In the below case study we are going to explore the operational criteria of an international food supply chain's new store opening near Sydney, Australia. It is crucial to plan the market entry and store layout correctly, and although the supermarket chain we have selected for the study (Costco) will have a competitive advantage of being a world-class retailer, the first impression of customers will be crucial. Costco is likely to benefit from a large pool of potential customers, however, it is imperative to review the existing store layouts and adjust them if necessary according to the local market's needs.
We are going to examine the proposed location and review the market's competitiveness, to be able to create advantages for the company. This will be done by reviewing the operational management principles, global and national policy of the company and the supply chain integration procedures.
Although we are aware that the first Costco store has already opened in 2008, in Australia in the Docklands, we are writing this study as if the company was only planning to start its operations in the country and chose a location close to Sydney for its new store. Therefore, all data regarding existing statistics and developments will be ignored and the case study will be based on a thesis.
[...] Still, as some of them would be new to the Costco experience, it is crucial to improve the first experience and help them find what they are looking for in the shortest possible time. Supply Chain Management Supply chain lead times need to be designed for maximum responsiveness. We are going to use the SD model for setting up an effective supply chain model for Costco in Australia. In this model, the supply chain is broken down to five subsystems, namely: end customers, store, distribution center, factory, supplier's procurement system. [...]
[...] The method helps hypermarkets determine the optimum data flow between the customer demand and suppliers. Silen (1998) assumes that the production rate is level and fixed, while the consumption rate is 1000 units per day. This model is suitable to be used after the initial demand has been established, however, it is advisable that Costco will keep a larger stock of products attracting larger households and catering businesses, including soft and alcoholic drinks, ready made and raw food. Store layout The company's competitive advantage lies in the simplicity of the layout and the easy to use facilities. [...]
[...] Conclusion An effective supply chain and stock-keeping system needs to be created, and as there is a difference in storage and supply conditions, new suppliers need to be tested in the initial 6-month period. We calculated with a 20 percent potential error rate, which should be taken into consideration in the initial period. A DLI inventory initial setup needs to be reviewed to adjust the measures to the market changes, applying the Periodic Review System. References Australian Trade Union Website. Market Entry Strategies. Retrieved: http://www.austrade.gov.au/Market-entry-strategies/default.aspx Corialis research. (2004). COSTCO IN AUSTRALASIA Are they going to stock- up? Gerston, L. [...]
[...] Information distortion in a supply chain: The bullwhip eﬀect. Management Science, 546–558 Sile´n, P Industrial dynamics, supply chain simulation and management, MEng Dissertation, Department of Mechanical Engineering, UMIST Harland, C. (1995). The dynamics of customer dissatisfaction in supply chains. Production Planning & Control, 209–217 Voss, T., Tsikrikstis, N., Frochlich, M. `Case research in operations management`. International Journal of Operations Management. vol p. 195-229. [...]
[...] (2003). The Costco Experience: An Unofficial Survivor's Guide. Ge. Y., Yang, B., Proudlove, N., Spring, M. (2003). System dynamics modelling for supply- chain management: A case study on a supermarket chain in the UK. Forrester, J.W. (1961). Industrial Dynamics. MIT Press, Cambridge, MA Lee, H.L., Padmanabhan, V., Whang, S.J., (1997). [...]
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