Supply Chain Management at Argos

SUPPLY CHAIN
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
Customer service and inventory management.............................................................................1
Transportation..............................................................................................................................3
Warehousing and capacity management.....................................................................................4
Strategy and competitive advantage............................................................................................5
Conclusion...................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Argos is a catalogue retailer that operates in UK and Ireland. It is a part of the parent
organization Sainsbury’s. As the organization is a multi-product and multi-channel business, the
delivery networks are fast (About us, 2021). The values of the organization are evident in its
commitment to make the services and stores easily accessible to the customers. Argos has an
efficient supply chain management. It operates on the basis of a hub- and- spoke structure
wherein the larger retail stores are made to work as mini distribution centers. These work to
enable the supply to stores of smaller size thereby fulfilling online orders.
Supply chain management encompasses the process that coordinates and manages the
flow of resources and materials so that the best products can be delivered to the stakeholders
(Wieland, 2021). In this process, suppliers, retailers, manufacturing units, distributors and
customers work in a coordinated manner. SCM is significant as it focuses on effective
management of costs at every stage thus facilitating timely delivery of products to the end users.
The present report focuses on four aspects of supply chain management namely, inventory
management, transportation, warehousing and competitive advantage. Critical issues in the
context of the chosen organization have been identified in the report. Further, strategies adopted
by the organization for resolving those issues have also been analysed. Lastly, recommendations
for improving the supply chain have been provided.
Customer service and inventory management
Inventory management encompasses a systematic approach through which inventory,
comprising of raw materials and finished goods, can be sourced, stored and sold (Saberi and
et.al., 2019). It is concerned with an organization maintaining the right amount of stock, at the
right place and time at appropriate cost and price. In addition to it, Customer service measures
the number of people a business interacts with and sells its products.
Being a large retail organization, it is important for Argos to provide choice to its
customers for buying the products from the store a well as online. The present environment is a
multichannel one and in order to provide efficient services, Argos needs to ensure that the right
items are stocked at the required locations. However, issues may be faced in the area of
optimizing inventory levels. There are factors that make it even more challenging to optimize
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levels of inventory across the supply chain (Kshetri, 2018). These include the large scale
business operations, the wide variety of merchandise assortment presented by the chosen retail
firm as well as the seasonality of the business.
Furthermore, there were numerous supply chain systems which were working
independently. These systems which were more than 15 years old hampered the planning done
by Argos regarding inventory controls, assessment and customer serviceability. The management
of the chosen retail firm identified the issue and used technology for resolving it. Replenishment
And Core Operation (RACO) Program was introduced by Argos. With the help of this, the
logistic solutions for supply chain were lined up with the modernizations of processes of
inventory management (Kober and Longoni, 2019). These were also linked to the information
systems. In this regard, Oracle Advanced Inventory planning system and oracle retail
merchandising system were adopted by Argos to mitigate the above mentioned issues. In this
manner, attempt was made by the chosen retail firm to bring modernization in its replenishment
process. This led to reduction in the levels of inventory as well as smooth function of the
serviceability. Thus, both Argos and its customers were benefitted.
In order to management inventory, the following three models are used:
 Economic order quantity- With this method, an organization can identify the number of
inventory units that should be ordered so that costs are reduced. This is based on the
ordering cost, holding cost and rate of demand (Tiwari, Wee and Daryanto, 2018).
 Inventory production quality- This inventory control model provides information about
the number of products that should be ordered in a single batch. The model thus helps in
reducing the setup and holding costs.
 ABC Analysis – This is concerned with categorization of the inventory into groups based
on the level of importance. The organization can then focus the attention o the inventory
that is most important. This model is based on the Pareto Principle:
o Category A- The inventory under this category constitutes a small portion of the
total inventory but bring in most of the revenue (Ben-Daya, Hassini and Bahroun,
2019). As being only 20 percent of the total inventory but being highly beneficial,
this category is provide the utmost attention by an organization
o Category B- This category is not vital for the business, but is needed for its
survival. it constitutes 30 percent of the total inventory.
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