supply chain which attracts more suppliers and customers towards a particular brand and add more competitive advantage (Nikakhthar and Jianzheng, 2012). From very practical perspective, if one considers the E-commerce business, then it is very clear that, the cost associated with the supply chain is significantly lower in E-commerce which helps in providing more high level of customer service consumer (Nanehkaran, 2013, Almaktoom, 2016, ).

• Role of supply Chain in Present Retail and E-commerce

In modern era, supply chain is an integral part of the e-commerce. People are now looking to save time and in order to do the same, organisations such as Amazon, Flipkart etc. are taking supply chain management into a new high. Success of the e-commerce industry is largely dependent on how the organisation is using the supply chain management model for the development of their business process. Presently, people are thinking differently as they are looking for a more hassle free purchasing process. If one considers the scenario five to ten years back, retailers used to enjoy a more powerful position as compare to that of the suppliers or manufacturers or end users.

• • Models of Supply Chain

To improve the overall supply chain management model, continuous evolution in the logistics and supply chain management model is going on across the industry. both The supply chain model can be designed keeping in mind 3 categories and those are location routing model, inventory routing model and location inventory model.

• Location Routing model: In any organisation, location and routing are closely related with each other. In early years, most of the studies related to this model are based on heuristic methods which analyzed the model by dividing the same into 3 sub heads namely facility location, demand allocation, and vehicle routing (Shen, 2007)
• Inventory Routing models: This model is associated with management of inventory in an organisation and associating the same with the vehicle routing system. There are 4 key characteristics associated with this model and those are, demand which is either or deterministic or stochastic, length of the planning horizon (long or short), number of retailers associated with the vehicle trip and fleet size, which is the number of vehicles associated with the supply process (Shen,2007).
• Location Inventory models: Success of the supply chain is largely dependent on the proper coordination between inventory, location and distribution strategies (Shen, 2007).

Role Modelling and Simulation in Supply Chain Model

The process of Simulation plays a major role in the supply chain model. The process of evolution in supply chain can be discussed based on the following three concepts – analytical methods, Monte Carlo methods and physical experiments.

• Importance of Modelling in Supply Chain:

In e-commerce, Supply chain plays a major role and models are of equal importance. Simulation process is helpful to solve or upgrade the business operation depends on various problems that an organisation is facing at present. Any organisation can take following approaches related to simulation to upgrade the SCM model:

• Continuous simulation approach in which operation condition changes frequently
• Discrete Event Approach, in which the organisation divides the problem into two segments, namely time bucket driven approach and event driven approach (Vollmann et al., 2005)

Decision system is one more integral part associated with the simulation model in the supply chain management. Generally in the simulation process, there are 3 segments which help any organisation to implement the SCM model successfully and these are

• Centralized simulation model,
• Multi-Agents system simulation model and finally,
• Simulation for product driven system (Kleijnen, 2005; Thierry et al, 2010)
• An Analysis of Deliveroo Company: Supply Chain Management and Development of the Process

In the recent times, online food industry is growing at a rapid pace and supply chain started to play, In UK, one of the well known organisations in this field is Deliveroo. The organisation is well known for its variety of food and faster delivery process. In the UK and in other places as well, the demand for online food is increasing at a rapid pace. The organisation does not produce foods on their own, but associate themselves with various local restaurants. People used to place order through them and they collect the payment on behalf those restaurant and again deliver foods after collecting the same from the specific ones (Deliveroo, 2016)

• • Overview of the Organisation

The organisation started its in 2013. The organisation is run by Will Shu (CEO) who is one of the founders and Greg Orlowski who is looking after the IT department. Presently, the company is having a consumer base of 74,000 with a total in house staff of 60 people, 450 drivers and cyclists, who deliver foods (WIRED 2015). The organisation is basically a logistic company, which accept orders from the consumers through online and after collecting the food from the respective restaurant, delivers it to the customer. The USP is delivery time and quality of the food, as they are associated with the top restaurants of the city (WIRED 2015).

• • Process Excellence of Deliveroo

The supply chain model of the organisation is very well designed and unlike some other companies such as Seamless, GrubHub, Deliveroo not only platform to place order online but at the same time keep the supply of the same in their own hand. As a result, the organisation has been able to increase the level of satisfaction among the consumers. Another key reason behind the success is hiring employees to deliver food directly to the consumers and posting them strategically in different locations of the country, so that minimum time taken to pick up the food from restaurant and deliver the same to the customers. Use of a simple technology accessible through mobile and web, which allow people to place order easily without any major time related issues. Finally, Hyper-Local model that the organisation uses is helpful for the consumers to select hotel within 2 km radius and it helps them to specify the time that may require delivering the food. This model reduces delivery time with less interference from traffic and other issues (Pubic, 2016; Harvard Business School, 2015)

• • Challenges:

In terms of supply chain model, the major challenges associated with the organisation will be during its business expansion time. Entering other markets might require modifying the supply chain model to get success in the business according to the choice of the customers and market trend (Harvard Business School, 2015)

• Implementation of SCM Model to Meet Challenges

First of all, it needs to be clear that whether the organisation will be stick to this business model only or it will change and adopt any new model. If one considers any alternate business policy then in the long runb organisation can think of involving their restaurant partners in the delivery process as well. . Firstly, in metropolitan cities or in different countries, the existing model might not work and at the same model for the entire consumer segment. Those who know how to use the internet but at the same time, belonging to middle or lower middle class background, may not be able to afford high class restaurant foods. Hence, in such cases, associating with restaurants of each and every level is necessary.

In order to o improve the process in new market, organisation can implement two different models which are mostly popular in the SM and those are Inventory Routing models and Simulation model with multi agent concept.

• Under inventory routing process, it will easier for the organisation to consider various factors associated with the industry such as demand, planning process associated with business expansion (both the organisation itself and the restaurants with which it is associated) to make sure that the supply chain process is at par and consumer can get best food within shortest possible time. The third point associated with this model is the number of retailers associated with the vehicle trip. As the organisation is now having their own delivery people hence business expansion will require more vehicles and more delivery people on road. This will again increase the operational cost. This model will help the organisation to manage the inventory more effectively and at the same time, ensure that the operational cost as well as the profitability remains in check.
• The simulation with multi agent concept will help the organisation to develop a franchise like agreement with the respective hotels or restaurants in any particular locality where those restaurants will be responsible for delivering the products within 2 km range. If there are orders from any customer staying beyond that reach, people of Deliveroo will take the responsibility of delivery of the same.
• In order to develop the business model, organisation can focus on purchasing readymade foods from the restaurants depending on the trend associated with the pattern of order and store the same on a daily basis. Then, on the basis of the order, they can deliver the food to the customer. Organisation must open few new operational hubs to reduce the timing of the delivery, which cost can be making up by increasing customer base.
• Conclusion

Supply chain management process is changing over time and now, technology started has to play a major role. In recent years, organisations across industry are started to enter online mode in order to reach out to the more number of customer at a faster pace. In online food delivery industry, organisation are more focusing on tying up with different restaurant to collect order which are placed through online portals rather than just providing a platform to place order and leaving the entire process in the hand of that particular restaurant. Various HR models have now started to get implemented in the online food industry as well, in order to reduce the time of delivery and increase the level of consumer satisfaction (Fenn, 2015). One of the great examples of the same is Deliveroo which after starting business operation in 2003 become so much popular among the customer that the organisation is able to get funding to expand their business also. However, to enter a bigger market and challenge the bigger players along with handing more number of consumers at one point require the organisation to mix its supply chain model and at the same time open new operational hub to expand the overall distribution network.

• Reference List:

Almaktoom, A.T., 2016.Influence of Electronic Commerce on Supply Chain Behavior. European Journal of Logistics, Purchasing and Supply Chain Management, 4(1), pp. 11-18

Anderson, D.L., Britt, F.F., Favre, D.J., nd. The 7 Principle of Supply Chain Management. [Pdf] Available at < http://www.scmr.com/images/01.SevenPrinciples_.pdf > [Accessed 24 July 2016]

Christopher, M., 2016. Logistics and Supply Chain Management. London: Pearson.

Coyle, J.J., Langley, J., Gibson, B., Novack, R.A., Bardi., E.J., 2008. Supply Chain Management: A Logistics Perspective. Cengage Learning.

Deliveroo, 2016. The food you love delivered to your door. Available at < https://deliveroo.co.uk/ > [Accessed 24 June 2016]

Fenn, D., 2015. The (almost) complete guide to food delivery services. [Online] Fortune. Available at < http://fortune.com/2015/08/28/food-delivery-services-on-demand/ > [accessed 24 June 2016]

Harvard Business School, 2015. Deliveroo: When Fine Food Meets Exceptional Logistics. [Online] Available at < https://rctom.hbs.org/submission/deliveroo-when-fine-food-meets-exceptional-logistics/ > [Accessed 24 June 2016]

Kleijnen, J.P.C., 2005. Supply Chain Simulation Tool and Techniques: A Survey. International Journal of Simulation & Process Modelling, 1(1/2), pp. 82-89

Nanehkaran, Y. A., 2013. An Introduction to Electronic Commerce. International Journal of Scientific and Technology Research, 2(4), 190-193.

Nikakhtar, N. and Jianzheng, Y., 2012. Role of e-commerce in supply chain management to minimize costs. African Journal of Business Management, 6(17), 5671-5683.

Pubic, T., 2016. The secret of Deliveroo’s rapid growth. [Online] ArabianBusiness.com. Available at < http://www.arabianbusiness.com/the-secret-of-deliveroo-s-rapid-growth-627011.html#.V20srNJ97IU > [accessed 24 June 2016]

Shen, Z.M., 2007. Integrated Supply Chain Design Models: A Survey and Future Research Directions. Journal of Industrial and Management Optimization, 3(1), pp. 1-27

Thierry, C., Bel, G., and Thomas, A., 2010. The Role of Modeling and Simulation in Supply Chain Management. [Pdf] Available at < http://www.scs.org/magazines/2010-10/index_file/Files/Thierry.pdf > [Accessed 24 June 2016]

USAID, 2011. The Logistics Handbook A Practical Guide for the Supply Chain Management of Health Commodities. [Pdf] Available at < http://deliver.jsi.com/dlvr_content/resources/allpubs/guidelines/LogiHand.pdf > [Accessed 24 June 2016]

Vollmann T. E, Berry W. L, Whybark D. C, Jacobs F. R., 2005. Manufacturing planning and control systems for supply chain management. New York: McGraw-Hill.

WIRED, 2015. Startup of the Week: Deliveroo. [Online] Available at < http://www.wired.co.uk/article/startup-of-the-week-deliveroo > [Accessed 24 June 2016]