International Logistics and Supply Chain Management

International Logistics and Supply Chain Management
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Table of Contents TOC \o "1-3" \h \z \u 1.0 Introduction PAGEREF _Toc500352994 \h 32.0 Advantages of Local Purchasing by Asda in the UK PAGEREF _Toc500352995 \h 33.0 Disadvantages of Asda buying locally PAGEREF _Toc500352996 \h 44.0 Advantages of Asda Buying Internationally PAGEREF _Toc500352997 \h 55.0 Disadvantages of Asda buying internationally PAGEREF _Toc500352998 \h 55.1 Retail Logistics and Supply Chain Management PAGEREF _Toc500352999 \h 66.0 Theory of The Industrial Chain in Relation to Asda’s Strategy PAGEREF _Toc500353000 \h 107.0 Conclusion PAGEREF _Toc500353001 \h 11
International Logistics and Supply Chain Management
1.0 Introduction
The development of international logistics is associated with the demands of its customers and their need to have goods moved from one region to the other. Contemporary logistics require adherence to demand based planning, which necessarily makes modern management practices to be more inclined towards supply chain management and maximize on available resources in regard to transport (Mena, Humphries& Choi, 2013, p. 59). Production requires conditions such as those related to supply, cost and information consumption. This scenario is evident in Asda supermarket which is cautious about its pricing strategy upon which it boasts of being the lowest priced supermarket in Britain. It majorly deals with groceries, financial services, general merchandise and because of diversification, it is now in mobile products. Information systems continue to play an important role in the achievement of these roles.
2.0 Advantages of Local Purchasing by Asda in the UK
Asda is a local retail outlet in the UK which is now owned by Wal-Mart that supports organic foods. Customers get to access fresh supplies which encourage them to frequent the store that deals in local products. Secondly, sustainability is achieved in the local markets with steady supply of the necessities. Thirdly, environmental benefits are realized as a result of reduced waste from packaging. The fourth disadvantage is that one of food miles which are cut down because Asda and other supermarket chains get fresh supplies without investing heavily in transportation. Finally, there is increased profitability because of direct purchasing from farmers in case of cereals.
This has provided an avenue for customers to reach out and get their much-needed fresh products. This has indeed brought about sustainability in the consumption to their advantage. In the recent years, some initiatives have been put in place to create local food systems (LFS) together with short food supply chains (SFSC) that are directed to direct purchases from the farm, partnerships that are formal between consumers and producers, and delivery schemes (Kneafsey et al, 2013 p 19). Commercially Asda is cutting down on their operation costs because of shorter distances whenever they procure their products locally.
3.0 Disadvantages of Asda buying locally
Most of the products bought have preservatives which discourages customers who are health conscious. People in the UK are health conscious and as such are wary of taking intoxicated foods. They prefer organic foods and most of the products sold locally are organic which have a short life of the shelves. The proportion of farmers to that of the consumers is not proportional. Low supplies do not guarantee variety to customer hence they are insufficient. The next disadvantage is that one of increased unemployment in the transport sector because the long-distance drivers across border will be rendered redundant. Finally, the tough legislations and taxation are a discouragement to the retail traders.
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Figure SEQ Figure \* ARABIC 1: The impact of new products on sales volume
4.0 Advantages of Asda Buying Internationally
Different reasons prevail that prompted Asda to go international, to operate on a global scale. The first advantage was, there is more room for diversification since new markets require new inventions. Secondly, this was important to the retail chain, so that it could off-set local competition. The third major reason was for purpose of the expansion of the market internationally. The international market is big and there is great potential for the supermarket chain to increase its sales volume when good marketing strategies are applied. It also has an advantage of acquisition of new talent that could boost the company’s marketing and sales force. Finally, the UK is known to have very tough rules. This way, Asda will be in a better position to avoid tough local legislation and high taxes (Corstjens & Lal, 2012).
5.0 Disadvantages of Asda Buying Internationally
The first disadvantage is the problems with regulatory mechanisms of the foreign countries hosting the business. Most of the host countries are often hostile whenever there is a new entrant in the market. There is a second disadvantage of difficulties in getting the logistics right of the foreign country. Finally, difficulties with segmentation, positioning and targeting of foreign markets.
Retailers have adopted the concept of quick response with the objective of cutting inventory levels and enhance the speed of logistics flow. This encompasses reducing lead time on orders and shifting to a frequent delivery of smaller packages both internally and externally. Internal delivery in this case entails movement of inventory between distribution centers and the retail store (Juan Ding, et al. 214, p. 86). The concept of quick response has been helpful particularly when dealing with products from international suppliers. External distribution on the other hand involves movement of products between the supplier and the distribution center. The concept of quick response has helped increase the rate of stock delivery and the amount of goods being cross docked as compared to storing such goods in distribution centers.
5.1Retail Logistics and Supply Chain Management
Today, retailers have become important partners in almost every supply system and have used this notion to redefine operations and relationships with suppliers and providers of logistic services. Asda is one of the leading supermarkets in the UK that is practicing reverse logistics as a way of improving the partnership in their supply chain and retail logistics. In essence, retailers have become critical controllers of supply channels. Previously, retailers were passive recipients of goods allocated to their retail stores by suppliers in anticipation of demand (Chkanikova& Mont, 2015, p. 65). Today however, they organize, control and manage the supply chain starting from production to consumption. This is the spirit of retail supply chain management and logistics and evolution of supply systems over the last couple of years.
Fig: 2 How to understand the consumer purchase behavior in the online platform
Several factors have contributed toward the transformation of retail logistics and supply chain management. One of these is the improved control over secondary distribution channels. In line with this, retailers have gained increased control over distribution channels and have realized the importance of distribution centers (DCs) in streamlining logistics. In the retail sector including the supermarkets, the transformation process is virtually complete. For example, retailers in the UK have attained tighter control over their supply chain as compared with retailers in other countries (Mogre, et al. 2017, p. 251). Logistics and supply chain management is highly dependent on information technology particularly when it comes to huge integrated stock replenishment. Such systems have become popular in regard to controlling logistics and storage of large number of dissimilar products.
Another factor that has contributed towards the reformation of retail logistics and supply chain management is the restructuring of logistic systems. In this regard, retail stores have reduced inventory while improving efficiency. For example, retailers have developed composite distribution which involves distributing products with mixed temperature via the same distribution centers and on the same transportation vehicle (Christopher, Harrison, van Hoek, 2016, p. 63). Equally, composite distribution has helped reduce the lead time where different products need to be supplied from international market (Stephens, Grant, Banomyong & Lalwani, 2016, p. 56). In addition to these, retailers have started to use centralized specialist warehouses when it comes to slow moving stock. Retailers who deal in mixed products have established common stock rooms from where products are shared across different stores according to market demand.
There is a number of supply chain planning methods available for use at the retail store level. The vendor managed supply chain is one of these methods whose aim is to provide a reciprocally beneficial relationship between the manufacturer and the distributor. In VMI, the distributor or the manufacturer assumes the role of supply chain planning on behalf of the customer. It is important to note that VMI calls for extensive sharing of information to enable the supply chain planner to maintain a high level of visibility of h...