Analysis of Retail Industry and Supply Chain

The assignment analyzes the retail industry and its reliance on information systems for supply chain management. It discusses the importance of data transfer, tracking products from manufacturers to suppliers, and the use of logistics and distribution management techniques. The document also references various studies and research papers on the topic, providing a comprehensive overview of the subject.

Supply Chain

Table of Contents
INTRODUCTION...........................................................................................................................3
2.3 Supply chain.....................................................................................................................3
2.4 Supply chain strategy ......................................................................................................3
2.4.1 Lean Strategy.................................................................................................................5
2.4.1.1 Effective-Reduces Cost and Waste............................................................................5
2.4.1.2 Requires a huge change in production process...........................................................5
2.4.2 Agile Strategy................................................................................................................6
2.4.2.1 Satisfying development strategies..............................................................................6
2.4.2.2 Extra Expenses...........................................................................................................6
2.5 E-Commerce and information system..............................................................................7
2.6 E-commerce and Information System (IS): E-Procurement............................................8
2.6.1 Enterprise Resource Planning (ERP)-A Good or Bad Way..........................................9
2.6.1.1 Failure in Best Practising the Business Intelligence...................................................9
2.6.2 Electronic Data Interchange (EDI)................................................................................9
2.6.2.1 A Time-effective Method..........................................................................................9
CONCLUSION..............................................................................................................................10
REFLECTIVE REPORT...............................................................................................................11
REFERENCES .............................................................................................................................13

INTRODUCTION
Supply chain is the organisation’s system which involves various activities, humans
and resources for information. All of these activities and information resources are used in
moving product from provider to consumer. Supply chain role is to transfer goods and
services from one place to another. From past years use of E- Commerce for supplying
product has been increased. Retail industries of Spain are making use of electronic commerce
to make supply chain work easier. Present report describes about implications in which
organisations interact with their suppliers. Furthermore, supply chain strategy used by various
companies in the country has been discussed. Moreover, E-commerce and information
system that are currently used in retail industry has been discussed.
2.3 Supply chain
The chain of processes involved in production and distribution of a commodity of
Aldi is supply chain. The organisation work with their suppliers for expanding social and
environmental compliance standards for supply chain(Hadjisolomou, Newsome, and
Cunningham, 2017). Company is committed to human rights and fair labour practices
throughout supply chain and they require suppliers to comply with their inbuilt corporate
standards.
2.4 Supply chain strategy
Supply chain strategy is used by organizations in making connection with suppliers
and supply chain to sell their products (Agrawal and Smith, eds., 2015).. Supermarket retail
industry of Spain uses supply chain strategies that helps in evaluating cost profit trade-offs
for operational efficiency. This strategy includes investing core resources of the business
organisation to accomplish high level objectives. This strategy also involves various activities
and functions end-to-end for making supply chain value for customers (Cansino, Sánchez-
Braza and Rodríguez-Arévalo, 2015)..
Supermarkets of the country uses supply chain strategy by shaping four elements
which are industry framework, unique value proposal of the organisation, internal procedures
and its managerial focus. All of these factors involve various elements which are used by
organisations in making supply chain strategy. These elements are as follows:
Industry framework
This involves interaction with suppliers, consumers, technological developments, and
factors affecting economy that can impact competition in supermarket retail sector (Retail

Spain. 2017) of Spain. In this, there are four elements which are used in making effective
supply chain which are ;
 Cost of market mediation which is associated with uncertainty in supply and demand
of product. For Example, supermarket chain of Aldi in Spain mainly focuses on
demand and supply. Company makes balance between degree of demand and
uncertainties related to it. Life cycle of product which is continuously changing due to technology and changing
trends of consumers (González‐Benito, Martos‐Partal and Fustinoni‐Venturini,
2014).. This forces retail sector to increase product development speed and make
changes in production accordingly.
Internal processes
The fourth component of supply chain strategy is internal procedures of the company
working in retail sector. This process also ensures connection of supply chain with
organisation. It involves activities like source, make and deliver the product (Turker and
Altuntas, 2014). Among various elements involved in this factor, the most significant element
is utilization of asset. In this internal procedure supply chain value focuses on specific and
unique characteristic product. This in turn supports in targeting specific consumers.
Various companies using different supply chains strategies in the country are as follows:
Aldi the supermarket chain working in retail industry of Spain use market
segmentation supply chain strategy. In this strategy the organisation defines its target market.
Target market is decided according to delivery frequency and quantity of product . In this
strategy company ensures that large stores have proper stock as they require. Demographics
of consumers are defined by organisation by describing the retailer which is serving properly.
In the next phase of market segmentation is to define how orders are received and delivered.
First step of market segmentation strategy used by Aldi in which company determines
attributes of each target marketplace. Consumers are divided by geography, demography and
their behaviour . In this company focuses on making segments which have same kind of
consumers.
One more example of supply chain strategy used by famous supermarket Caparbo
which is working in retail sector of the country. The company uses continuous flow supply
chain model as its supply chain strategy . The main feature of this strategy is maintaining
balance between supply demand and stability. Processes of this strategy ensure constant flow
of products and services. In this supply chain strategy the organisation focuses on promoting
collaboration with supply chain. Caparbo grocery store retail chain in country uses this plan

of action for supplying its products to consumers. Wining orders from the competitive firm
helps in making link with incorporated suppliers. It also supports in assuring the fulfilment of
value which is promised to consumers. For making this scheme successful , the organisation
places these factors in proper way:
 Production cycle of the company is scheduled in logical series of stock keeping unit.
It is done to reduce disparity setup time between these units (Rushton, Croucher and
Baker, 2014). Production sequence of the organisation is fixed from long time and it
is helping the company to increase manufacturing line experience.
 The company is making efforts to collaborate with its customers that help in making
effective supply chain management. Interaction with consumers and suppliers helps
in generating higher sales. The organisation forces its suppliers to enhance inventory
or segment the series of production (Mangan and Lalwani, 2016). Both of these
approaches support in increasing efficiency of supply chain.
2.4.1 Lean Strategy
Aldi imply lean strategy of supply chain management to reducing wastes and other
non-value added activities. The organisation has ample number of sectors in their supply
chain where waste can be analysed as time, cost and inventory. This can be imply in various
department, especially in manufacturing and packaging areas where amount of waste is huge
and unbearable (Rushton, Croucher and Baker, 2014). With the help of lean strategy
organisation able to control extra waste which aid them in saving cost and time effectively.
2.4.1.1 Effective-Reduces Cost and Waste
By implementing lean strategy in supply chain management organisation able to
minimise wastes and increases its cost effectively. The lean strategies has been implied in
warehouses by reducing unnecessary inventories, in transportation by minimising shipping
options and packaging department by reducing extra waste of plastic and cardboards. This
helps organisation to save cost and reduce in waste effectively.
2.4.1.2 Requires a huge change in production process
Lean strategy is effective in reducing wastes and increasing cost, but it requires huge
change in production process of the company. Specific measures are implied by management
which affects supply chain in various ways (Storey, Basterretxea and Salaman, 2014). For
example by up-gradation and modification of production process of organisation require huge
changes and provide training to employees, which impacts on working of company. Thus,
management requires huge change in production process which affects its overall supply
chain.

2.4.2 Agile Strategy
Agile strategy means readiness to change. The agile supply chain work on the basis of
real time data and updated information. Speed, cost and efficiency are the basic drivers which
govern the strategy of agile supply chain. The framework of this strategy is based on four
major constituents which are virtual integration. Process alignment, network based and
market sensitive. Aldi implemented this strategy to cover the market demand and increase
customer satisfaction by providing them quality products and services.
2.4.2.1 Satisfying development strategies
Agile supply chain assist in satisfying development strategies by targeting on
avoiding potential shortages and reducing excessively stocked inventory (Zubeldia, and et.al,
2016). It uses real time data and updated information to leverage current operations and
analysing demand forecast. The speed, cost and efficiency driver assist the organisation to
improve its functioning and aid in growth and development of businesses.
2.4.2.2 Extra Expenses
Implementation of agile strategy in supply chain management requires huge cost in
acquiring real time data and information through various tools and techniques. It requires
training cost to employees and development cost to the organisations (Agrawal and Smith,
eds., 2015). To implying change in structure of company, Aldi spent extra expenses to apply
those changes.
Issues faced by Aldi in supply chain strategy
Various issues faced by the organisation in supply chain strategies are provided below:
Lean Strategy
 Lack of Strategic focus: Organisation sometimes got indulge in waste
management activities which diverted the management from their main strategic
focus (Turker and Altuntas, 2014). The result of which is organisation got
flounders and unable to accomplish set goals.
 Time factor: Lean strategy is time consuming, as managing waste requires more
time which can be very disruptive to management.
Agile Strategy:
 Cost consuming: Agile strategy implied by the organisation is cost consuming and
requires huge cost of training and upgrading information systems, which is
sometime unbearable by the management of company (Mangan and Lalwani,
2016).

 Failure in IT systems: Real time data and updated information collected through
efficient information network of organisation. Failure in technology can lead in
providing wrong or useless information which result in wastage of time and
efforts.
2.5 E-Commerce and information system
Electronic commerce is defined as buying and selling of products online. Many retail
industry companies are using this platform for increasing their sale. E- commerce is the
transaction of goods and services by making use of computer networks. In this selling of
product organisations sell their product using computers and internet (Storey, Basterretxea
and Salaman, , 2014). As the technology is increasing almost all supermarket retail are
putting their business online. Increasing demand of online purchasing has moved al the
business of retail industry online. In Spain 50 percent of people are buying from online
supermarkets. This data indicates that e- commerce is increasing tremendously. This is
because this platform provides retail. Sector firms various advantages and industry can
increase its market share. Technology ash highly affected the retail sector of the country.
Impact of e commerce on retail sector
The retail sector firms which are based on E- commerce supports in reducing
production cost of retail sector companies. Supply chain is helping businesses to increase
their production by reducing the cost of production. E -commerce service also helps retail
industry in sharing resources. Supply chain has greatly affected by online platform. Goods
delivery and supply gets done in particular time (Rushton, Croucher and Baker, 2014).
Operating purchase cost and its performance has reduced in retail industry. One of the survey
suggests that electronic commerce allows retailing firms in Spain to boost revenues and
efficiencies. Logistical cost of the retail sector has also been reduced due to it. Supply chain
of the Aldi supermarket is getting impacted by e- commerce in following ways :
Consumer orientation
Electronic commerce is a significant link in the influence of supplying and
transportation services for both intrinsic and extrinsic consumers. It supports companies in
better delivery of services to their buyers (Zubeldia, and et.al, 2016). It also accelerates
growth of business by reducing cost of operations. Using internet for e- commerce in
supply chain permits consumers to access information rate. It also helps in order delivery,
tracking of order and bill payment online. It makes easier for consumers to do business with
companies working in retail sector. Anything that modifies the procedure of transcription

and transportation services will assist build organizations' business and raise stockholder
value (González‐Benito Martos‐Partal and Fustinoni‐Venturini, 2014).
Impact of information system on supply chain and retail industry
Supply chain strategies of the retail industry has greatly affected by information
system. Web based information system are having significant place in supply chain in retail
industry. On the coordination part, the Web gives a nearly free level for improving
transparency, eliminating messages delays and damages, and importantly reducing the cost
of transaction. Use of information system in supply chain reduces the cost of sending
messages. Flow of information in supply chain has increased significantly. Market are
growing continuously and are getting more complex. So information system are needed to be
deployed in retail sector (Agrawal and Smith, eds., 2015).
Information system has helped many retailing firms like Adli and Caparbo to collect
and and analyse data along with improving differentiation. Information system and
technology is improving speed of procedures and and cost of delivery by supply chain. Due
to RFI and electronic coding of product the supply chain has become much agile. Retail
companies are using real time data to see merchandise levels (Rushton, Croucher and Baker,
2014).
Issues faced by Aldi in E-Commerce
The issues faced by organisation in using E-commerce for conducting business are provided
below:
 Lack of security, reliability and standards owing indigent e-commerce system.
 Huge costs for services are incurred by the organisation in using e-commerce platform
for business.
 Consumer finds the method useless as they cannot touch or feel the product during
shopping.
 It becomes troublesome for management to manage software or website with exiting
database or application.
2.6 E-commerce and Information System (IS): E-Procurement
E-Procurement and information system in supply chain management are various
business model used by organisation. Aldi used business to business (B2B) and business to
consumer (B2C) model in supply chain management. Where the company purchase, sale of
supplies, work and services through internet and networking system(Christopher, 2016). It

assist the organisation in increasing its overall efficiencies and cost saving with improved
transparency in procurement service.
2.6.1 Enterprise Resource Planning (ERP)-A Good or Bad Way
Aldi has installed enterprise resource planning, which is an integrated software that
assist in sharing and collaborating information of finance, human resource, stores and
warehouses departments. In positive way, it helps in reducing time and efforts of
management and in negative way, it is not reliable, secure and require extra cost in setting up
in the organisation.
2.6.1.1 Failure in Best Practising the Business Intelligence
Business intelligence tools, platforms and application provide valuable services and
play critical role in Aldi overall business intelligence strategies. But some assumed best
practices lead to failure of BI strategy in organisation. Some of which are not allowing
business user to access the tools, making excel as default business intelligence tools, selecting
a business tool without having specific business need (Hadjisolomou, Newsome and
Cunningham, 2017). Thus, this lead to failure in practising the business intelligence
strategies in organisation.
2.6.2 Electronic Data Interchange (EDI)
Electronic data interchange is the process of interchanging data and information paper
less from one company to another or to consumer. The process used in Aldi to reduce efforts
in manual working and move forwards towards digitisation(Christopher, 2016.). Invoices and
purchase order are most common business documents exchanged using EDI in the
organisation. The process is simple but requires extra cost to implement this system in
company.
2.6.2.1 A Time-effective Method
The electronic data interchange system is time effective method as it assist in
eliminating of traditional paper work documentations and aid in exchanging data and
information digitally and electronic way (Turker and Altuntas, 2014). The transaction speed
of Aldi has been increase after implementing electronic data interchange by 61% which aids
in time effectiveness. In addition, the quality of information also increases and it also aids in
cost saving to the organisation.
CONCLUSION
Summing up the above report it can be concluded that supply chain is the most
significant part in retail sector. Increased globalization has made retail sector to make some

supply chain strategy that can increase market share. Supply chain strategy is used by
organizations in making links with suppliers and supply chain to sell their products. Strategy
for supply chain also impact relation of supplier with organisation. Various companies make
supply chain strategy by using market segmentation. Continuously increasing technology is
greatly affecting retail sector. Retail industry firms are now using e- commerce platforms to
make their buying and selling of goods efficiently. Information system are helping companies
to exchange their information instantly. Use of information technology is supporting retail
firms to increase their market share.

REFLECTIVE REPORT
From the above report I have understood supply chain and their importance in retail
sector. I have learned about supply chain strategies and their impact on retail sector firms.
Supply chain plays an important role in organisations. I have learned about globalization
that has made retail sector to make some supply chain strategy that can increase market share.
Various companies makes distinct supply chain strategy for making their transportation of
goods effective. I have learned about continuous flow supply chain model.
I have understood the significance of relationship between suppliers and organisation.
I have learned that making supply chain strategy is very necessary for any retail company to
lead the competition. Plan of action for supply chain also effect relation of provider with
organisation. Various organizations make supply chain strategy by using market
segmentation. I have learned about different companies and level of sophistication in using
electronic commerce.
Constantly accelerating technology is largely impacting retail industry . Wholesale
commercial enterprise firms are now using e- commerce platforms to make their buying and
selling of goods expeditiously. Information system are supporting companies to exchange
their information fast. Use of these systems is supporting wholesale firms to increase their
market place share.
I have also learned about impact of electronic commerce in retails sector
organisations. The supplying chain administration which are based on E- commerce assists in
reduction of cost of production of wholesale sector firms. Supply chain is helping business
concerns to improve their manufacturing by reducing the cost of production. E -commerce
service also helps wholesale industry in sharing resources.
I have learned about effects of electronic commerce on retail sector firms.
Organisations which are selling their product on online platform are significantly increasing
their market share. Use of information system support in effective product management,
Product management becomes easy for retail firms. It also assists in handling customer
analysis . These systems plays essential role in carrying complicated operations of wholesale
companies . Knowledge of market as well as data and substance control which is the key
benefits for retail aspect.

I have also learned about information system impact on retails sector and supply
chain. These information system provides high and effective transfer of data from one place
to another. . Moreover I have understood about the retail industry is now capable to defend
its cargo by permitting tracking of products from manufacturer to whole supply chain. Use
of retail information system in this industry allows retail functioning of like acquisition ,
stocking of materials and dispatching. More over , I have understood about implications of
the methods used by organisation while interacting with suppliers.

REFERENCES
Books and journals
Agrawal, N. and Smith, S.A. eds., 2015. Retail supply chain management: quantitative
models and empirical studies (Vol. 223). Springer.
Cansino, J.M., Sánchez-Braza, A. and Rodríguez-Arévalo, M.L., 2015. Driving forces of
Spain׳ s CO 2 emissions: A LMDI decomposition approach. Renewable and Sustainable
Energy Reviews. 48. pp.749-759.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
González‐Benito, Ó., Martos‐Partal, M. and Fustinoni‐Venturini, M., 2014. Retailers’ Price
Positioning and the Motivational Profiling of Store‐Brand Shoppers: The Case of
Spain. Psychology & Marketing. 31(2). pp.115-125.
Hadjisolomou, A., Newsome, K. and Cunningham, I., 2017. (De) regulation of working
time, employer capture, and ‘forced availability’: a comparison between the UK and
Cyprus food retail sector. The International Journal of Human Resource Management,
pp.1-18.
Mangan, J. and Lalwani, C., 2016. Global logistics and supply chain management. John
Wiley & Sons.
Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution
management: Understanding the supply chain. Kogan Page Publishers.
Storey, J., Basterretxea, I. and Salaman, G., 2014. Managing and resisting ‘degeneration’in
employee-owned businesses: A comparative study of two large retailers in Spain and the
United Kingdom. Organization. 21(5). pp.626-644.
Turker, D. and Altuntas, C., 2014. Sustainable supply chain management in the fast fashion
industry: An analysis of corporate reports. European Management Journal. 32(5).
pp.837-849.
Zubeldia, B.B. and et.al, 2016. Effectiveness of the cold chain control procedure in the retail
sector in Southern Spain. Food Control. 59. pp.614-618.
Retail Spain. 2017. Accessed
through<http://www.logisticsspain.com/Supply_Chain_Spain>[Accessed on 31st May 2017]