Understandably, change is inevitable in business. Keeping with the trend of business and being proactive to the possible change ensures that the business remains profitable in the market. With the increased need for efficiency and the introduction of the new technology, businesses are forced to change their methods of operation and adopt new technologies for efficiency. Accordingly, they are expected to study their customers who are also changing with the technology to make informed decisions during the change process. Supply chain does not operate in a vacuum and hence cannot assume the changes in technology. It must adopt new technologies that ensure better services and ability to reach the customers conveniently. This essay looks at technological changes in the supply chain sector which are termed as "click to brick" where the supply chain operations are being changed from the traditional store-based operations to online based operations. It focuses on the challenges faced by traditional and the new technological model. It also focuses on the benefits and the suitability of the new online based supply chain operations.
First and foremost, ‘click and mortar' method is faced with changes ranging from the convenience of the customers to management of the inventories in the stores. Lack of basic supply chain expertise/ web order fulfillment expertise has been the main challenge towards to the adoption of the ‘click and mortar’ model. Notably, the long and unpredictable lead times are also a challenge because they lead to late deliveries of orders, incorrect orders and at times, order fails to arrive completely. In logistics part, many companies lack the art of chipping small and even large packages as ordered by the customers. More so, inventory and even the warehouse management systems become a challenge due to highly unpredictable sales.
On the other hand, ‘brick and mortar’ stores are known to perform quite poorly on the overall profitability. Through this method, the company is unable to get reach out to its customers and hence there are few orders. This method also incurs high costs of stock management as the physical warehouses are essential in this case. The warehouse management systems are also a challenge since they are supposed to incorporate a number of functions which are essential for the functioning of this system. These include the store replenishment, direct shipping methods, order fulfillment and others which are mainly handled in a central position. This system also causes wastage of time and many delays in the operation of the business.
Given the above challenges, it has been an uphill task to adopt the new systems which are more appealing and profitable in a company. The transition to new methods either online/ web-based, catalog or store based methods has been challenged by the high reliance on the earlier models. Most companies rely on a specific mode of distribution. Some rely on single channel method of distribution while others have adopted the multi –channel methods of distribution. For this reason and with the more forces to adopt the web and online methods due to technological advancement, companies, and business are faced with the challenge of integrating all these systems for efficiency. Companies are aiming at getting more benefits of the new systems of supply chain management without losing the benefits of earlier methods which are seemingly stable. Therefore, the main issue is seeking the way in which these systems and methods can work together through integration.
On the shipment of the inventory, both ‘click and mortar’ and ‘brick and mortar’ have different levels of carrying the shipment. With the ‘click and mortar’ organizations have a very complicated method of shipment. This is due to the complex demand and ordering systems. Many orders which are done online may not allow for the profitable integration and planning of the shipment. On the other side, ‘brick and mortar' system allows for planned and controlled shipment strategies of the ordered goods. More so, this system provides for the better integration of the routes for shipment of inventory. Availability of many physical warehouses and retail center also ensures access to the inventories and hence better shipment planning.
In the ‘click and mortar' system, customers are allowed to return constantly goods bought. Customers can order various categories of goods with varied characteristics which they can then return in the case where the specifications are not favorable. The customers can return either directly or through the delivery agent. On the other hand, ‘brick and mortar' system does not experience many returns given that the customers can interact with the goods in the retail displays before the purchase. Due to the many returns and the controls needed for the online system, the supply chain, and the business, in general, is not able to operate effectively. In addition to that, it lacks flow and consistent in its operation.
Regarding customer satisfaction, ‘brick and mortar' stores continue to offer the best customer satisfaction. The system can deliver effectively to its customers. Order fulfillment is also done conveniently since they consider physical customer more important which putting virtual customer under ‘dummy category.' More so, ‘brick and mortar' provides for the interaction of the customer with the goods provided and hence reducing the dissatisfaction levels in the customers. More importantly, ensures continuous satisfaction of the customers and hence loyalty.
Question 2
Profitability is achieved through the reduction of the supply chain costs in an organization. In this case, the supply chain cost can only be cut through the proper configuration of the regions where the warehouses will be located. The location of the warehouses also determines the level of transportation required to reach the customers. In this case study, the expansion model should take into consideration proposed cost reduction. For the cost reduction, the management should consider leasing the warehouses in the other four regions as proposed. Leasing in other regions would highly reduce the cost of shipment cost due to a reduction of the distance of travel. Due to proximity to the customers, the company will record increase in sales of the commodities.
The management should also consider the lease of the large warehouses. Lease of the large warehouse with a floor area of 200,000 sg.ft would then mean there are few warehouse required and hence reducing the fixed costs to be paid per the warehouse. Leasing the large warehouse ensures sufficient floor space for the storage of commodities. It also reduces the costs which would have been incurred if the management had decided to lease small warehouses. The large warehouse also gives the space sufficient for future needs of expanding the business.
For efficiency in distribution and reducing the cost of the supply chain, the configuration of various operations and ideas would be necessary. In this case, the configuration of the distributed warehouses and the leasing of large warehouses are recommended because it will ensure smooth and effective operation of the supply chain in this organization. It will cut the costs of shipment of the commodities all over the United States since the retail store would be more close to the customers. Moreover, it will also reduce the efforts required to serve the whole country from one area. All in all, the configuration of the two decisions, therefore, means that effectiveness will be achieved at the end.
References
Aalst, W., Weitzel, T., Weinhardt, C., Veit, D. J., Kundisch, D., Shaw, M. J., Sadeh, N. M., Szyperski, C. (2009). Enterprise Applications and Services in the Finance Industry: 4th International Workshop, FinanceCom 2008, Paris, France, December 13, 2008. Revised Papers. Berlin, Heidelberg: Springer Berlin Heidelberg.
Botha, J. A. R., Bothma, C. H., & Geldenhuys, P. (2008). Managing e-commerce in business. Cape Town, South Africa: Juta.
Khosrowpour, M. (2006). Encyclopedia of e-commerce, e-government, and mobile commerce. Hershey, PA: Idea Group Reference.
Wilson, J. S., & Blumenthal, I. (2008). Managing brand you: Seven steps to creating your most successful self. New York: AMACOM/American Management Association.
