Nor Maya Binti Salman

2009323773
Supply Chain And Distribution Management –MKT757
Test 1

Question 1
The main goal of effective logistics and supply chain management is providing of
competitive advantage. The foundations for success in the marketplace are numerous, but a
simple model is based around the triangular linkage of the company, its customers and its
competitors - three-way relationship. The source of competitive advantage is found firstly in
the ability of the organization to differentiate itself, in the eyes of the customer, from its
competition and secondly by operating at a lower cost and hence at greater profit. Seeking a
sustainable competitive advantage has become the concern of every manager who is alert
to the realities of the marketplace. It is no longer acceptable to assume that good products
will sell themselves, neither is it advisable to imagine that success today will carry forward
into tomorrow.

First, Think Strategically:

Beware of Cost Advantages: As the initial step, you must think about the direction you’re
headed ‐‐ what is the competitive advantage you really have? If it’s just price, that probably
will not be good enough, because every sinking competitor will cut its prices to survive,
catching you potentially in a death‐spiral of endless cost‐cutting. Squeezing suppliers who
are undercapitalized and strapped for cash will probably be counter‐productive and my just
drive them out of business. A strategic focus on competitive advantage and value creation
is, in the longer view, more important. Innovation is a more powerful advantage than low
cost.

Supply Chain as a Strategic Asset: If your outside purchases are more than 40% of your total
corporate budget, then your supply chain is a strategic asset, but most probably it’s not
been used to create a real competitive advantage, although it should be. The best
companies, like Toyota and Honda, collaborate with their suppliers to create massive
advantage by focusing on innovations, including those that will lower the cost of flowing
products and services efficiently throughout the entire supply chain.

For example Carrefour using the EDI system in their supply chain management. EDI was
originally conceived to target « zero paper » and for data processing: have available rapidly
an exhaustive and reliable information. In practice, EDI allows to reduce considerably
human intervention in data processing, and thus makes it faster and more reliable. This
allows to fluidify the information flow, and to reduce considerably processing costs while
improving the security of transactions

Acceleration of commercial cycles

Electronic exchanges between partners reduce considerably the cycles «order/delivery»
and «invoice/payment». They allow stock reduction and a better cashflow management.
They enable precision in the follow-up and traceability of goods. They serve as basis for
automating some operations.
Reduction of administrative costs
Savings realized are proportional to the volume of the dematerialized flows and the
processing automation in place, in particular through messages integration in the
information system.

Reduction of keyboarding time

- Reduction of direct costs (data processing costs)
- Reduction of indirect costs linked to keyboarding errors
- Reduction of litigations thanks to automatic integration

Reinforcement of collaboration
- Simplification or current and future exchanges
- Contribution of additional services
- Development of partnerships
Second, Focus on Your Customers:
Keeping your Customer Competitive: New economic realities demand dramatically different
thinking from the past. This time around you’ve got to think about how to keep your
customer alive, too. If your customer is not healthy, you will inherit the malady! More
businesses fail for lack of sales and strategic positioning than other reasons. Remember the
top‐line: REVENUES; it’s the only line on your operating statement that makes a positive
contribution to profit. Understand the Customer’s Value Needs: But don’t start with what
you want to “sell” to a customer. Instead, set up a meeting with your top ten or twenty
customers. Then explain to them you are seeking ways in which to create competitive
advantage for them. The objective is to make your customer more successful by: offering
them new innovations that will help them thrive and beat their competition, thus increasing
their revenues and profits, which, in turn increases your revenues. Seldom will the
customer’s procurement people know the answers to these questions; you’ll probably need
to speak directly to senior management.

Towards a better understanding of our consumers

Knowledge of the needs and buying habits of our customers is key to improve constantly
our client's satisfaction.
This satisfaction has to come from an optimal assortment, the best products in store, and a
buying experience compliant to the customer's expectations.

Through the loyalty cards, Carrefour is able to analyze the information gathered and be as
close as possible to the consumer's needs.

Client Datasharing consists in the secure and reliable exchange of part of this information
with our suppliers in order to improve collaboratively the consumers experience at the
buying and consumption point.

Merchandises DataSharing consists in the exchange of POS (Point of Sale) data aggregated
or detailed, allowing the supplier to make analysis, such as:
- Promotional efficiency
- Evolution of product sales
- Supplier benchmark in its category
- Regional analysis

Carrefour is providing information

- A the international level, for all store formats and countries, with different levels of
granularity and additional analysis
- At the national level, in order to take into account specific country information and
detailed information per point of sale.
Third, Concentrate on Value & Innovation Flows
Engage your Chief Supply Chain Officer: Your key supply professional should be an integral
part of the customer discussions – they need to know what creates competitive advantage
for your best customers so that innovations from key suppliers can flow through to key
customers. Cash flows in the opposite direction and in direct response to value and
innovation flows. If you want to generate cash, find ways to create value and useable
innovation. Be sure to learn what the customer truly values and what innovations will create
competitive advantage.

Innovation from Suppliers: Some of the most important innovations are simply “process”
innovations that eliminate non‐value added and cut time and cost, without eroding the
profit margins of suppliers. (Toyota and Honda are experts at this.) However these are often
the most difficult to identify and replicate because they look invisible. In the larger view, the
most competitive companies at the end of the chain are those that have lined up a series of
best‐in‐class companies contributing to the end product/service. In other words, this is a
battle of value chains. Thus, thinking of your suppliers strategically and getting your
customers to treat you strategically in the creation of value is a powerful weapon in the
competitive battle.

Carrefour use and practice Vendor Managed Inventory is an ECR (Efficient Consumer
Response) best practice between manufacturers and retailers aiming at supplying
warehouses and/or stores according to management rules defined in a cooperation
contract.

The supply management of the retailer is transmitted to the manufacturer through a shared
process. Vendor Managed Inventory optimizes the supply process through the exchange of
stock and/or sell data.

Based on this information, the manufacturer establishes an order proposal which may be
validated by the retailer.

The VMI objectives can be summed up :

- Improve the Supply Chain efficiency by reducing stock levels and transport costs, while
improving the service level
- Optimize demand management through anticipation and better planning

Two VMI models

- VMI with confirmation by the retailer of the order proposal generated by the manufacturer
(CMI, Co-Managed Inventory)
- VMI without confirmation by the retailer of the order generated by the manufacturer
(VMI, Vendor-Managed Inventory)
Fourth, Build a System of Trust & Teamwork:
Trust is the Foundation of Teamwork & Innovation: Great leaders understand that … Trust
unleashes and focuses the latent human energy in an organization, resulting in enormous
productivity and innovation. Internal teams function to keep your organization alive.
Alliances with customers, other providers, and suppliers are the external teams that can
radically improve your prospects for success.

Trust is a Competitive Advantage: Our initial research is indicating that there is up to a 50%
competitive advantage for companies that have high trust with their suppliers and
customers, as opposed to those with deep distrust. This is a massive advantage that’s too
often overlooked in companies. It is a terrible cost of doing business that is, for all intents
and purposes, hidden from view ‐‐ it never gets reported on the balance sheet or P&L,
because, like a poison, it’s imbedded in every line item. Every leader at every level of the
organization should be attuned to creating trust, because it costs far less to have trust than
the alternative ‐‐ nagging, gnawing distrust that daily pilfers people’s energies and creativity.
Yet most leaders tell us that their relationships in business are filled with manipulation,
deceit, criticism, extraneous legal protections, posturing, skimming, hidden agendas, and
subtle trickery that damages good decision‐making, slows down communications flows, and
blocks creativity and innovation.

For example Carrefour, practise Data Synchronization consists in all the activities linked to
the acquisition of the product information (in creation and update) with the suppliers in an
electronic form (« dematerialization of the data»)

The quality of the product information is essential in the good functioning of the processes
of the Supply Chain.
The improvement of the Master Data introduction process thus depends on the capacity of
Carrefour and its suppliers to exchange some qualitative data.

The common target is to supply to our customers:

the right product, in the right place, at the right time and at the right price.

For that purpose, Carrefour implemented a solution called DataSync allowing the acquisition
of product data via 3 possible acquisition channels
- Webform / Upload of data
- Peer to Peer : Exchanges of files standardized
- Global Data Synchronization Network

Carrefour' strategy leans mainly on the Global Data Synchronization Network

Indeed, GDS corresponds to the exchange of product information with the suppliers through
a network of electronic catalogues ( GDSN), according to standardized data model and
exchange processes.
The supplier publishes his catalogue on the GDS network, and makes it available for all the
distributors, thus replacing spreadsheets, portal or EANCOM messages which the suppliers
currently use.
For the retailer, it is the possibility of receiving in a single point of entry of the already
dematerialized, standardized and reliable data

Question 2

The contemporary business environment has become complex and competitive forcing
organizations to be strategic in their internal and external structures in order to effectively survive
the storm. With globalization tending to control the flow of international trade, firms are adjusting
themselves with corporate strategies that not only involve diversification, but also organizational
structures that can effectively allow them to gain competitive advantage in the global market.
Indeed, globalization and technological advancement have influenced companies to seek ways of
optimal space management, cost effectiveness, optimal human resource capacity and operational
efficiency. In this regard, firms have resorted to outsourcing various organizational functions and
maintaining only the most sensitive and those that can be easily and competently managed within
the firm. Some of the mostly outsourced functions are customer service (help desk) functions,
technological supply and maintenance, human resource recruitment, security services and cleaning
services among others.
In simple terms, outsourcing may be defined as contracting outside agency for the management of a
firm’s operations that otherwise could have been managed through in-house staff (Lock, p. 149).
Outsourcing may be beneficial to a company especially in terms of cost saving, production efficiency,
knowledge blending, operational flexibility and resource mobilization. However despite these
benefits, outsourcing may have damaging impacts on the firm itself especially in terms of quality,
customer service and security. This paper wills discus the reasons as to why outsourcing is a bad idea
for a company.
Over the last few years, companies, especially the multinationals have embraced outsourcing as a
means of restructuring their business. With the current economic crisis biting the global business
world, many firms have found an escape route of downsizing to outsourcing causing limited negative
impacts that could have been realized through formal downsizing/staff lay off procedure (Hira and
Hira, 2008). In addition, many multinationals and transnational have realized the benefit of
outsourcing services from developing countries where input costs (labor and raw materials) are
cheaper than the developed countries. This has been one of the major contributing factors behind
the rapid growth of some developing countries like India and some East Asia and African countries.
For example, most American and Japanese auto makers have been outsourcing labor from India due
to low salaries thus saving on operation costs. However, low cost is always the case especially when
outsourcing specialized skills that require a huge paycheck. In addition some internal processes such
as internal audit and payroll management are costly to outsource (Bragg, 2001, 406).
For outsourcing to succeed, the company outsourcing should be capable of validating the
outsourced provider’s ability to provide throughput with expected quality, low cost and within
required time frame. Where a company lacks adequate processes to validate this, consequences of
poor quality, cost and time overruns may result leading to ineffectiveness of the outsourcing
process.
Quality of work may feature significantly in the outsourcing process especially where the company
outsourcing has no direct contact or control of the company performing the outsourced function.
Communication problems between the contracting company and the outsourced company may
hinder the efficiency of service delivery, especially considering that the outsourced company needs
to perform the tasks with reference to the organizational mission, strategies and goals. It is also
worth noting that, the overall responsibility and accountability of the results from the contracted
activities lies with the outsourcing company and therefore it should be involved in decision making
as well as constant/regular monitoring and review of the progress of the outsourced functions.
Service delivery including customer service may be compromised especially where the customers
have to contact the contracted firm for business issues. Where a company outsource call center
operations or technical operations from an oversees firm, communication between the company
and the customers may be affected especially where the contracted firm has to make reference
(which may take time) from the company or wrong information is provided, the customer tends to
be less satisfied and may even switch to competing firm in the long run. In this case, outsourcing
may lead to loss of customers in the wrong run due to ineffective communication and time overruns.

Outsourcing that involves different countries with different time zones may also be ineffective. This
is due to the fact that, the customer who is in the same time zone with company may not get what
he/she requires from the company directly but has to wait for odd hours to contact the outsourced
firm. This leads to dissatisfaction and lost time on the side of the customer who may as well seek
services from a more flexible company. In addition, customer identity and loyalty may be affected as
most customers like identifying themselves with the company whose products they are consuming