DARAZ 2 1.0 Concept of Supplier Chain Management

Introduction to DARAZ 2 1.0 Concept of Supplier Chain Management 2 1.1 Importance of Effective Supply Chain Management 3 1.1.1 Lower Shipping costs and delivery Speed 3 1.1.2 Multi Distribution centers 4 1.1.3 Automated barcode technology 4 1.1.4 for Products online 4 2.0 Link between supply chain and business functions 5 2.1 Inventory Management 5 2.2 Reverse Logistics 6 3.0 Strategies used to maintain Supplier relationship 6 3.1 Supplier Evaluation 6 3.2 Onboarding and Training 6 3.3 Improving supplier recognition 7 4.0 References 8 Introduction to DARAZ In Sri Lanka,

Table of Contents
Introduction to DARAZ.........................................................................................................................2
1.0 Concept of Supplier Chain Management.........................................................................................2
1.1 Importance of Effective Supply Chain Management...................................................................3
1.1.1 Lower Shipping costs and delivery Speed............................................................................3
1.1.2 Multi Distribution centers.....................................................................................................4
1.1.3 Automated barcode technology............................................................................................4
1.1.4 Accessibility for Products online..........................................................................................4
2.0 Link between supply chain and business functions..........................................................................5
2.1 Inventory Management................................................................................................................5
2.2 Reverse Logistics.........................................................................................................................6
3.0 Strategies used to maintain Supplier relationship............................................................................6
3.1 Supplier Evaluation.....................................................................................................................6
3.2 Onboarding and Training.............................................................................................................6
3.3 Improving supplier recognition....................................................................................................7
4.0 References.......................................................................................................................................8
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Introduction to DARAZ
In Sri Lanka, the e-commerce industry has grown rapidly in the last year, with a significant
percentage of shoppers turning to the digital platform. The shift in attitude toward e-commerce has
been aided by a rise in trust in available goods and online payment gateways. Daraz, Sri Lanka's
largest online marketplace, saw massive growth in terms of orders and net merchandize value in 2019,
as well as a strong 11.11. campaign that outperformed its sales goal, indicating the direction in which
local e-commerce is heading. Daraz published an e-commerce index based on data from their own
platform that shows key demographic, customer behaviour, and buying patterns in Sri Lankan online
shopping. The Western province has the highest online order share of 50%, followed by the Central
and North Western provinces with 10% and 9% order shares, respectively. Colombo and Gampaha
have the highest district-level order share, with 31% in the former and 15% in the latter. The
concentration in these areas reflects the country's population density. There is, however, evidence of a
shift away from the main cities of Colombo, Gampaha, and Kandy and toward developing towns like
Kurunegala, Kalutara, and Gampaha.
1.0 Concept of Supplier Chain Management
Supply Chain Management (SCM) is the method of taking an order and seeing it through to
completion. Via a virtual network or directly, this mechanism connects suppliers, retailers, and
consumers. The primary goal of SCM is to transfer products from producers to consumers. Managing
the supply chain is one of the most important aspects of the company, as it affects the entire operation.
To grasp the significance of SCM, we must contrast the situation when the traditional method of
gathering and distributing goods was used with the advanced supply chain management system. The
management of supply change is an essential element of the business. The company will accomplish
its target in good way if the supply chain is functioning efficiently in the organization. Management of
the supply chain involves three political, tactical and operational stages. In strategic terms, the
company decides how it works in order to control the supply chain. Tactics means what in the supply
chain should be used that helps the company to accomplish its objectives and how it works exactly.
The relationship between supply chain management and business goals is therefore solid (Amin,
Program and Yousuf, 2019).
Figure 1-1 Linear representation of a supply line
A simple illustration of a supply chain, as seen in Figure 1-1, shows that it is linear, with
companies only connected to their immediate upstream suppliers and downstream consumers.
It also only considers one-way material flows, ignoring important details and financial flows,
as well as reverse material flows. Such misunderstandings simplify fact and obscure the
complex existence of a supply chain network.
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Figure 1 – 2 Network representation of a supply chain
In fact, supply chains necessitate a plethora of connections and pathways for goods
and information to move. The conceptual diagram of a supply chain in Figure 1-2,
which depicts the supply chain as a web or network of participants and services, better
reflects this. To get the most out of a supply chain, an organization must dynamically
tap into its internal capacities as well as the external tools of its supply chain network
to meet customer demands. The sourcing of materials, transformation of materials into
desired goods, and delivery of the product are all made easier by this network of
organizations, their facilities, and transportation links. The sourcing of materials,
processing of materials into desired goods, and delivery of products to consumers are
all made easier by this network of organisations, their facilities, and transportation
links(Vorst, 2004).
1.1 Importance of Effective Supply Chain Management
The supply chain can be effectively managed with the aid of e-business techniques, which
will ensure improved cooperation between wholesalers and retailers of different goods. E-
business strategy will efficiently incorporate better supply chain alignment from the point of
origin to the final distribution of the product. This also leads us to e-commerce, where a
parallel network of buying and selling can be observed through the sharing of knowledge
over the Internet. Under the techniques of sound supply chain management, anything from
cars to electronic gizmos can be purchased over the Internet in a hassle-free
manner(‘Internship Report On Topic : “ Barriers in growth of Daraz Bangladesh from
customer ’ s point of view .”’, no date).
1.1.1 Lower Shipping costs and delivery Speed
Two out of five consumers claim they will never again buy from the seller if they suffer from
a bad delivery experience. The same source shows the possibility to raise the rate of shopping
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carts withholding from the shipment and slow delivery. 44 percent of the online customers
who cancel their purchase state that the main explanation for high shipping costs is the 24%
and slow delivery rates cancel orders. It is clear that an e-commerce company that provides
lower shipping costs and rates of delivery would more likely retain clients and raise word-of-
mouth referrals with 73% of e-commerce customers anticipating quick and cheap delivery.
Therefore, it is important to explore all your shipping options and find the best conditions,
particularly delivery speed, in your capital allocation. Multi-distribution centers are a perfect
way to simplify the shipment and delivery operation. This is the way your stock is divided
into many warehouses. The advantage is that you can ship goods from a store or center closer
to your customers. However, this method is not appropriate for all companies. In order to
determine the current and future objectives of your business, it is necessary to check if a
multi-distribution centers works for you.
1.1.2 Multi Distribution centers
The technology could help a company that continuously ships a high volume of its goods or
services or that has very particular top-selling items. Multi-distribution would allow you to
store certain or all of your goods closer to your consumers, reducing delivery cost and speed.
Another scenario for multi-distribution is that consumers are distributed through various
locations. This approach would not be useful if you are a business that sells local sports team
products to a smaller area. However, you might want to look into it and other digital service
solutions to streamline your efforts if your company sells office supplies nationally. This
approach can also be useful for you if you constantly ship heavy goods. In order to determine
whether it is cost efficient to have multiple warehouses, it is necessary to estimate your
average product weight and shipping costs(MacBeth, 2016).
1.1.3 Automated barcode technology
This laser-based technology can turn bar codes into readable data and information for items.
Computers can then process this quickly and reliably, eliminating the need for an
intermediary person and the chance of human error. There are some reasons for investing in
automated barcode technology for your e-commerce business. Your read rate percentage can
be increased by new modern bar code scanners. They have cameras that can read barcodes
even if a printing error occurs on the mark, even if the code itself becomes corrupted. It can
not only increase accuracy, but also raise speed with their sophisticated scanner. As goods
push the conveyor belt down, these scanners collect the barcode at a high rate that prevents
the manual entry process. This liberates workers for other tasks, eliminates staffing
requirements and cuts costs. With this technique you are able to gather information about
your operation and send it to computers. This enables consumers to follow up on products,
managers to observe and resolve ongoing problems and the collection and analysis of data to
provide input into the future(S.R.a and G.b, 2012).
1.1.4 Accessibility for Products online
Buying whatever you like is a satisfying experience,but the process of physically visiting a
store facing the crowd and traffic jams might not be. This is where the concept of online
shopping comes in handy. You can simply buy anything you want and get it delivered to your
doorstep by only raising your finger. Online shopping has made the lives of modern men and
women so much easier that, they will only have to worry about scrolling up and down the
screen. Today,shopping online has gotten even simpler with the use of mobile apps.There are
many apps for online shopping in Sri Lanka and Daraz undoubtedly resides among the best
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shopping apps in Sri Lanka. Daraz app has been able to reach out to its customers better by
its user friendly features and amazing offers which makes it one of the best mobile apps in Sri
Lanka . Daraz is a one-stop-shop for all your needs ranging from electronics to groceries and
even furniture and fashion accessories.Apart from the ease of letting you shop from your
comfort zone,there are many more benefits you will receive whilst using this app.
2.0 Link between supply chain and business functions
Daraz has managed to develop an informative market path through exposure to emerging
technologies. In addition to creating a customized and easy to use user interface, the company
has created a high understanding of its consumer contact points, and also extends its physical
presence to provide a comprehensive customer experience. The website has increased its
focus in comparison with categories on the platforms DMart, Dfamily, DStudent and
DarazMall. In other words, Daraz is led by what the user wants and has designed a simplified
interface to lead them through the app. Gamification was an important feature of an app-
driving user experience as we progress over the years. In 2020 Daraz aims to attract the
customer base, which is not solely driven by functionality but still values innovation, by
building on this aspect. Given the need for "internet picking-up shops" in stores, Daraz also
opened 105 points in 19 towns and thus broadened the physical footprint of the company.
One of the company's principal targets is to close the gap between online and offline
collection points and sizes further in 2020(Analysis, 2019).
By developing a robust paying infrastructure, working with leading banks and open-loop
wallets and by collaborating and establishing tactical alliances, Daraz has been able to bring a
stable and efficient digital payment method to a cash-sensitive consumer base. The launch of
Daraz Wallet – the smarter way to pay with the app – a closed loop wallet that enables
customers to transact more quickly and to receive refunds immediately marked a significant
milestone for the business. Daraz has seen a promising transition to digital payment methods
over the last year. About 20% of the orders received by the company are digitally charged.
Over 50% of the transactions are made through Daraz Wallet. Due to its compliance with PCI
DSS, Daraz has ensured that clients are protected against fraud. In order to ensure customers
health, the organization also implements a rigorous buying safety policy. Daraz has ensured
that customer support continues to be a primary objective through its creative activities.
Innovative service techniques—whether user management systems are involved in
infrastructure—are all geared to one particular objective: to maximize client service. As
result, Daraz is on the top 10 most visited websites in the world, in the Digital2020 report of
Hootsuite, which examined trends in e-commerce, the internet and social media. Daraz
represents the largest online markets in the country and at the same time inspires
entrepreneurs and customers to transform the e-commerce climate and stimulate the
industry's growth(Zigiaris, 2000).
2.1 Inventory Management
Inventory is a key factor in the control of the supply chain. Businesses used their own
warehouses to market their goods directly to their buyers according to the conventional
inventory model. But e-commerce companies should not keep their own inventory and
exchange their inventories for a larger wholesaler as per the strategic risk pooling strategy. It
allows e-commerce companies to reduce their own inventory risk. Several companies follow
the inventory drop-out model. According to this model, the product being sold on the website
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does not carry a store. Rather, the product is purchased from a third party and sent to the
consumer(Ahmed, 2020).
2.2 Reverse Logistics
E-commerce firms also have a reverse logistics structure for SCM. The concept of reverse
logistics is to schedule and implement the transfer of goods from the point of consumption to
the point of origin. Nearly all e-commerce companies offer swap and return facilities. This
makes logistics more necessary(Pandey, 2001).
3.0 Strategies used to maintain Supplier relationship
Suppliers provide companies with the required materials to conduct their business. The
actions of a provider will affect the enterprise it supplies directly. This might, for instance,
improve timescales or product quality if a supplier offers low service. Daraz still tries to take
good supplier and seller, so that its name does not hamper. The close relationships between
suppliers are an important way to keep the goods competitive and secure. The company
should think about the use of the material or work needed by its manufacturing scheme with
respect to suppliers. It may follow such an acquisition strategy that gives the company
negotiating leverage(‘DIGITAL ECOMMERCE A case study of Daraz online shopping store
in Nepal’, 2020).
3.1 Supplier Evaluation
In order to evaluate brands and items that are included in the online listing, Daraz began
interacting with the traditional seller at the time of its takeover. The new sellers were then
brought on by an investment team. The acquisition team contains information on the logistics
models, payment and return practices, commission structure and sales details, to illustrate the
company potential. The existing brands were approached for the business.
3.2 Onboarding and Training
The incubation team was responsible for 4–8 weeks of training for sellers to work on the
platform in Daraz and to allow sellers' operations to be synchronized with Daraz. The sellers
were educated in the structure and policies of Daraz. The training provided for the use of the
sales center tool was the main part of the incubation stage(Ahmed, 2020).
3.3 Improving supplier recognition
Following the incubation process and education successfully, sellers earned their graduation
certificates from a so-called center of sales, which made them authentic and ceremonial. The
help of an individual seller after the incubation period differed considerably, according to
whether the seller was considered to be strategic or not based on the contribution from
revenues(Ghani, 2017).
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4.0 References
Ahmed, W. (2020) ‘An Investigation into Customer Preferences for Online Shopping In South
Asia(Pakistan): A Case Study of Daraz.pk’.
Amin, M. N., Program, E. and Yousuf, M. J. (2019) ‘Report on DARAZ Bangladesh Course : EMB 690 ,
Sec-01 Semester : Summer 2019 Prepared for Prepared by Date of Submission : 10 September ,
2019’, pp. 1–31.
Analysis, S. (2019) ‘Project Report on Ansys’, (September).
‘DIGITAL ECOMMERCE A case study of Daraz online shopping store in Nepal’ (2020).
Ghani, A. (2017) ‘Internship Report On “ Overall Marketing Strategies of Daraz Bangladesh Ltd .”
Prepared For : Prepared By :’, pp. 1–46.
‘Internship Report On Topic : “ Barriers in growth of Daraz Bangladesh from customer ’ s point of
view .”’ (no date), pp. 1–45.
MacBeth, D. (2016) ‘Supply chain management’, The Global Business Handbook: The Eight
Dimensions of International Management, pp. 133–146.
Pandey, R. (2001) ‘Essentials of Supply Chain Management’, Opsearch, 38(2), pp. 238–239. doi:
10.1007/bf03399229.
S.R.a, D. and G.b, D. (2012) ‘Supply chain management practices as a support to innovation in SMEs’,
Journal of Technology Management and Innovation, 7(3), pp. 91–109. Available at:
http://www.scopus.com/inward/record.url?eid=2-s2.0-
84868119928&partnerID=40&md5=34cbbd32fa2d9928d10e9cdc4aec0320.
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Vorst, I. J. G. A. J. Van Der (2004) ‘Supply Chain Management : theory and practices’, The Emerging
Science of Chains and Networks: Bridging Theory and Practice, (June), pp. 1–19.
Zigiaris, S. (2000) ‘Supply Chain Management. Report produced for the EC funded project’, pp. 0–26.
Available at: www.urenio.org/tools/en/...[Accessed: 15/5/2020].
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