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You are required to provide a strategic analysis of a key supply chain issue facing your retail client over the next five years. Your submission needs to include a brief outline of the clients retail offer and the key features of their existing supply

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Introduction

Retail Buying and Merchandising Management You are required to provide a strategic analysis of a key supply chain issue facing your retail client over the next five years. Your submission needs to include a brief outline of the client's retail offer and the key features of their existing supply chain (less than 100 words). Conclude with strategic recommendations. "In modern markets, success requires more than just making high quality products" (A. Kamen, Nikon's Vice President of Operations). Having the ability and visibility to predict how much merchandise is available and when it can be distributed makes the difference in staying ahead of customers' needs and creating a competitive advantage for any organization. The above are parts of supply chain management. A supply chain is "a network of connected and interdependent organizations mutually and cooperatively working together to control, manage and improve the flow of materials and information from suppliers to end users" (M. Christopher 2005). Thus, the focus of supply chain management is upon the management of relationships in order to achieve a more profitable outcome for all parties in the chain. The supply chain consists of four components; Production, Inventory, Location and Transportation. These should be integrated in order to achieve the best mix of responsiveness and efficiency for the market being served. ...read more.

Middle

Trucks arriving are not fully loaded, increasing costs, and valuable time is consumed in sorting products in a coherent and easy to access inventory. This proves that Transportation and Inventory management are interrelated decisions. Therefore a firm has to evaluate the impact of transportation decisions on the total cost of the supply chain as bad decisions in one function of the supply chain will negatively affect other functions. From the above it can be understood that transportation problems have hindered the efficiency of inventory management. "Inventory management is the branch of business management concerned with planning and controlling inventories and its main role is to maintain a desired stock level of specific products or items" (J. Toomey 2003). Being a catalogue retailer, the catalogue is in fact an all season promise of product availability to the customer; therefore Argos must ensure that it stocks the right products at the right locations to meet customer needs. Inventory managers are required to provide an accurate demand signal for an extended period of time and then match that forecasted demand to existing inventory stock levels across its supply chain to make the right procurement decisions. To achieve this strategy Legacy systems are being used. They are "socio-technical computer based systems that include software, hardware, data and business processes" (R. ...read more.

Conclusion

This will have two positive effects on the supply chain. Firstly, average stock levels will decrease which will in turn improve pick accuracy and reduce the floor space required. Secondly, improvements in stock accuracy should lead to increased stock availability at store level. The serviceability benefits gained from this will increase revenues. Overall, efficiency improvements and lower operational costs will be observed, creating a competitive advantage for the firm. In spite of the numerous advantages gained from the proposed solutions, potential drawbacks arise as well. In order to introduce a new distribution center there is a need for extensive capital investment which will lead to a dramatic increase of fixed costs. Furthermore if the firm decides to put 'all its eggs in one basket' the risk of vulnerability underlies. For example, a natural disaster or an operational accident might have disastrous effects on the company's stock levels and capital assets. Lastly, Argos might be faced with transition problems. Replacing the existing legacy systems with Advanced Inventory Planning is very time consuming and requires expensive labour training. It is clear that the proposed alterations to the supply chain will bring greater benefit rather than harm to the firm. Accompanied by a carefully planned strategy to integrate the different parts of the supply chain Argos will be able to enjoy higher profits, the main target of any organization. ...read more.

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