B School presentation on e-Supply Chain in Australia. If useful, do not forget to share and comment.

1. STUDY OF E – SUPPLY CHAIN
MGMT AND ITS IMPORTANCE IN
RETAIL INDUSTRY OF
AUSTRALIA
Anant Mathur | Prateek Parshwa | Sanket
Golechha
MGB JAN
‘14

2. AGENDA
 Research Objectives
 Literature Review
 Secondary Research
 FMCG Industry
 IT Systems
 Primary Research
 Challenges in e-SCM
 What can we expect in future
 Research Methodology
 Timeline
2

3. RESEARCH OBJECTIVES
 To study e-Supply Chain Management and its
scope
 To study the FMCG Industry of Australia
 To study the importance of e-Supply Chain
Management in retail industry of Australia
3

4. WHAT IS SCM?
Management of upstream and downstream
relationships in order to deliver superior
customer value at less cost to the Supply
Chain as a whole (Christopher, 1998).
4

5. FACTORS IN SUPPLY CHAIN
NETWORK
 Inventory
 Transportation
 Facilities and
Handling
 Information
Technology
 Response Time
 Product Variety
 Product Availability
 Customer
Experience
 Order Visibility
 Return Ability
5
COST FACTORS SERVICE FACTORS

6. ELECTRONIC SUPPLY CHAIN
MANAGEMENT (WHAT)
By operating the overall solution plan via internet,
one integrates the product procedure from the
material supplier, manufacturer, wholesaler,
retailer to customer as a supply chain system
which allows the immediate sharing of
information such as production, stocks and
selling among the enterprise (Chang and Tsia,
2006)
6

7. EVOLUTION (WHEN)
Phase 1
• Warehousing and Transportation (till
1960)
Phase 2
• Total Cost Management (till 1980)
Phase 3
• Integrated Logistics Management (till
1990)
Phase 4
• Supply Chain Management (till 2000)
Phase 5
• e-Supply Chain Management (from 2000)
7

8. FACTORS FOR EVOLUTION
OF
e-SUPPLY CHAIN (WHY)
 Additional cost reduction and improvements in the
process
 Introduction of computerization for better
management
 Improve efficiency and agility for better demand
planning
 Tendency for outsourcing non core activities of the
business
 Explosive expansion of Global Commerce
 To stay connected with the stake holders through
a network
 Information availability and visibility
8

9. BENEFITS OF e–SUPPLY
CHAIN
 Lower cost by choosing from larger supplier base
 Reduction in cycle time and inventories
 Increasing efficiency and minimizing bullwhip
effect
 Information visibility and sharing with real time
communication
 Order tracking and faster delivery
 Faster market adaptations with better forecasting
and demand planning
 Cost savings and increased profits
9

10. IMPACT OF e-SCM
 IT changes industry structure and rules of
competition
 Creates competitive advantage
 Creates business opportunities
 Strategic planning with day to day centralized
operations
 Supply Chains have become less integrated
and more market oriented
 Change of power from seller to buyer
10

11. VALUE CHAIN OF SCM
AND e-SCM
Asset Core
Competencie
s
Inputs and
Raw Material
Product
Offering
Channels
The
Customer
The
Customer
Channels
Product
Offering
Inputs and
Raw Material
Asset Core
Competencie
s
Traditional Supply Chain
Electronic Supply Chain
Source: Ivanovaska and Kaleshovaska, 2014
11

12. Retail Industry and its Supply Chain
SECONDARY RESEARCH12

13. CURRENT RETAIL INDUSTRY
 More than 133,000 retail outlets across the
country
 Employs 1.2 million people; 10.5% of total
employment
 GDP of 4.9% in 2009 – 10
13
Retail Environment 2009 2020 Forecast
Supermarket share of
top two players
78% (80-85)%
Pvt. Label share of
Supermarket Sales
25% (2010) 40%
Source: Productivity Commission Interim Report, 2014

14. PRIVATE LABEL
PERCEPTION ACROSS THE
WORLD
Source: The Nielsen Company, Global Online Survey, Q3 2010
14

15. STORE-BASED RETAILING
BRAND SHARES
(PERCENTAGE)
BRAND COMPANY 2010 2011 2012 2013
Woolworths Woolworths Ltd. 16 16.2 16.7 17.1
Coles Wesfarmers Ltd. 11.8 12 12.4 12.6
IGA Metcash Ltd. 4.3 4.4 4.4 4.8
Metcash
Liquor
Metcash Ltd. 2.5 2.5 2.4 2.4
Bunnings Wesfarmers Ltd. 1.6 1.7 1.8 1.9
Big W Woolworths Ltd. 1.9 1.9 1.9 1.9
K-mart Wesfarmers Ltd. 1.9 1.8 1.9 1.9
Target Wesfarmers Ltd. 1.8 1.7 1.7 1.6
Aldi Aldi Stores 1.2 1.3 1.3 1.4
7-Eleven 7-Eleven Stores 0.7 0.8 0.8 0.8
Amcal Sigma Pharma. 0.5 0.5 0.5 0.6
Source: Euromonitor International from official Statistics, 2012
15

16. RETAIL MARKET STRUCTURE
AND CONCENTRATION
Category Major supermarket chains share of
sales(approx.)
Packaged Groceries 70%
Fruits and Vegetables 50%
Fresh Meat 50%
Bakery Products 50%
Dairy Products 50-60%
Deli Products 50-60%
Eggs 50%
Source: Australian Competition and Consumer Commission, Inquiry into the competitiveness of retail prices of std.
16

17. INDUSTRY TURNOVER
($Billion)
Source: ABS Catalogue Number 8155.0, Catalogue Number 7503.0, 2008-09
17

18. CHALLENGES OF INDUSTRY
Source : Website of Australian Food and Grocery Council
18

19. WORKFORCE
PARTICIPATION
QUALIFICATIONS
Source: ABS Catalogue Number 6306.0, Employee Earnings and Hours, 2010
19

20. SWOT ANALYSIS OF THE
INDUSTRY
Strengths
• Brand
recognition of
top players
• High exchange
rate of AUD
• Greater
knowledge of
local market,
customers and
seasons
• Large
bargaining
power –
squeeze the
Weaknesse
s
• Confined only
to Australia
and New
Zealand
• Frequent price
war due to
absence of
fixed retail
prices
• High labour
and occupancy
costs
• Trading hours
and other
Opportuniti
es
• Social
Commerce
• Mobile
Commerce
• Global
Expansion
Threats
• Threat of new
entrants (IKEA
Group,
Amazon,
Costco)
• Rise of Private
Label Brands
• Rise of
e-Commerce
20

21. FUTURE OF THE INDUSTRY
 Retail market to remain highly concentrated
between Coles and Woolworths and retain a
market share of 80%
 Private Label to grow and earn a market share
of 40-50% by 2020
 Imports are expected to increase by 25bn to
47bn by 2020.
 Labour Costs are expected to increase by
3.6% per annum
21
Source : Australian Bureau of Statistics, 2012

22. IT SYSTEMS22

23. RADIO FREQUENCY
IDENTIFICATION
 RFID (Radio Frequency Identification) is a
technology that incorporates the use of
electromagnetic or electrostatic coupling in the
radio frequency (RF) portion of the
electromagnetic spectrum to uniquely identify an
object, animal, or person (Wamba and Boeck,
2008)
 Uses in Retail Industry
 Security
 Real Time Data
23

24. ENTERPRISE RESOURCE
PLANNING
 Enterprise Resource Planning (ERP) systems
are software packages composed of several
modules, such as human resources, sales,
finance and production, providing cross-
organization integration of data through
embedded business Processes’ (Parr and
Shanks, 2000)
 Uses in Retail Industry
 Single control point
 Inventory management and carrying cost
 Data integrity/Consolidation
 Standardization
24

25. ELECTRONIC DATA
INTERCHANGE
 EDI is the electronic transfer from computer to
computer of commercial or administrative
transactions using an agreed standard to
structure the transaction or message, data
between two machines’ (Rapporteurs, 1990)
 Uses in Retail Industry
 Data Security
 Reduced paper work and errors
 Fast data transfer
 Enhanced trade relations
25

26. POINT OF SALE
 POS is defined as a system that provides a
unified order, payment and service experience
to customer at field location (Anand, 2009)
 Uses in Retail Industry
 Internal collaboration
 Transactional data collection
 Inventory information
 Ease of check out
 Ease of operations
26

27. ACADEMIC EXPERTS AND INDUSTRIAL
EXPERTS
PRIMARY RESEARCH27

28. ACADEMIC AND INDUSTRIAL
EXPERTS
 Academic expert – Dr. Stephen Waters,
Sydney Business School
 Academic expert – Dr. Rama K. Ramanathan,
University of Western Sydney
 Industrial expert – Mr. Tarang Jain; Group
Procurement buyer, Woolworths Ltd.
 Industrial expert – Mr. Naresh Rao; Owner,
Indian Groceries store
28

29. RETAIL INDUSTRY
 Increasing competition – Aldi, Costco, etc
 Innovative strategies – Aldi
 Low variety
 Simplistic design of the store
 Cheaper products
 Innovative strategies – Costco
 Customer lock-in
 Bulk buying
 Survival of small retailers is difficult
29

30. PREFERENCES OF
WOOLWORTHS
 Contractual buying
 Bulk purchasing
 IT system compatibility
 Minimum lead time
 Procure to Pay system
30

31. IT IN SALES AND
PROCUREMENT CYCLE
ERP
EDI
RFID/Barcode
Scanning
ERP
POS
31

32. ROLE OF ERP AT RETAIL
OUTLET
 Product requirement
 Communication of requirement list to
Distribution Centre
 Communication through Electronic Data
Interchange
32

33. ROLE OF ERP AT
DISTRIBUTION CENTRE
 Receipt of requirement list from the retail outlet
 Inventory check
 Order placement
 Generation of Purchase Order
 Selection of Vendor
 Interaction with Electronic Data Interchange
33

34. ROLE OF EDI
 Receipt of Purchase Order
 Interact with vendor’s Electronic Data
Interchange
 Communication of the order
 Interaction with vendor’s ERP
34

35. ROLE OF RFID/BARCODE
 Dispatch of product by vendor with
RFID/Barcode
 Real time tracking of product movement
 Safety and security of goods
 Receipt of product at Distribution Centre
 Product scanning through ERP
35

36. ROLE OF ERP (RECEIPT OF
ORDER)
 Inventory update in the system
 Assessment of retail outlet’s requirement
 Dispatching products to retail outlets
 Optimization of transportation
 Communication through EDI
 Receipt of order at retail outlet with RFID and
Barcodes
 Inventory update at retail outlet
36

37. ROLE OF POINT OF SALE
 Generation of Sales Receipt
 Maintenance of Cash register
 Sales tracking
 Real time Inventory updates
 Interaction with Inventory Management
System/ERP
37

38. OPERATIONS IN SMALL RETAIL
OUTLET
 IT systems in use
 Electronic Cash Register
 Barcode scanning
 Lesser inventory
 Reliability on Human Resource
 Cost conscious
38

39. CHALLENGES FACED
 Obsolesce of existing system and right time to
upgrade
 Increasing costs with better technology
 Interference of other types of waves (Ultrasonic,
Micro) in RFID transmissions
 Drop in efficiency of RFID when in contact with
water or metal
 Training along with installation of new system
 Dependency on other corresponding systems
 Unforeseen IT failures reduces reliability
39

40. WHAT CAN WE EXPECT IN
FUTURE
 Less dependency on Human Resource
 Increasing reliance on Big Data
 Virtual experience
40

41. RESEARCH METHODOLOGY
 Interview with Supply
Chain Academic and
Industry experts
 Interview Supply Chain
Managers of Retail
Outlets
 Enquiry on the usage
and relevance of
Information Technology
in Supply Chain
Management
 Information through
journals, books and
research papers
 Visit to Australian
Statistical Centre
website for Australian
specific statistics
 Referring articles on the
web for literature review
Primary Secondary
41

42. TIMELINE
19th May
2014
Team
Formation
20th June
2014
Finalization
of statement
of Purpose
21st June
2014
Ongoing
Literature
Review
1st July
2014
Secondary
Research
compilation
21st -
25th July
2014
Primary
Research
August
2014
Final
Presentatio
n and
submission
of the report
42

43. QUESTIONS PLEASE
THANK YOU43