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  • Subject Name : Business Logistics

Logistics - Question 1

Many retailing companies have adopted direct shipment method where the goods are transferred from suppliers to the customers directly (Christopher 2016). They have appointed separate logistics teams to efficiently deliver the goods and services either to the retail stores or to the customers directly. For example: Zara has adopted effective supply chain strategies that helped it to acts a leader in apparel industry. It maintains a stand of a brand that helps in keeping fashion both affordable and forward.

Demand side logistics: Zara makes effective use of push model in supply chain and inventory management. It undertakes the creation of approximately 1000 new designs each month on the basis on current market trends and estimated sales of the retail stores (Fisher at al. 2018). The amount spent by the customers in buying stuff of Zara is monitored properly to determine the type of designs required by the customers. The prices of items or the clothing products are set on the basis of market demand rather than on the basis of manufacture cost (Guo et al. 2020). It takes short lead times in delivering unique items to the customers together with shorter production runs facilitate Zara in offering wide range of styles and choices to the customers. Zara has the capability to deliver garments to the customers located in different countries across the globe in a short span of time (Maiti and Giri 2017). It delivers the products via trucks in Europe and uses air transport to ship products to other different markets. Zara has the capability to afford large amount of shipping cost because it does not require to undertake discounting of clothes and also do not spend large amount of funds on advertising its brand.

Supply side logistics: The Information Technology system used by Zara is very strong that acts a back in its distribution operations. The clothes or the other materials are first shipped back to the Spain which is considered as the central location for distribution. And then, from Spain, it is transferred to other different countries and retail stores based on requirements of the customers and needs. Manufacturers undertake the production of small quantities of each and every product (Laari et al. 2017). In a year, approximately 450 million products are produced by Zara. It exercises effective control over its supply chain and competes on the idea of fast fashion in the industry. It undertakes development of new products with the help of both in-house staff members and merchandisers. Each team involved in the development of new products have its own sales persons, designers, production planners and procurement channels in a similar manner as in the case of cellular manufacturing (De Vries and Van der Poll 2018). Zara makes necessary efforts to keep itself away from outsourcing its operations to the low cost countries and undertakes huge investment to carry out manufacturing operations in-house.

This is because it believes that flexibility improves or increases with the help of in-house production operations. The turnover rate of Zara is very fast. This provides the organization, an opportunity to gain better understanding with regard to successful apparel designs (Wheeler 2017). It is considered as an effective way to explore better and new designs and their rate of acceptance in the market. This further helps the organization in eliminating the risk of generating large amount of output of specific design that is not required by the customers. The production level in the factories can be increased or decreased very fast and therefore leads to lower level of inventory in the supply chain and lower amount of funds to finance inventory along with working capital (Naidoo and Gasparatos 2018). It buys few types of fabric in bulk quantities and designs the garment and other dyeing and cutting related work in- house. In this way, manufacturers of fabric make faster deliveries of large quantities of fabric to the central location of Zara.

Logistics - Question 2

Staple Yourself to an Order strategy is concerned with the strategy used by the organization to satisfy its customers. The experience of the customers can be determined effectively with the help of Order Management Cycle (OMC) of the company (Homburg et al. 2017). It is considered essential for the organizations to track each and every step of its OMC to ensure complete satisfaction of customers. The performance of the logistic cycle has been improved in Zara by adopting staple yourself to an order strategy. This helps the company in the following ways:

  • Identification of Horizontal gaps: These gaps are concerned with process related and communication gaps faced by various functional departments operating within the enterprise. An order moves horizontally from one department to other in the company’s OMC.
  • Identification of vertical gaps: These gaps are concerned with communication and knowledge gaps faced between various levels of management.
  • Selection of order and prioritization: With the help of OMC, a company gains ability to manage its orders in a better way by effectively analyzing costs, stakes and benefits involved in a particular order.
  • Order based pricing: Effective control over OMC by the management of Zara will enable it to set price of the individual orders (Tidd and Bessant 2018).

The first stage in OMC is concerned with order planning (Kazmi et al. 2017). High integration within Zara helps the planners in gaining more information from sales, customer service agents and marketing representatives. Thus, the production planners estimate sales and production levels by working jointly with the marketing department (Darmawan et al. 2018). The second step is concerned with order generation by the sales and marketing department of Zara. It undertakes suitable measures to minimize the gap between order planning and order generation (Ivanov et al. 2017). In the third step, cost and price of different products are estimated. In this, collective efforts are made by the engineers who do forecasting, accountants who determine the costs, group of headquarters that oversees pricing and at last sales force who establish the price of products (Gorodnichenko and Talavera 2017). Each department acknowledges competence, judgment and objectives of each other with the help of integration and mutual understanding. Next two stages are handled by the customer representatives. These two steps are concerned with order receipt and entry and order selection and prioritization.

Being in direct contact with the customers, they will gain better knowledge regarding the needs and wants of the customers in a better way and also get to know who the best customers of the company are (Loureiro et al. 2018). This will further help the representatives in rejecting bad and selecting good orders that are more profitable for the company (Akrofi 2018). Sixth step is concerned with scheduling of order. The production department of Zara looks for the order needs and carries out necessary steps to complete the order placed by the customer. The billing of the order is done as per the requirements of the customers and the finance department verifies the notes made by sales department to develop bills in such a way that are easily understandable by the customers. There will be less chances for claims and returns if all the steps listed above re done correct by the executives. Zara exchange or return policy is simple that provides higher level of satisfaction to the customers (Aftab et al. 2018). Customers are considered as the major part that impacts the profitability of the company. The executives of Zara are stapled to the order which means that they are concerned with every step involved in OMC.

Logistics - Question 3

Omnichannel approach is considered as a multi channel approach to selling, marketing and providing the customers with the products in a manner that helps in attaining cohesive and integrated customer experience (Hubner et al. 2016). The customer can use various shopping options to place hi orders like mobile phones, laptop, retail store, etc. In an omnichannel approach, each device or platform used by the customers for interaction purposes are accounted. Today, many companies have adopted omnicahnnel approach because the customers now demand for a better and seamless shopping experience. This approach acts as an effective tool to participate with other rival firms in the industry. It makes efficient use of cross-channel strategy to incorporate customers’ experience with effective communication. Thus, it combines various channels like social media, website, e-commerce, physical locations, and mobile applications to improve values of the customers and enable them to participate with the multiple avenues (Gao and Su 2017). For instance, Zara is now focusing its attention towards developing a creative and innovation omnichannel sales and marketing strategies.

Companies that are competing at the global level have made drastic transformations in the entire market with the evolution of information and communication technology. It has been found that approximately 22% of the total customers use their mobile phones to locate and successfully redeem coupons or discount vouchers and explore the features of the products at the time when they are physically present in the store itself. Sales of the company can be improved by promoting personalized messages like on birthday card on eve of customer’s birthday, discount offers, etc. over the mobile phones. The customer might come for shopping if he/she can get access to rewards and gifts. These add on resources attract large numbers of customers to the retail stores. Approximately 54% of the total retailers’ are involved in various social media activities and monitor them in order to implement appropriate initiatives. The future of the retail industry is revolving around the omnichannel approach as it smoothens the consumers’ journey and improves the overall shopping experience of the customers.

Today, the customers place order after carrying out research and checking out the reviews given by previous customers of the specific product. Omnichannel retail strategies must be formulated by the companies in order to compete globally in the competitive retail industry. It is beyond having a store or online presence. There is a need to maintain effective store presence along with multiple online channels, devices and other digital technology like kiosks (Martins et al. 2018). Therefore, it can be concluded that competitive space of the retail industry is changing drastically with the advancement in technology. Digital forces are continuously changing the method of shopping and the shopping habits if the customers are now more restrained (Molenaar 2016). The companies should determine effective and innovative ways to make positive response towards those digital forces, changing consumer behavior patterns and various other challenges. Omnichannel approach is helpful in facing all these challenges effectively and efficiently.

References for Logistics

Aftab, M.A., Yuanjian, Q., Kabir, N. and Barua, Z. 2018. Super responsive supply chain: The case of Spanish fast fashion retailer Inditex-Zara. International Journal of Business and Management13(5), p.212.

Akrofi, S. 2018. Value Creation Through Executive Development. Routledge.

Christopher, M. 2016. Logistics & supply chain management. Pearson UK.

Darmawan, A., Wong, H. and Thorstenson, A. 2018. Integration of promotion and production decisions in sales and operations planning. International Journal of Production Research56(12), pp.4186-4206.

De Vries, H. and Van der Poll, H.M. 2018. Cellular and organisational team formations for effective Lean transformations. Production & Manufacturing Research6(1), pp.284-307.

Eurostat. 2018. E-commerce statistics – Statistics explained. [Online]. 

Fisher, M., Gallino, S. and Li, J. 2018. Competition-based dynamic pricing in online retailing: A methodology validated with field experiments. Management Science64(6), pp.2496-2514.

Gao, F. and Su, X. 2017. Omnichannel retail operations with buy-online-and-pick-up-in-store. Management Science63(8), pp.2478-2492.

Gorodnichenko, Y. and Talavera, O. 2017. Price setting in online markets: Basic facts, international comparisons, and cross-border integration. American Economic Review107(1), pp.249-82.

Guo, S., Choi, T.M. and Shen, B. 2020. Green product development under competition: A study of the fashion apparel industry. European Journal of Operational Research280(2), pp.523-538.

Homburg, C., Jozić, D. and Kuehnl, C. 2017. Customer experience management: toward implementing an evolving marketing concept. Journal of the Academy of Marketing Science45(3), pp.377-401.

Hübner, A., Holzapfel, A. and Kuhn, H. 2016. Distribution systems in omni-channel retailing. Business Research9(2), pp.255-296.

Ivanov, D., Tsipoulanidis, A. and Schönberger, J. 2017. Global supply chain and operations management. A Decision-Oriented Introduction to the Creation of Value.

Kazmi, S.A.A., Shahzad, M.K. and Shin, D.R. 2017. Multi-objective planning techniques in distribution networks: A composite review. Energies10(2), p.208.

Laari, S., Töyli, J. and Ojala, L. 2017. Supply chain perspective on competitive strategies and green supply chain management strategies. Journal of Cleaner Production141, pp.1303-1315.

Loureiro, A.L., Miguéis, V.L. and da Silva, L.F. 2018. Exploring the use of deep neural networks for sales forecasting in fashion retail. Decision Support Systems114, pp.81-93.

Maiti, T. and Giri, B.C. 2017. Two-way product recovery in a closed-loop supply chain with variable markup under price and quality dependent demand. International Journal of Production Economics183, pp.259-272.

Martins, S., Amorim, P. and Almada-Lobo, B. 2018. Delivery mode planning for distribution to brick-and-mortar retail stores: discussion and literature review. Flexible Services and Manufacturing Journal30(4), pp.785-812.

Molenaar, C. 2016. Shopping 3.0: Shopping, the internet or both?. Routledge.

Naidoo, M. and Gasparatos, A. 2018. Corporate Environmental Sustainability in the retail sector: Drivers, strategies and performance measurement. Journal of Cleaner Production203, pp.125-142.

SCM Globe. 2020. Zara clothing company supply chain. [Online]. 

Tidd, J. and Bessant, J.R. 2018. Managing innovation: integrating technological, market and organizational change. John Wiley & Sons.

Wheeler, A. 2017. Designing brand identity: an essential guide for the whole branding team. John Wiley & Sons.

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