MGT2104 Quality Management

Student ID: 18007088

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1 Both conventional and e-commerce retail logistics have their own

benefits and drawbacks from a green transportation view. But first,
what is green logistics/transportation? Green transportation refers to
the process and activities done to make the entire logistic aspect of a
business more sustainable for the long run. The main aim is to reduce
environmental impact and minimize various waste. This is done by
“greening” the facility, inventory and lastly the transportation area of a
business.

Conventional retail logistics is a simple modal or chain where goods

move a relatively straight and direct through the whole process. Goods
from suppliers will be sent to the regional distribution center (RDC) to
be stored in large quantities/bulk. Then the items are distributed to
various retailers in different places according to demand. Lastly, final
consumers can travel to the physical store to purchase their wants and
needs.

However, for e-commerce retail logistics, there are more components

and parties involved and the passage of item is not so straight forward.
Almost all the process happens online as the retailer’s platform or
website has replaced the traditional physical store. Goods from the
suppliers are placed at the storage facility while waiting orders. When
item order is placed by the customer, e-retailer will notify e-fulfillment
centers (EFC). EFC will process the requirements such as item quantity
and modal for example then proceed to packaging process. Once
packaged, the item is handed over to the designated delivery company
to complete the home delivery process. Final consumers can pay online
or cash on delivery and track their items along the way.

As mentioned just now, both methods have their specific way for
several processes such as inventory management, delivery, and
packaging at different sustainable levels.
MGT2104 Quality Management

Student ID: 18007088

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Conventional Retail Logistics

Starting with the benefits, the main advantage of conventional retail

model is that it has no delivery cost for the consumers. Consumers must
travel to the physical shop to buy and receive their wanted item. This is
because most physical stores do not have their own or 3rd party delivery
company unless they receive a bulk order. By not having a delivery
company to deliver items, several environmental impacts are reduced.
Since delivery companies might have lots of items to deliver in an area,
they tend to have huge, bulky trucks in operation. These trucks are not
the most efficient vehicles for the job especially last mile delivery as it
consumes more fuel (diesel) and emits a substantial amount of carbon
dioxide (Co2) in the process compared to a regular car. Hence when
consumers use their cars or even the public transport to reach the retail
store, less environmental impact is made.

Another benefit would be reduced return management for the retailer

and manufacturers. Return management is known as reverse logistics.
This type of logistics is done when the consumer is not satisfied with the
received item. Hence the product will be sent back to its manufacturer
through the retailer to be repaired, refurbished, or recycled. When
consumer buys from a retail store, they have the golden opportunity to
view and test the item for defects and faultiness. This reduces the
chance of the item being returned tremendously. Reverse logistics is a
tedious process since it involves more steps and costly as well. The
process of repackaging, reloading, restacking, and delivery is not
beneficial to anyone especially the environment as more resources and
materials such as fuel and packaging paper is being utilized again for a
single product. This essentially double or triples the carbon footprint of
the product. Process above reduces the overall efficiency level of the
operation, thus affecting green logistics.

Now moving in disadvantages. The first would be consumer travel to the

physical store to get what they want. This is only a disadvantage
MGT2104 Quality Management

depending on the location of the store and its surrounding area. For
example, a hardware store located far away in a relatively small town
means that the consumers there do not have a choice but the travel to
the store regardless of the distance. This will increase the Co2 emission
from their vehicles since it’s a longer trip than usual. In the city or urban
area context, the retail shop might be nearer but traffic congestion in
these parts is worse compared to rural areas. More time spent waiting
in an ignited car for the traffic lights and traffic jams will certainly shoot
the greenhouse gas emission level high. Moreover, sound pollution is
also unavoidable in this situation. Both scenarios are not ideal to
support green transportation.

Next disadvantage is physical retailers might need the usage of a second

warehouse to store goods. Since retailer usually purchase in big bulk to
save money from the manufacturers, some retailers need a secondary
warehouse to keep their inventory. This warehouse will require energy
and input to keep it running. Example, electricity usage will increase
with all the lights and tools needed to maintain the warehouse.
Increased electricity usage is not efficient nor “green” as power plants
or dams that generate electricity must run overtime to maintain the
steady supply of current to meet consumer’s demand.

Final disadvantage would be need of physical store. Retailers need to

build a sufficient store to showcase their goods. Building a store might
not be cheap and certainly uses resources such as cement and large
cranes if necessary. Heavy constructions will have several negative
impacts on the environment. First, is low air quality around the area due
to micro debris and Co2 emission from the cranes and tractors. Next
problem is the construction waste itself that covers used wood, tiles,
and large chucks of cement. This waste will have negative impact on the
environment is not disposed properly.

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MGT2104 Quality Management

E-commerce Retail Logistics

Starting with benefits, e-retailers do not need to own multiple

warehouses or physical stores. Most online retailers practice
consolidated warehousing system. This practice allows multiple online
retailers to store, divide and distribute their goods all under one, single
warehouse. Consolidated warehousing supports green logistics as it
helps retailers and logistic service providers to maintain sustainable
operation by maximizing total efficiency. To illustrate, goods from 3
separate retailers can be fitted into a single trailer/truck until maximum
capacity. With this, number of trips can be reduced which directly leads
to less Co2 emission and fuel usage.

Since delivery aspect of online shopping is one of the most important

factors of e-commerce, logistic giants are involving themselves more
into sustainable vehicles. As a result, innovative and green vehicles are
being used more nowadays than before. Compact vans by NinjaVan
Malaysia for example, has a lower carbon emission percentage
compared to standard vans, truck and even most cars on the road. A
lower carbon emission than standard cars indicates that these vans are
quite efficient as well as providing faster delivery. Smaller vehicles such
as compact vans and bikes or even drones by Amazon, is proven to have
faster delivery time than trucks especially last mile delivery. It is such
since smaller vehicles can pass through smaller roads and avoid traffic
better, providing, route-optimization.

The last benefit would be e-commerce pushes retailer to go paper-less.

Going paper-less is an excellent way to reduce waste and move into
green logistics. Since almost all transaction, billing, delivery order and
invoice are kept in the retailer’s operating system/cloud, there is less
need for the parties of the supply chain to have physical copies of these
information. Example, if the logistic provider needs the delivery order
immediately or has lost it, it can be found on the server. Moreover,
online advertisements have also reduced the usage of paper for fliers
and promotion purposes. This is ideal as most or almost all fliers just get
thrown away which contributes to major pollution and wastage.
MGT2104 Quality Management

Now with the downside, e-commerce has a higher return rate of

products to be fixed or replaced. This is common and almost
unavoidable for online retailers as returned products tend to have
higher processing and repairing cost. The item will have to be sent back
to the manufacturers again which uses up fuel and packaging material
for repackaging. Furthermore, it is difficult to foresee return volume
forecast as retailers can’t possibly know it. As a result, only few items
will be shipped back in trucks at a time. Meaning that the truck will
never move in full capacity. Reducing logistic efficiency and increasing
total trips. UPS Malaysia is on the few companies in Malaysia that’s
willing to provide reverse logistics even with the mentioned issues.

Another disadvantage is the usage of packaging material. Most delivery

companies use a ton of packaging material when handling the items.
This both seals the items and protects it from damages. While some
companies such as Amazon use recycled paper and hemp for their
packaging, most logistic providers have single use plastic like such
bubble wrap for their packaging. Since packaging is involved from start
to finish, it has a massive impact on the environment as plastic takes
thousands of years to completely degrade. Plastic packaging will just
end up filling the land field forever.

The last disadvantage is increased electricity usage. E-commerce has no

physical platform as it operates wholly on the internet. Moreover, the
servers that holds data, e-fulfillment center and even computers must
be active all day long since whole operation depends on them. This uses
up electricity way more than a standard retail shop. Increased electricity
usage is not ideal as more power plants will be needed to operate
overtime to supply the constant demand. Burning of fossil fuel releases
astonishing amount of greenhouse gas or (GHG) into the open
environment. As mentioned before these gasses are not beneficial for
the environment as it is not sustainable for the long run, hence goes
against green logistics/transport.

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MGT2104 Quality Management

2 Customer satisfaction is deemed to be the most important aspect to

look for in the product and service industry. Customer needs and
satisfaction depends on the individual; hence it is important to meet
their specific demands. This can be done using Kano’s model of
customer needs. This model helps us to understand customer demands
better by trying to classify product characteristics and how it is seen by
the final customer. Kano’s model has 3 different level or characteristics.
First is known as “must be”. This level satisfies all the necessary features
that customers expect of a product or service. Example, when buying a
secondhand car, customer expects the car’s basic function like air-
conditioning to work. Next is one-dimensional that means the feature is
not compulsory, but customers seem to enjoy it if available. To
illustrate, a larger engine capacity is not a must in every car but
enjoyable to some. Last level is attractive requirement. Known as
elements of surprise that customer didn’t even know about initially.
Done to bring out large positive outcome from customers. For example,
the same secondhand car that was bought comes with a
complementary gift basket and seat covers.

Eco-design or eco-friendly on the other hand is defined as products that

do not cause negative impact on the environment before and during
any stage of production. The product is usually made from recycled
material such as hemp and bamboo for example. Eco-design products
have various traits like repairable, refurbishable and recyclable.

The chosen eco-friendly product is rechargeable battery. Numerous

companies nowadays are coming up with rechargeable batteries such as
Panasonic, Duracell, and Energizer. These batteries are considered eco-
friendly due to ability to be reused for a very long period thus reducing
the manufacturing of regular batteries that increase GHG emission.

The must be characteristics of these batteries would be, it must be able

to charge or power compatible devices in the first place. Since
rechargeable batteries are built different from normal ones, consumers
might doubt is ability to charge certain devices. Another must have is,
tight and nickel casing around the battery. This is to prevent the
batteries from being exposed to the air and corrosion as well. Corrosion
reduces the efficiency of the rechargeable battery and spoils it quicker.
MGT2104 Quality Management

The last characteristic, the batteries must be cheap and easy to find.

Moving on to the one-dimensional aspect. The batteries should last

longer than average rechargeable batteries in the market. Since there
are diverse types of rechargeable batteries with different
materials/elements available, some tend to last longer and have better
conductivity than others. Next, the batteries must not overhead when
on use or recharging as this can be extremely dangerous.

Lastly, attractive requirement aspects. For rechargeable batteries,

consumers might be excited to know its time taken to fully charge,
shorter the better. Then, the batteries’ capability to maintain a steady
voltage output during every single usage. Following, the maximum
charging life cycle, the number of times the battery can be recharged.
The last factor covers the additional items that comes with the batteries
like carrying pouch and charging dock.

Hence, by using the Panasonic’s Eneloop rechargeable batteries as

example, let us analyze the attractive requirement characteristics of it.
To begin, the time taken to reach maximum capacity of charge is said to
be 1 hour. This means that the battery will be fully charged from 0% to a
100% within the span of an hour. This aspect is considered attractive
because consumers do not prefer batteries that take a long time to
recharge since it considered a waste of time and electricity. Extensive
usage of electricity is not considered good for the environment.
Moreover, batteries with longer charging time will have higher chance
of overheating as well. Another attractive aspect would be the batteries
constant, steady voltage output when in use. Normal batteries will
begin with a 1.5V output at the start and end with voltage output below
1.0V while Nickel-Metal batteries maintains an average of 1.2V output
every use. Consumers prefer this attribute since some devices like
electric shavers demand a steady output to function properly. If these
batteries do not possess this feature, more consumers will just prefer to
buy normal batteries that allows higher voltage output but for a shorter
period. This will certainly increase the usage of normal, non-eco-friendly
batteries.
On the other hand, the maximum charge cycle is also considered an
attractive requirement for this eco-product. Charge cycle is the number
MGT2104 Quality Management

of times the batteries can be recharged fully, 0% to 100%. To illustrate,

the previously mentioned Panasonic batteries has a charge cycle rating
of 1100. Meaning, consumers can recharge the batteries up to 1100
times before it loses it ability and efficiency to power devices. High
charge cycle allows customers to be invested in only few batteries for a
long time. Consumers can actually save a huge amount of money on
batteries this way. This action will reduce the demand and production of
normal batteries which includes steps that deteriorates the surrounding
environment.

The last attractive requirement is free gifts such as a carrying pouch and
charging dock/case for the batteries. High end and quality rechargeable
batteries such as Panasonic Eneloop comes with the mentioned free
gifts. The gifts are provided for consumers as an eye-catching aspect
when making purchasing decisions but also has some environmental
benefits also. For example, the charging dock allows safe charging of the
batteries. This is because the company gives out charging docks that are
tested numerous times before and it is also compatible with the
modal/type of battery being charged. Safe and compatible charging
eliminates the chances of overheating batteries that might explode or
leak its content onto the ground. Both scenarios are not beneficial to
the environment. Moving forward, the carrying pouch allows for a
better way to carry the rechargeable batteries for consumers who love
to travel. The pouch secures the batteries from freely tumbling in the
bag and prevents damages to it. The pouch also reduces the chances of
the batteries being misplaced and dropped. This might not seem like a
worrying matter but, eco-friendly, rechargeable batteries still have the
potential to cause negative impacts on environment since most used
batteries just end up in landfills where the chemicals can seep into the
ground/soil and reduce soil quality for generations.

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MGT2104 Quality Management

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MGT2104 Quality Management