Research proposal on supply chain management at Walls Ice Cream UK

Introduction

In the increasingly competitive business environments, focus has shifted to the efficiency of the retail management systems and the supply chain management as a whole in providing a competitive advantage to the businesses (Walters, 2006). The essence of good supply chain management is the provision of goods at the convenience of the customers in a manner that ensures that the organizational costs are kept at a minimum. This study focus on an Ice cream firm (Walls Ice Cream UK) with an aim to reveal the weaknesses in their retail logistics and make recommendations on how they can improve their supply chain management through the adoption of an effective logistics mix that would set them above their competitors while keeping their costs at the lowest point possible. The research shall involve the use of questionnaires (on the Walls Ice Cream UK) as well as an extensive review of the various practices relating to retail logistics in the perishable food industry in the UK. These insights will be used in making recommendations on how Walls Ice Cream UK can improve its profitability through effective supply chain management and effective retail logistics management.

Topic

How Walls Ice Cream UK can improve its retail logistics mix and supply chain management to ensure higher organizational performance

Aims and objectives

This aims to recommend ways in which Walls Ice Cream UK can boost its profitability by embracing effective supply chain management styles as well as focusing on the use of efficient retail logistics management. The study shall firstly explore the supply chain management styles already in practice at the Walls Ice Cream UK and outline them accordingly. It shall then focus on analyzing the various studies dedicated to analyzing the various ways in which other firms in related industries have been able to improve their performance through the adoption of effective supply chain management styles. Having made the requisite comparisons, the study shall recommend the ways in which Walls Ice Cream UK could improve its supply chain management. The research questions to be answered include:

·         In what ways does distribution affect the financial performance of organizations?

·         What is the retail logistics mix and what are its defining components?

·         How does Walls Ice Cream UK manage its supply chain and what retail logistics are involved?

·         What are the general trends in retail logistics mix and supply chain management styles in the UK and what is their relative contribution on the financial performance of organizations?

·         How can Walls Ice Cream UK improve its supply chain management to boost and sustain its financial performance in the market?

Conceptual framework

This research is based on the premise that supply chain management is a key contributor to the financial performance of any enterprise.

Rationale

Unlike other studies that tend to focus on general trends across different industries, this research is company-specific. Its findings and recommendations are therefore expected to be specific to the company mentioned and therefore not applicable prima facie to other organizations without meaningful modifications. This aspect distinguishes this research from past studies. The information gathered in this study is expected to provide Walls Ice Cream UK with invaluable insight into the ways in which they can improve their financial performance and enhance their competitive advantage using proper supply chain management styles and the use of an effective retail logistics mix. The study is also expected to provide a strong basis for future research on the impact of retail chain management on the effectiveness of individual companies across the UK.  

Literature review

According to Fisher (1997), the good performance of an organization is dependent on how it combines effective retail logistics with the choice of suitable supply chains and general practice of good supply chain management. The process of building customer confidence requires an established reliability of the chosen channels of distribution to ensure constant availability of the goods in good form in the selected outlets (Kogan Page Ltd, 2009). On the other hand, organizations need to guard against the temptation to overstock inventories in their warehouses in the guise of ensuring supplies are available to the retail outlets whenever needed. The balance between the retail logistics and ensuring the goods are readily available to customers at the designated outlet is what is generally referred to as the supply chain management (Dubois, Hulten and Pedersen, 2004).

The logistics involved in retailing of goods can be very expensive to the organizations if not organized in an efficient manner. The main cost that manufacturers need to guard against is the cost associated with the holding of inventories for protracted lengths of time which may lead to spoilage and depreciation of the inventories before sale to the target consumers (Carter and Ellram, 1998). In their publication, Razzaque and Sheng (1998) observed that good coordination of the retail logistics can lead to the reduction of the cost of the products, which may in turn allow the organizations to either gain superior profits or enable them to reduce their prices and in the process gain a competitive advantage over other market players. Good retail logistics can also help ensure constant supply of the goods in the retail outlets. This may help build the customer confidence in such retail outlets hence giving the organizations a strategic advantage in the market through the creation of loyal customers. Various factors have been known to have a significant influence on the decisions that organizations may take in relation to the retail logistics that they may adopt from time to time. Such factors may include the legal and environmental concerns may have an influence on the manner of packaging that organizations may choose to have for their products (Towil and Christopher, 2002).

While this move may have been costly at the beginning, many organizations, especially those in the food industry have found the recycling of packaging materials to be quite useful in containing their costs thereby improving their bottom lines. Retail management goes beyond the act of simply manufacturing and availing the products to the retail outlets in good time: it also involves the art of making accurate predictions on the demand trends and making appropriate adjustments to ensure that the organization can capitalize on the arising opportunities and minimizing their costs when unfavorable conditions arise (Gunaesekaran and Ngai, 2006). For instance, when the meteorologists predict extremely high temperatures in a given area, the organization must increase their stocks in the retail outlets in the affected areas in order to maximize on the likelihood of the demand for ice cream going up. Similarly, the amount of inventories to be stocked at the retail outlets need to be scaled down at the onset of a cold season in order to avoid high costs associated with overstocking inventories. Scholars categorize the components of retail logistics into five: storage facilities, inventory, transportation, unitization and packaging, and communication (Croom, Romano and Giannakis, 2000). The storage facilities or warehouses are used by the retail outlets to stock goods that they anticipate would be needed at any particular time before the arrival of any additional stocks from the manufacturers.

The concerns on inventory mainly focus on the amount of inventory to be kept in store at the retail outlets. An efficient logistics management system should be able to provide guidance on the figures required to ensure that the inventories stocked are just the right quantity that will meet the customers’ needs while minimizing any losses (Smith and Sparks, 2004). The transportation element involves the selection of the most efficient and cost effective form of transport for the inventory in question. It may also involve the scheduling of the mode of transport in a manner that ensures that delivery is timely and reliable thereby reducing the need to stock a higher amount of inventory as would be necessary where the transportation modes prove to be unreliable. The unitization and packaging involves the packaging of goods in a manner that allows the consumers to purchase the quantities of the goods needed with relative ease (Fernie and Sparks, 1998). The consumers that require smaller units should be able to access the products with as much ease as those who require higher quantities of the same products. The element of communication involves the sharing of information between the manufacturers and the retail outlets on the demand trends and the quantities of goods required at a particular time.

The delivery of the right quantity of goods enables the retail outlets to remain stably stocked, a phenomenon that allows them build the requisite customer confidence they need to maintain a strong performance in the market. The logistics mix enables the combination of these five elements in a manner that creates a synergy which results in highly effective and cost effective retail logistics management system which helps achieve a high profitability for the organization. The trends in most markets have seen a surge in the level of cooperation between the manufacturers and the retail outlets where the retailers are increasingly becoming influential in determining the type and amount of inventory that can be stocked with them at any particular time (Cheung, 2010). This is a sharp break from the past where manufacturers simply anticipated demand and deposited their products at the retail shops for sale. The changing trends have also been able to capture the various steps that organizations take to improve their retail logistics. Key among these has been the cutting down of the amount of inventories to be stocked at the retail outlets that potentially result in the reduced suitability of the products (especially perishable foods) (Cheung, 2010). The focus has instead shifted to ensuring efficient delivery systems that avail the goods to the retail outlets as soon as the inventories are required. This improvement has led to a reduction of the order lead time required for the deliveries as well as the enhanced functionality between various retail outlets that enable the manufacturer cut on the cost of transport Cheung, 2010. Retail management has also focused on ensuring the efficiency of the return of the use packaging materials for re-use and recycling. The recent market trends that have seen the consumers’ preference for environment-friendly packaging on the rise has shaped the concept of retail management and most organizations have sought to use their retail outlets as a crucial collection point for the materials to be re-channeled to the factories for recycling and re-use.

The concept of supply chain management can be attributed to the works of Peter Drucker in his 1962 discussion which viewed distribution as one of the functions of business organizations whose costs could be greatly reduced through the introduction of more efficient systems (Drucker, 1962). He focused on the reduction of duplication of functions and the optimization of the properly placed functions in order to ensure a well coordinated and effective distribution system that would be both reliable and cost effective. The main theories that are associated with the supply chain management concept include the resource-based theory of firms, the value chain, the network theory, and the transaction cost economics (Harland, Lamming and Cousins, 1999). The aim of the supply chain management is to give the organization a competitive advantage through the effective and efficient distribution of their products in the market. Supply chain management has gained prominence with the acknowledgement of the fact that efficient management not only saves time and money, but also enables the firms to gain a competitive advantage over other market players.

Methodology

Research strategy

The research shall mainly dwell on secondary sources although with a significant input of primary research. The primary research shall be used to determine the supply chain management styles as well as the retail logistics mix in use at Walls Ice Cream UK. The thrust of the research, which is centered around making recommendations on how Walls Ice Cream UK can improve its financial performance through effective supply chain management, shall be based on the review of previous studies and industry reports which have been dedicated to finding ways on how companies in various industries can improve their performance. This data will mainly be obtained from official publications of companies, industry reports, economic journals and other reliable sources.

Research philosophy

The dominating view to be applicable in this study shall be the realist philosophy. It shall constitute both the perceptions of individuals to be featured on the surveys as well as proven data from across a number of related industries (Research philosophies, 2009). This paradigm will ensure that the information gathered can be relied upon for making changes in the way an organization conducts its business.

Population and sample

The population shall consist of the members of staff of Walls Ice Cream UK. Out of these, 5 employees whose functions are related to distribution and overall organizational performance (management level staff) shall be interviewed.

Methods

The interviews shall be face-to-face interviews. This kind of interviews is popular among researchers due to their ability to provide the researcher with in-depth views on the subject at hand. The scheduling of the interviews shall be by mutual consent and the use of recorders shall be employed ensure ease of analysis with minimal loss of data.

Analysis and presentation

This shall be done quantitatively and qualitatively. The data collected shall be presented with use of visual aids such as charts and various figures in order to create quick understanding. The analysis shall also incorporate findings from secondary data and shall be presented with utmost clarity to ensure that palatability of the information.

Anticipated limitations

It is feared that there may be insufficient information to allow for the study to make compelling recommendations. If this limitation occurs, the research shall use it as a basis for the recommendation of additional research on the subject.

Resources required

The resources required for this exercise will be the internet, finances to organize for interviews, and the finances to search for relevant company and industry reports needed for the research.

References

Carter, C R., and Ellram, L.M. (1998). Reverse logistics: a review of the literature and framework for future investigation, Journal of Business Logistics, 19 (1), 85–102

Cheung, M. (2010). A comparison of two logistic systems in the UK and China Frozen food industries. University of Nottingham. Retrieved April 29, 2011 from: http://edissertations.nottingham.ac.uk/287/1/06MSclixmhc.pdf

Croom, S., Romano, P., and Giannakis, M. (2000). Supply Chain Management: An Analytical Framework for Critical Literature Review. European Journal of Purchasing and Supply Mangagement, 6, 67-83

Drucker, P. (1962). The economy’s dark continent. Fortune, April, 265–70

Dubois, A.., Hulten, K., and Pedersen, A.C. (2004). Supply Chain and interdependence: a theoretical analysis. European Journal of Purchasing and Supply Management, 10 (2) 3-9

Fernie, J., and Sparks, L. (1998). Logistics and Retail Management, London: Kogan Page

Fisher, M. (1997). What is the right supply chain for your product? Harvard Business Review. March-April. Retrieved April 29, 2011 from: http://www.computingscience.nl/docs/vakken/scm/Fisher.pdf

Gunaesekaran, A., and Ngai, E.W.T. (2005). Build-To-Order Supply Chain Management: a Literature Review and Framework for Development. Journal of Operations Management, 23, 423-451

Harland, C.M., Lamming, R.C., and Cousins, P.D. (1999). Developing the concept of supply strategy. International Journal of Operations and Production Management, 19 (7) 650-673

Kogan Page Ltd, (2009). Logistics and retail management: emerging issues and new challenges in the retail supply chain. 3^rd Ed. Retrieved April 29, 2011 from: http://www.iibms.org/DownLoads/rename-Ebooks/Logistics%20and%20Retail.pdf

Razzaque M., Sheng C. (1998). Outsourcing of logistics functions: a literature survey, International Journal of Physical Distribution & Logistics Management, 28 (2)

Research Philosophies, (2009). Research Philosophies- Importance and Relevance. Retrieved April 15, 2011 from:  http://www.networkedcranfield.com/cell/Assigment%20Submissions/research%20philosophy%20-%20issue%201%20-%20final.pdf

Smith, D.L.G., and Sparks, L. (2004).  Logistics in Tesco: past, present and future, in (eds) J Fernie and L Sparks, Logistics and Retail Management, 2nd Ed, London: Kogan Page

Towill, D., and Christopher, M. (2002). The supply chain strategy conundrum: to be lean or agile or to be lean and agile?, International Journal of Logistics, 5 (3), 299–309

Walters, D. (2006). Demand chain effectiveness – supply chain efficiencies, Journal of Enterprise Information, 19, 246–251