Building Supply Chain Efficiency
Through Online Retailers
The case of the fashion industry in Pakistan
MASTER THESIS WITHIN: Business Administration NUMBER OF CREDITS: 30 ECTS
PROGRAMME OF STUDY: International Logistics and Supply Chain Management
AUTHOR: S M Jawwad Haider
Acknowledgement
I acknowledged that writing this thesis was a perfect platform to gain knowledge in the field of Logistics and Supply Chain Management. Most important, I would like to thank my thesis supervisor Elvira Ruiz Kaneberg, Assistant Professor Jönköping International Business School for her support, time and energy. Her guidance helped me to take the right path and complete this thesis. After that my sincere thanks to the different companies who have provided me with the required data and the precious time. Furthermore, my family and friends deserve a big thanks who have supported me throughout this degree. I hope this thesis would support upcoming researches.
Master Thesis in Business Administration
(International Logistics and Supply Chain Management)
Title: Building Supply Chain Efficiency Through Online Retailers Author: S M Jawwad Haider
Tutor: Elvira Ruiz Kaneberg Date: 2021-05-24
Key Terms: supply chain efficiency, technological advancement, human capital, Online retailing, Customer satisfaction
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ABSTRACT
This study focuses on assessing and exploring the aspect of building supply chain efficiency through online retailers. Supply chain efficiency has been assessed with regards to online retailers functioning in the fashion industry of Pakistan. The main areas of focus have been factors contributing to supply chain efficiency, and barriers to supply chain efficiency. The research has employed a primary qualitative method for analysis, in which subjective information has been gathered from sources through the use of interviews. Due to COVID-19 restrictions and budget limitations, the data has been gathered online using the Skype application. A non-probability convenience sampling technique has been used to select the study respondents. 10 managers working in the supply chain department of organisations in the fashion industry have been chosen. In order to carry out the analysis, a thematic analysis approach has been implemented. The results have depicted that factors that significantly contribute to supply chain efficiency are skills and qualifications of employees, technological advancement, training and development, integration of business functions, and maintaining effective supplier relationship. Moreover, the significant challenges associated to supply chain efficiency has been limited capital, resistance to change, lack of technology, limited skills and qualification of employees, and lack of motivation.
Table of Content
CHAPTER ONE: INTRODUCTION ... 5
1.1 Background ... 6
1.2 Problem ... 8
1.3 Purpose ... 9
1.4 Significance of the Study ... 9
1.5 Research Questions ... 10
CHAPTER TWO: THEORETICAL FRAMEWORK ...11
2.1 Introduction ... 11
2.2 Supply chain management and the efficiency of online retailers ... 12
2.3 Factor contributing to supply chain efficiency ... 15
2.3.1 Skills and qualifications of employees ... 15
2.3.2 Technological advancement ... 16
2.3.4 Resource allocation ... 17
2.3.5 Training and development ... 17
2.3.6 Improved risk mitigation ... 18
2.3.7 Integration of business functions ... 18
2.3.8 Collaboration and joint planning ... 19
2.3.9 Maintaining effective supplier relationship ... 19
2.4 Benefits of supply chain efficiency ... 20
2.4.1 Reduced overhead costs ... 20
2.4.2 Better quality service and products ... 21
2.4.3 Time efficiency ... 21
2.4.4 Risk mitigation ... 22
2.4.5 Better product flow ... 22
2.4.6 Effective warehouse management ... 23
2.4.7 Better customer satisfaction ... 23
2.4.8 Reduced Wastage of goods ... 24
2.4.8 Better resource allocation ... 25
2.5 Challenges related to Supply chain efficiency ... 25
2.5.1 Limited capital ... 25
2.5.2 Limited skills and qualification of employees ... 25
2.5.3 Lack of technology ... 26
2.5.4 Lack of knowledge ... 26
2.5.5 Poor cultural integration ... 27
2.5.6 Lack of motivation and employee empowerment ... 27
2.5.7 Resistance to change ... 28
2.6 Summary of Chapter ... 29
CHAPTER THREE: METHODOLOGY ...30
3.1 Research Philosophy ... 30
3.3 Research Approach ... 31
3.3 Research Design ... 33
3.4 Inclusion and Exclusion Criteria ... 34
3.5 Data Collection ... 35
3.7 Ethical Considerations... 38
3.8 Data Analysis ... 38
CHAPTER FOUR: RESULTS/EMPIRICAL FINDINGS ...40
4.1 Results ... 40
4.1.1 Significance of supply chain ... 40
4.1.2 Challenges in ensuring supply chain efficiency ... 41
4.1.3 Factors contributing to supply chain efficiency ... 41
4.2. Findings ... 42
CHAPTER FIVE: ANALYSIS AND INTERPRETATION ...43
5.1 Significance of supply chain efficiency ... 43
5.2 Factors impacting supply chain efficiency ... 46
5.3 Challenges in ensuring supply chain efficiency ... 50
CHAPTER SIX: DISCUSSION ...56
6.1 Challenges related to Supply Chain ... 56
6.2 Factors contributing to Supply Chain Efficiency ... 60
6.3 Recommendations regarding improvement of Supply Chain ... 64
CHAPTER SEVEN: CONCLUSION ...67
7.1 Summary of Findings ... 67
7.2 Conclusion ... 69
7.3 Limitations of the Study ... 71
7.4 Future Research ... 71
CHAPTER ONE: INTRODUCTION
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This chapter provides an overview of the research topic along with explaining the scope of the study. It provides background regarding supply chain efficiency and the fashion retail industry of Pakistan. It further discusses the problem and provides research objectives.
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Organisations in the supply chain are adapting to undertake online retailing to meet the changing demands from customers. It has been assessed that the contemporary environment has been constantly evolving and companies today have been facing varied adversities and challenges which they need to overcome on daily basis. The external environment specifically plays a significant role in impacting the overall performance of companies and so businesses need to remain keen regarding such aspects (Needle & Burns, 2010). There are various aspects that this particular study has focused upon and the most imperative could be identified to be supply chain management efficiency, Pakistan fashion industry, and the importance of attaining supply chain efficiency. The study further takes into consideration the lack of understanding of the conditions for online retailing to the efficiency of supply chains.
The evolution of businesses has been imperative over the past and operating through online platforms has become a necessity for firms to retain the brand position and ensure ample sales. The preferences and behaviour of customers have changed over the past few years and they have shown a greater inclination towards the use of online shopping. Aspects such as convenience, time, costs and many others have influenced customers to use online platforms in order to carry out the purchasing process (Kumar & Pradhan, 2016). As the prevalence of online retailing has augmented over the years, more and more businesses and industries have inculcated the phenomenon and followed the approach in order to optimise the opportunities. In the same way, the fashion industry has also led to significantly use online platforms to carry out their business activities. The majority of fashion stores today operate through online stores along with having a physical presence as well. There are ample online businesses that only function through this model and do not adapt to the brick-and-mortar model (Su & Cui, 2009).
1.1 Background
The fashion industry has grown significantly in the last two or three decades, and this has been the time where customers gained knowledge about global trends and fashions (Wen et al, 2019). Customers today have become more aware of the products and services, and the increased knowledge about fashion has stimulated the demand for fashion products. Along with other age groups, young individuals ranging from the age of 15-30are mostly the ones who are more inclined towards fashion (Sudha & Sheena, 2017). People tend to depict their culture, personality, preferences and more of such elements through fashion and so its significance has increased evidently in the past years. The fashion industry has been constantly evolving over the years along with the preferences and choices of customers Companies in the fashion sector have been keenly involved in conducting market research to assess the preferences of individuals and keep their demands fulfilled through their offerings (Strahle & Muller, 2017).
The fashion industry of Pakistan has also been constantly evolving. Many new investors and brands have entered the business sector such as Saphire, Junaid Jamshed, Lime Light, HSY Studio, and more. Most of these brands have developed their presence in the last decade after assessing potential buyers in the market. Consumers have depicted adequate demand for products in the fashion industry, and this has been one of the major reasons why an increasing amount of companies have entered the sector. Also, to better serve the customers and reach out to a bigger set audience, most brands have also started their online services (Idrees et al, 2020). Identifying that many fashion retailers are operating online to better serve customers, it needs to be assessed how significant is supply chain efficiency for all such businesses to rightly carry out their required activities. Supply chain efficiency has been identified to be an imperative aspect of businesses and firms functioning online must put immense attention and focus towards it in order to optimise operations. It needs to be further evaluated how supply chain efficiency contributes to smoother and better operations for online fashion businesses (Umam & Sommanawat, 2019).
The internal processes and procedures have to be highly effective to make sure that the evolving demands of customers are met at all times. The business must have ample resources, adequate skills, enough ability and capacity to amend its activities in accordance with the requirements of the customers (Yang et al, 2019). For a firm to adequately respond to the demands of its customers, it is necessary that it first gets to remain aware of what the changes are. The changes made in the preferences or priorities of the customers must reach the
organisation within the right amount of time so that it may be able to respond and react in a timely manner (Zhang et al, 2016). As competition is immensely high between industries, businesses that attain the information regarding customer needs and requirements a little late often fail to take use of first-mover advantage (or gain good customer satisfaction). Businesses need to remain highly keen and observant regarding the market changes as this allows them to take measures and develop strategies in a timely manner (Huo et al, 2019).
With regards to customer preferences, it has been identified that catering to the evolving needs and requirements of customers has become challenging for companies. In order to adequately respond to changing customer preferences, it is vital to ensure that supply chain management is carried out in an effective manner (Gong et al, 2015). As businesses functioning over the internet do not have the facility of providing products from the store, they have to manage relatively larger and bigger warehouses. These warehouses being part of the supply chain have to be managed and controlled effectively in order to streamline the processes and activities.
For supply chain efficiency it is further necessary to make sure that the resources of the firm are harnessed and allocated in the most adequate manner. Businesses have varied resources such as technological, financial, human and many more. For implementing supply chain efficiency, it is necessary that each of these resources is worked upon in the right manner and utilised effectively to their optimum usage. With regards to supplying chain efficiency, businesses should have the potential to rightly meet the demands of customers in a timely manner along with retaining the quality of products (Gong et al, 2015). Fact that customers keep demanding a different set of products at varied times, it is imperative that businesses manage their inventory in such a way that they do not have to make the customers wait for a long period of time. Also, the inventory has to be controlled so that customers never face the issue of products being out of stock at any instance. The fact that competition has been increasing and customers have varied options and substitutes to choose from, firms must be effective in all departments and functions to not create dissatisfaction among individuals (Zhang et al, 2016).
While it has been understood that attaining supply chain efficiency has become a critical aspect in the success of companies today, it has to be ensured by the businesses that in delivering effective services to customers the element of cost is rightly controlled. Cost-effectiveness is a vital aspect related to supply chain efficiency and must be taken into keen consideration by
businesses at all times. If the firm is able to maintain its inventory and manage the warehouse adequately but its costs are significantly higher, it would not be considered being efficient in the supply chain (Jacyna-Golda, 2015). Due to price competitiveness, organizations have to make sure that they keep their prices at the lowest and gain a competitive edge over others. To be able to maintain low prices, it is necessary to always reduce operational and functional costs (Gong et al, 2015). Through retaining low costs in processes and procedures, companies may be given the opportunity to remain competitive and successful on the whole. Further, the supply chain must be responsive and flexible in order to amend and adapt in accordance with the requirements of the firm. The internal and external environment is constantly evolving and so remaining adaptive becomes critical for firms at all levels (Nikfarjam et al, 2015).
1.2 Problem
The problem of the study is related to the increased work complexities and intricacies for online fashion retailers with regards to supply chain efficiency. The rising concerns of businesses (evolving external and internal environment) have augmented the need of establishing an adequate stance towards resolving the related issues. Further, while various studies have been carried out regarding supply chain management, less has been studied and researched with regards to the supply chain efficiency of online retailers in the fashion industry of Pakistan (Idrees et al, 2020). The major identified problem, therefore, is related to the lack of available literature regarding supply chain efficiency for the fashion industry of Pakistan and surfacing issues linked with the variables. From the findings of this particular study being carried out, varied practitioners, relevant researchers, businessmen and other stakeholders would be able to assess factors critical to supply chain efficiency for online retailers and how organisations may be able to overcome the barriers that limit their efficiency. To rightly understand what factors have resulted in developing the impact to supply chain efficiency and how to mitigate the adverse effects, this study could further be regarded as assessing the barriers that restrict the outcomes related to supply chain efficiency. Online businesses may take use of the findings of this study to develop strategies and establish ways through which they may overcome the difficulties related to the supply chain efficiency of online fashion retailers in the Pakistan context.
1.3 Purpose
The purpose of this study is to analyse the factors and imperative elements affecting supply chain efficiency and significance with regards to the Pakistan fashion industry, specifically supply chain efficiency for online retailers and the barriers faced by firms in the same sector.
1.4 Significance of the Study
This study would result in being highly significant for a set of varied stakeholders. The fact that the research is focused on assessing supply chain efficiency with regards to the case of online fashion retailers in Pakistan, the organisations working in the sector would be able to benefit the most from the results. A huge number of businesses has indulged in online retail and not all of them have been able to ensure effective outcomes in terms of performance. Through the findings of this study, such firms would be able to better assess the factors that contribute to supply chain efficiency, along with understanding the barriers to supply chain efficiency for online retailers. Once these barriers are identified, it becomes easier for firms to avoid or overcome the factors that are limiting the efficiency and effectiveness of the supply chain. The supply chain is one of the most imperative and critical aspects for organisations, and exploring the dynamics related to supply chain efficiency would allow businesses to develop better strategies in this regard and create contingency plans for the future.
One of the other stakeholders that would benefit from the findings of this study would be the practitioners and researchers working in the related field. As it has been identified that ample research has not been carried out with regards to the supply chain efficiency of online retailers in the fashion industry, the researchers carrying out their work in the related area of the field would benefit considerably. The outcomes of the study will assist them in better exploring the related dynamics of the supply chain, along with helping them to understand how supply chain efficiency could be attained and what barriers may arise. Most of the details related to supply chain efficiency would become clear through the results of this study and it would be of immense importance with regards to further research opportunities.
1.5 Research Questions
• What are the challenges of the supply chain dealing with online retailers in the fashion industry of Pakistan to increase efficiency?
• What factors contribute to the supply chain efficiency of online retailers in Pakistan’s fashion industry?
• What are the recommendations for online retailers in the fashion industry of Pakistan to overcome the challenges related to supply chain efficiency?
CHAPTER TWO: THEORETICAL FRAMEWORK
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The purpose of this chapter is to provide the theoretical background related to building supply chain efficiency through online fashion retailers, related to the Pakistan fashion industry. It presents literature related to the study area, critically discussing the findings of different researchers regarding supply chain efficiency.
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2.1 Introduction
Organisations have been involved in the development of different strategies and approaches through which they are given an opportunity to establish a significant presence in their industry. Through creative ideas and other meaningful techniques, almost every business today is inclined toward progress and growth. While the urge to succeed is there, businesses often find it difficult to establish and effectively implement approaches that are beneficial for it in the long run (Moyano-Fuentes et al, 2020). Online retailing has emerged to be one of the techniques that companies have adopted in order to meet the ever-evolving demands and requirements of customers (Istvanic et al, 2017). Through the use of online retailing, businesses have been given the opportunity to better connect with customers and keep them highly satisfied. While online retailing has had various benefits and opportunities for companies in the contemporary environment, it has also been identified that firms strive extremely hard to ensure the level of effectiveness and gain the expected outcomes. There are numerous considerations that have to be made in online retailing in order to make sure that effective implementation of it takes place and the objectives of the firm are attained in the right manner (Soni, 2019).
Creating a responsive and effective supply chain allows businesses to become more capable of responding to the changing consumer needs more effectively and quickly. In order to remain competitive and successful in the industry, it is vital for businesses to respond to customer queries in a timely manner. The fact that inability or ineffectiveness of supply chain could result in dissatisfaction or loss of potential customers, businesses have started putting the immense focus on this aspect (Kumar et al, 2015). There are various considerations that businesses may implement in order to retain the efficiency of the supply chain and these
eventually lead to having an impact on the overall performance of organisations in the long run. Some of these considerations could be regarded as skilled workforce, effective leadership, effective planning and processing, the delegation of authorities, technology inculcation and many more. With all such areas of focus, companies may lead to ensure that supply chain efficiency is attained on a broad level. In order to improve the supply chain, firms must further focus on a continuous improvement approach through which the adversities and challenges are identified and resolved immediately (Nikfarjam et al, 2015).
2.2 Significance and Supply chain efficiency of online retailers
Businesses today are aimed at expanding in size and it has become imperative for all such companies to makes sure that they attain operational efficiency by all means. Every department of the businesses is of high value to the company, and the supply chain could be considered one of such critical aspects of businesses today (Zimon et al, 2020). Even though the supply chain has been of immense value in the past also, its significance and value have augmented in recent years more due to increasing complexities in the environment. It has become vital for firms to remain efficient and effective in supply chain management, as it has the capability of directly impacting the overall performance of the business (Brandenburg, 2016). Realising how critically the supply chain may affect the company, organisations have started investing their resources in the business function along with giving high significance to its implementation. Ensuring efficiency in the supply chain has become equally important as this could allow firms to achieve a competitive edge over others and establish a unique position in the sector. If a business is efficient in supply chain management, it may be able to save its costs, reduce time involvement, retain the quality of products and attain much more benefits (Moyano-Fuentes et al, 2020).
Supply chain efficiency could be considered as the activity of making the best use of its resources i.e., human, technological, financial or physical. It also inculcates minimising the costs related to supply chain activities and reduce time wastage. Efficient supply chains could deliver products at a low cost and within minimum time to meet the demand of consumers and meet the related business objectives. Businesses today are involved in improving supply chain efficiency, through which they may be able to better compete in the market and attain a significant position in the industry (Trkman et al, 2015). An effective and efficient supply chain may allow firms to further establish a unique identity among competitors, along with assisting firms to enhance their
overall performance. Focusing on the prime objective of supply chain efficiency, companies are focused on getting the right product to the right place at the right time, with minimum cost involved in the process. The fact that work complexities have been increasing, supply chain efficiency may provide the businesses with an opportunity to standout and attain better customer satisfaction as well (Gattorna, 2016).
One of the main objectives of effective supply chain management is linked to higher profits through enhanced customer satisfaction and decreased cost of business (Zimon et al, 2020). Attaining high customer satisfaction and lowering business’ cost could both be regarded as daunting tasks and firms may strive hard to attain both of these objectives in the contemporary environment. The increasing intricacies have made it challenging for companies to make sure that customers are kept satisfied at all times. The preferences and requirements of customers are constantly evolving, and this has led to augment the difficulty level of better customer satisfaction (Skipworth et al 2015). Companies need to make sure through effective supply chain management that such customers keep getting their products delivered at the right time and with high quality. Any compromise made in quality or time of delivery could result in losing the customers and adversely impacting the image of the firm. Also, lowering business costs is equally difficult along with ensuring high quality and effective logistics handling. Even though there have been technological advancements in supply chain operations, retaining the cost at a low level becomes challenging in most cases (Chase et al, 2018).
Even though supply chain efficiency is a critical factor for businesses in the contemporary environment, it has become even more important for firms involved in online retailing. Several researchers have raised their concern regarding the use and significance of supply chain efficiency for online retailers. Some have argued that efficiency and effectiveness of supply chain are not equally imperative for online retailers as much as it is essential for those involved in brick-and-mortar mode. While this aspect has been brought into consideration, it has been identified that supply chain efficiency is extremely vital for online retailers and their need for it is the highest (Khurana & Ricchetti, 2016). The fact that many online businesses do not maintain a physical store and all their business transactions are carried out directly from their warehouses to the customers, the need to maintain adequate supply chain management augments significantly. Customers are often involved in purchasing products online because of ease and convenience. Keeping this aspect in consideration, firms need to make sure that the product
quality is maintained and timely delivery takes place. In many cases, businesses place orders directly from the vendors to the customers and this requires a keener assessment from the company (Sajjad et al, 2015).
Online retailers have no physical presence and consumers often feel vulnerable dealing with such organisations. In order to make sure that customers are kept satisfied and content in terms of their purchase experience, the efficiency in getting the products delivered becomes necessary (Memon et al, 2020). Supply chain management and efficiency involve getting the right products delivered to the customers in a timely manner and with adequate quality. If there is any sort of inefficiency in the process, the chances of customers being dissatisfied with the brand may significantly increase (Tiwari et al, 2015). To attain better customer loyalty and increased satisfaction, it is vital for online businesses to ensure that products are well managed and delivered. Warehouse management, for instance, is a major aspect of supply chain efficiency and online retailers have to put in immense effort and strategic planning to effectively implement the related activities. The fact that every product has to be delivered to the doorstep of the customers, businesses working online have to indulge in logistics and transportation every day. Also, dealing with vendors and suppliers is also more often in online retail, and this increases the need for proper management (Christopher, 2016).
Through supply chain efficiency, online retailers could keep the customers more satisfied and develop better relations with them on the whole. Also, supply chain efficiency may also reduce operational costs and lower the time involved in the delivery of products (Memon et al, 2020). Many businesses today have inclined towards same-day delivery of products and this element is being worked upon in order to achieve better satisfaction of customers. Also, competition has been increasing over the years and this has also augmented the significance of supply chain efficiency (Foerstl et al, 2017). With enhancing supply chain efficiency, firms may be able to establish a competitive edge over others and attract more customers towards it eventually. For instance, being able to deliver products on the same day could allow organisations to positively impact customer behaviour and augment their overall sales. To achieve this target, firms need to implement better supply chain efficiency and strategies through which performance objectives could be met (Chang et al, 2020). Further, with supply chain efficiency the costs of supply chain activities may reduce and this could again be of immense importance to the firm involved in online retail. Companies today are looking for ways through
which their product prices could be brought down in terms of remaining competitive. Supply chain efficiency could assist in this matter, and allow firms to mitigate some of their operational costs (Khurana & Ricchetti, 2016).
2.3 Factor contributing to supply chain efficiency
It has been understood that supply chain efficiency is imperative to businesses in the modern working environment (Memon et al, 2020). Businesses are striving to make sure that their supply chain efficiency is improved, so that they may be able to attain a competitive edge and enjoy all the related benefits to it (Zimon et al, 2020). While it is essential to understand the benefits related to supply chain efficiency, it is also vital to understand what factors contribute to it (Chase et al, 2018). Through developing a greater understanding regarding the factors contributing to supply chain efficiency, businesses would be able to better develop strategies and approaches through which the desired objectives could be attained (Foerstl et al, 2017). The factors that contribute to supply chain efficiency are critical to assess, as it provides a greater understanding as to how businesses may develop and amend their overall focus in order to ensure optimum output. Once these factors are identified and critically assessed, organisations may lead to work towards attaining such factors and establishing their strategies in accordance (Sajjad et al, 2015).
2.3.1 Skills and qualifications of employees
Human capital is regarded as one of the most useful assets for any company (Chang et al, 2020). To be able to ensure optimum working efficiency, it is vital that the employees are highly skilled and they have the potential to carry out the assigned work activities in an effective manner. Even though much of the activities and work related to the supply chain has been dependent on technology in the contemporary environment, it is the employees that are eventually involved in the process (Gligor et al, 2015). To be able to take use of technology, employees have to be highly skilled and qualified, along with having the potential to deliver high performance on the whole. If the employees are not adequately skilled, they may not be able to take use of the resources correctly or perform the required activities. In this regard, businesses need to make sure that the right set of talent is recruited by the human resource department, and individuals are given the correct guidelines to deliver their best at work (Pettit et al, 2019).
Retaining employees that are highly skilled may allow firms to attain a competitive advantage, and this advantage could be used to develop a unique position among the competitors. Skilled and qualified employees may perform the supply chain activities in an adequate manner through understanding the intricacies and carrying out assigned tasks in a proper way (Lambert & Enz, 2017). For supply chain efficiency, the individuals involved in the process have to be capable enough to integrate with other departments and attain the performance objectives that could eventually lead to success for the business.
2.3.2 Technological advancement
Businesses today have been inclining towards the use of technology to carry out varied activities related to different business functions. In this regard, supply chain management has also become dependent on technology to a great extent and firm today need to inculcate technology while carrying out the related operations. Through the use of technological advancements, businesses are given the opportunity to automate processes and procedures, along with increasing the overall efficiency of work (Foerstl et al, 2017). With technological advancement, companies are given the opportunity to reduce their supply chain-related costs in the long run, lower the time involved in related activities, enhance work quality and efficiency, increase productivity and attain much more of such benefits. While taking use of technology has become an essential aspect, organisations need to make sure that they have the potential human capital that could put the right use of technology for the company. Inclining towards technological advancements is beneficial for firms, but the inability to manage the consequences could lead to varied adversities for the business (Gligor et al, 2015).
Using technology in logistics management, warehouse management, vendor management, transportation, data keeping and more of such supply chain-related activities could result in improved performance for an organisation on the whole. Today, work complexities have increased and it has become vital for firms to adapt to new technology and methods of working in order to sustain competition and retain the established position in the market (Foerstl et al, 2017). Even though many companies today have been interested in taking use of technology and inculcating related advancements, not every firm has been able to achieve the related benefits. The firm must have ample resources and the right environment to lead towards technological advancement.
2.3.4 Resource allocation
Resource allocation is related to taking use of the resources in the most optimum and adequate manner. With regards to supplying chain efficiency, firms must make sure how they have to divide and utilise their capital for the benefit of the company (Centobelli et al, 2018). Supply chain activities require resource utilisation from businesses for activities such as logistics, transportation, warehousing, and much more. The business needs to decide upon how much capital needs to be invested for the activities related to the supply chain and how these resources could be utilised in the best possible manner to augment the overall efficiency of supply chain management (Bastas & Liyanage, 2018).
As there are various projects going on in a company at one time, project managers need to allocate the resources in accordance and prioritise work activities for better outcomes. If the resources are not well distributed within the projects and their supply chain-related tasks, the firm may not be able to ensure adequate performance for any of them. One imperative aspect to support resource allocation is the prediction and analysis of demand for products (Khurana & Ricchetti, 2016). Businesses need to assess the trends and demands for their products, through which it may become feasible for them to maintain inventory and fulfil the demands. The allocation of resources needs to take place in such a manner that the company is able to ensure smooth working operations along with avoidance of any interruption (Bastas and Liyanage, 2018).
2.3.5 Training and development
Even though it is vital to hire employees that are highly potential and skilled, it is equally necessary to make sure that they individuals keep attaining training and development regarding the changes and advancements taking place. The working environment is constantly evolving and so are the strategies and objectives of businesses. In this regard, keeping the employees trained becomes critical for companies and their success (Raheja, 2015). It is only after the employees are adequately trained, that they would be able to perform at the optimum level of efficiency and deliver the desired results related to performance. Many companies today have failed to assert high focus and attention on the aspect of training and development. Businesses mostly put focus on hiring individuals that are of high potential and skills, but they do not train
them according to the evolving business environment and requirements. Through the use of training and development, businesses are given the opportunity to sustain employee performance and lead towards optimum work efficiency on the whole (Mozael, 2015).
2.3.6 Improved risk mitigation
Most of the businesses working in the contemporary environment are exposed to varied sorts of risks. With regards to supply chain efficiency, aspects such as transportation, storage, handling of products, delivery and many more of such activities involve risks. These risks could be financial and may eventually lead to a negatively impact on the image of the company as well (Chang et al, 2020). In many cases, the risk involvement of firms is considerably high and they are exposed to the chances of facing huge losses as well. In order to make sure that such losses could be avoided, it is essential that risk mitigation strategies are given immense importance and value (Gong et al, 2015). Through focusing on risk mitigation, firms may be able to reduce the probability of encountering risk and would further be given the opportunity to manage risk in a much better way. If companies are prepared for certain adversities to take place, it becomes easier and more feasible for them to control the risk consequences and manage the results caused through it. To be able to have improved risk mitigation approaches, firms need to focus more on effectively analysing situations, predicting future activities, taking precautionary measures and much more. How companies employ the risk mitigation strategies also depends on the nature of work, and the type of organisation as well (Rana et al, 2016).
2.3.7 Integration of business functions
While it could be identified how essential the supply chain may be for the firm, it is vital to integrate the business functions and connect them well with each other to cumulatively lead towards better performance. Through the integration of business functions, the most important stakeholders of the company would remain aware of the strategies and approaches that are being implemented (Hugos, 2018). Also, integration would allow a smoother and better functional flow, as everybody would be inclined and focused towards the same direction. Further, the company may be able to seek assistance from other functions if there are any sorts of barriers or difficulties, and a better effort to attain performance objectives could be employed. In order to carry out the supply chain activities in a smooth manner, the particular business function has to
seek help and connect with other functions such as human resource, administration, and more of such departments. Supply chain management inculcates a set of different activities and functions, and these could only be carried out if departments are well connected and coordinated (Alicke et al, 2017).
2.3.8 Collaboration and joint planning
The function of supply chain management could be considered complex and intricate for businesses to a certain extent. Businesses need to be effective in various areas to be able to make sure that the required activities and tasks are carried out in an adequate manner. Collaboration is a vital aspect that is required for an effective supply chain and this could be carried out through emphasising communication and collective attainment of goals. To make sure that there is good collaboration, the culture of the firms has to be made more inclusive and holistic. Different stakeholders of the firm need to interact and collaborate with each other, identifying the areas of inefficiency and working upon them to achieve better performance results on the whole (Li & Yu, 2017). Another major element that is critical for the success of the supply chain is joint planning. The leaders of the firm have to sit together and plan, taking into consideration all the critical areas and aspects that require focus. While conducting supply chain activities, numerous areas of work require attention and these could only be attained through effective planning. With the use of joint planning, individuals with varied qualification and skills would be able to present their views and ideas regarding supply chain activities and would lead to mitigate the aspect of risk involvement. Consequently, lesser or ineffective planning could contribute to increased risks and poor performance-related outcomes (Adobor & McMullen, 2018).
2.3.9 Maintaining effective supplier relationship
The preferences of customers have been evolving and completion has augmented as well. Due to such a complex working environment, it has become necessary to provide effective and efficient services to consumers. If consumers are not provided with the most adequate services, they may incline towards changing the choice of brand and preferring companies that could deliver better services. Through better supplier relationships, businesses are able to ensure smoother operations and further make sure that no form of barrier takes place in supplying (Oghazi et al, 2016). Being able to develop better relationships, suppliers start giving preferences
to companies and give better services to them on the whole. Once this is assured, businesses are eventually able to manage better logistics and deliver customers the products that they require. Also, if changes take place in consumer preferences it becomes easier for brands to adapt to the changes and ensure activities in accordance. On the other hand, if supplier relations are not good, businesses may face issues in ensuring smoother operations and difficulties related to meeting consumer demands may also take place (Sillanpaa et al, 2015).
Supplier relationships are highly essential in the modern environment, the fact that suppliers are limited and competition has increased, it has become more imperative to maintain the relationship on the whole. Suppliers today have ample variety of businesses to supply their products and this generally contributes to the lesser bargain power of buyers. This aspect could also be explained through porter’s five forces analysis, in which buyer purchase power has been identified to be a significant force (Forkmann et al, 2016). Through maintaining supplier relationships, businesses are able to maintain the demand and supply of products in an adequate manner. In other words, the issues of surplus or shortage are well managed by businesses through maintaining a good relationship with suppliers. As the demands and requirements of consumers are evolving, businesses today need to develop systems that could better respond to the changing needs. One of the factors that could contribute to improved service to customers could therefore be regarded as better supplier relationships (O’Brien, 2018).
2.4 Benefits of supply chain efficiency 2.4.1 Reduced overhead costs
Even though supply chain efficiency has varied benefits and provides numerous opportunities to companies, effective implications are often difficult and daunting. Once supply chain efficiency is ensured, firms may be able to significantly reduce their overhead costs. Through such efficiency, better management of logistics take place and this eventually leads to lower transportation costs. Also, evident other costs such as storage and warehousing, distribution, handling, and many more would be lowered (Waters, 2019). With supply chain efficiency companies make sure that goods are handled and managed in the best possible manner, and this attempt allows businesses to lower their overheads on the whole. Firms today that is not able to implement supply chain efficiency often face consequences such as long days of warehousing and storage, extended transportation routes, poor distribution network, and much
more. All of these activities lead to an increase in the overall costs for the company and establishes the issue of increased overhead costs. Once these costs are controlled, companies may be able to offer competitive pricing to their customers and sustain a better position in the industry on the whole (Chamekh et al, 2017).
2.4.2 Better quality service and products
One of the aspects related to supply chain efficiency has been identified to be a better relationship with suppliers. Once this is attained, businesses would be given the opportunity to make sure that the suppliers only provide them with the best quality raw materials and products, which further may be processed and provide to the customers. Through having a good relationship with suppliers, companies are able to ensure better quality supplies and this eventually results in producing or supplying better quality products on the whole (Yoo & Cheong, 2018). Consequently, if supply chain efficiency is not maintained and relationship with suppliers are not good, businesses may often face lower quality products from the suppliers and this eventually would have an adverse impact on the final goods provided to the customers as well. Further, with supply chain efficiency it is ensured that the best quality products are attained and managed throughout the process, along with handling them with care. The quality of products is retained throughout the process of retaining products from the vendors and providing them to the final consumers (Huo et al, 2019).
2.4.3 Time efficiency
Realising that customer preferences and demands have been evolving frequently, businesses have to make sure that they are kept satisfied and content at all times. While various factors lead to the achievement of such satisfaction, timely delivery of products is also one of the elements in it. With supply chain efficiency, the processes and activities related to the supply chain are streamlined and conducted in a timely and efficient manner. The logistics management, warehouse management, transportation and more of such factors are carried out effectively through supply chain efficiency, and this eventually contributes to time efficiency on the whole (Lu et al, 2019). Once the process and procedures related to supply chain management are optimised, businesses may be given the opportunity to fasten up the activities and functions on the whole. Every individual is influenced to carry out the required tasks and responsibilities in an
effective manner and this allows the business with the opportunity to complete the available activities within the provided time frame adequately. Once time efficiency is assured, companies may be able to gain a competitive edge over others and keep the customers more satisfied (Zhan et al, 2018).
2.4.4 Risk mitigation
Most of the supply chain activities have risks involved in the process, and it is vital for the business to make sure that such risks and mitigated and controlled in the most effective manner. There are various techniques and approaches through which risks could be minimised, and one of such techniques could be considered as supply chain efficiency. With supply chain efficiency, every individual is provided with concise tasks and activities, and all processes are managed in an effective manner. Moreover, better assessment and prediction of present and upcoming activities is made which allows the business to take ample precautionary measures (Khojasteh, 2018). Further, supply chain efficiency allows firms to develop better contingency plans through which firms are able to develop approaches that minimise the adverse outcomes of intricate events or instances taking place. Once risk mitigation takes place, companies are able to better manage and carry out the required activities in a more efficient manner. Risk mitigation makes it more feasible for firms to carry out the required activities with more confidence on the whole. As supply chain activities often have high stakes and risks involved in most of the processes, risk mitigation becomes highly critical and imperative by all means (Li et al, 2015).
2.4.5 Better product flow
In supply chain management, one of the major activities inculcates getting the products delivered from one place to the other. The handling and transferring of products become highly critical for companies, as this ensures the overall performance and efficiency level of the firm. The products are often initiated from the suppliers and then forwarded to the final consumers. This process has various stages and stakeholders involved in it, and the product goes from varied places before reaching the final consumer (Govindan et al, 2016). Some of the stages through which the product goes are from the vendors to the docks for forwarding, then to the transportation medium, further to the docks and warehouses, to the company stores and to the final consumers. In many cases, the product flow may be completely different depending on the
model of the business and the strategy developed for it. Also, the place of stores, warehouses, and customers also significantly affects the complexity of supply chain management, and so attaining high efficiency in this regard may become extremely daunting. Whatever the processes and activities may be, businesses must ensure that the product flow is effective and this eventually would allow the company to save time, protect the products, timely deliver the products, lower risks and much more (Holmstrom et al, 2019).
2.4.6 Effective warehouse management
Warehousing management is one of the other essential aspects of supply chain management, and its effectiveness becomes imperative for companies in many instances. Through supply chain efficiency, businesses are given the opportunity to carry out effective warehouse management. With supply chain efficiency, firms handle the products in a more effective way and sorting and managing products become easier. Through efficiency, firms are given the opportunity to better stock their products and use them accordingly when needed (Lin et al, 2018). The whole process of warehouse management could be highly complex in certain instances and so ensuring effectiveness in this regard could become very useful. Once warehouse management takes place effectively, companies are able to save time, reduce their costs involved in management, lower efforts involved in the process, enhance the process of storage and retrieving, and much more (Singh & Kumar, 2020). Warehouse management, therefore, is associated with many other aspects, and ensuring effectiveness in this regard could lead to bringing out many other linked benefits. Businesses that are unable to carry out effective warehouse management often are unable to timely deliver products to consumers, face delays in fulfilling consumer requirements, slow down the process of delivery and handling of products, face high costs in storage and management, along with many other adversities (Atieh et al, 2016).
2.4.7 Better customer satisfaction
Even though supply chain management and efficiency may not be directly related to customer satisfaction, it has been identified that the two have a significant relationship with each other. With supply chain efficiency, businesses are able to fasten up their process related to storage, delivery, handling and management of goods. Through such efficiency, customers are
not only able to attain high-quality products, but they are also able to receive them on time. Further, as changing customers’ preferences and requirements have become imperative for companies, an efficient supply chain may allow the firm to better respond to such changes and attain the related benefits on the whole (Chavez et al, 2016). In most cases today, companies have been unable to meet the evolving requirements of customers, and one of the reasons for this has been the incapability of supply change management. If the supply chain does not respond well to the requirements of businesses and customers, it may lead to cause various adversities and issues on the whole. Once it is made sure by companies that supply chain responds well to the changing environment, not only a competitive edge would be attained, but firms would be given the opportunity to keep the customers satisfied in a much better way (Gomez-Cedeno et al, 2015).
2.4.8 Reduced Wastage of goods
Through working upon supply chain efficiency businesses are given the opportunity to reduce wastage of goods, through better managing timely delivery of goods. Customers today have become more conscious and keener about attaining services and so working on supply chain efficiency has become imperative for organisations (Singh and Kumar, 2020). If firms are able to deliver the products timely, customers would not return the goods back to the company or deny the delivery, and so lesser wastage would take place in this regard. Also, customers may also cancel the orders before reaching them if timely delivery does not take place. While this adds to the costs for the firm, it also negatively impacts the image of the company in terms of lesser reliability (Verma et al, 2018). Wastage has become an evident concern for firms today and managing this aspect has become necessary in order to control costs, time and efforts. Supply chain efficiency involves getting the products timely to the customers and effectively impacting logistics management. It further inculcates improving transportation and this eventually contributes to lower wastage on the whole. The use of technology in this regard could be essential as it may positively affect lowering the wastage of goods (Jaggernath & Khan, 2015).
2.4.9 Better resource allocation
Supply chain efficiency has been considered a vital and important aspect for businesses today as firms are able to attain varied benefits from its effective implementation. The benefits are attained in the short and long run, which results in being a huge element of attraction for firms today (Singh & Kumar, 2020). Through supply chain efficiency, companies may be able to better allocate resources and utilise them in a more effective manner. Attaining supply chain efficiency allows businesses to manage their resources in a better way by identifying areas that require them, and saving certain resources at times when required (Harrison et al, 2017).
Supply chain efficiency inculcates various elements and aspects, and in order to carry out the tasks and activities related to the supply chain businesses often have to utilise their resources. These resources could be of financial value and they may not be of any monetary value either. Time for instance is one resource that does not necessarily have a monetary face value but it is highly critical for companies (Tatham et al, 2017). Through focusing on improved supply chain efficiency, companies may be able to save these resources and put them to use in areas where required. Resource scarcity has become a huge issue for businesses today at a global level and even though resource allocation is not directly linked to supply chain efficiency, it could positively contribute to this aspect in the long run (Pavlov et al, 2019).
2.5Challenges related to Supply chain efficiency 2.5.1 Limited capital
In order to attain supply chain efficiency, it is vital for companies to inculcate technology in the process and utilise tools and techniques through which an efficient supply chain could be developed. In this regard, limited capital may lead to act as a huge barrier, as businesses implementing and taking use of technology may initially require high capital investments (Yan et al, 2019). While the invested capital may create beneficial results in the future and provide effective returns, generating capital initially could be an area of concern for SMEs and those having limited resource availability.
2.5.2 Limited skills and qualification of employees
While technology may play an imperative role in ensuring supply chain efficiency, human intervention is equally imperative and critical for attaining the desired results related to
the supply chain. Employees play a significant role in implementing the designed strategies or even taking use of new technology in order to maximise results and outcomes. Having said this, employees in the firm must be highly skilled and qualified to perform the required activities and maximise work efficiency on the whole (Jordan & Bak, 2016). Firms that do not have skilled employees may not be able to attain optimum results even after having effective technology implementation. As employees and human capital are one of the most essential assets to any organisation, their skills and qualifications are equally vital for attaining supply chain efficiency. Unskilled or unqualified employees may not be able to rightly understand the changing requirements of the company or even respond well to the training sessions provided for better learning. Even to have adequate learning and development, it is imperative that employees have ample potential to learn and grasp new dynamics of work activities (Tatham et al, 2017).
2.5.3 Lack of technology
In order to make sure that supply chain efficiency is attained, it is necessary for firms to have ample and adequate information technology. Not only the infrastructure, but the firm must also have proper tools and techniques through which information technology could be utilised in the best possible manner. Businesses that do not have proper information technology (IT) structure are often unable to rightly take use of the supply chain, and the efficiency, therefore, is not ensured (Singh & Teng, 2016). Many businesses have the barrier of limited capital, and this restricts such firms from taking use of IT or leading towards development. Implementing and taking use of IT initially requires certain capital investment by businesses, and businesses are only able to attain the related advantages if they have enough money available. This barrier in supply chain efficiency has often been faced by SMEs, as these are the organisations that are not working on a large scale and have limited financial support (Thoni & Tjoa, 2017).
2.5.4 Lack of knowledge
Lack of knowledge could be regarded as one of the other barriers to supply chain efficiency. To be able to make sure that advanced methods of supply chain management are implemented, it is vital that the employees and human capital have enough knowledge and skills to carry out the required activities. Most of the companies today do not have ample employees who are adequately skilled and qualified, and this eventually leads to result in a barrier in
achieving supply chain efficiency (Sajjad et al, 2015). With changing work environment and needs, companies have been constantly evolving their methods and approaches of work. In this regard, it is imperative that the employees are rightly trained and developed to adapt to such changes and work in accordance. Lack of knowledge regarding the usage of new technology, methods, and approaches has been one of the major reasons why firms have been unable to attain supply chain efficiency. Due to lesser knowledge, bottlenecks may be created at varied parts and places in the company, eventually slowing down the process and procedures of work. With regards to the supply chain specifically, it is imperative that proper knowledge is attained by employees involved in work activities. If this barrier is not resolved by businesses, their overall effectiveness and performance of work may eventually get adversely impacted (Cerchione & Esposito, 2016).
2.5.5 Poor cultural integration
Culture plays a critical role in ensuring the good performance of a company, as it impacts the behaviour and attitude of employees as to how they work in the firm and conduct their required activities. Poor cultural integration is one major issue faced by businesses today in which they are unable to inculcate every norm and practice in the accepted notions of the company. In poor cultural integration, the businesses are unable to keep the employees motivated and create a system that is widely accepted and followed by individuals. In order to attain supply chain efficiency, it is essential that every stakeholder of the firm is connected to each other, and a cumulative effort is put to meet the performance goals (Kurniawan et al, 2017). Due to poor cultural integration, not only the supply chain but various other business functions fail to perform adequately, and this leads to create an adverse impact on the firms in the long run. Leadership in this regard could be considered as playing a critical role, as an effective leader may develop good cultural integration within an organisation. Developing a holistic framework to be followed by individuals is necessary and the inability to do so could be considered as poor cultural integration (Altay et al, 2018).
2.5.6 Lack of motivation and employee empowerment
Motivation is one of the most imperative and essential aspects that could be associated with employee performance. Even if an individual is highly skilled and qualified, he/she may not
be able to adequately perform in the organisation if the person is not motivated towards work. To be able to attain supply chain efficiency, it has been identified that human intervention is highly imperative. Since employees and managers have to cumulatively work towards the attainment of supply chain efficiency, it may become highly daunting for the firm to ensure effective outcomes if employees are de-motivated. Such de-motivation has been one of the main reasons why many firms with even a talented pool of employees are unable to achieve supply chain efficiency (Oelze, 2017). On the other hand, lesser employee empowerment could also be identified as one of the other barriers to supply chain efficiency. If employees do not have enough authority or value in the organisation, he/she may not be able to take critical decisions that sometimes are highly imperative for the company. To be able to make sure that every individual is working at the optimum level of efficiency, it is vital that employees are kept empowered to a certain extent. This not only leads to greater engagement of individuals but also pushes them to work effectively on the whole (Sajjad et al, 2015).
2.5.7 Resistance to change
Today’s work environment has been constantly evolving, and this has developed the requirement of employees to remain flexible towards change. The working environment, along with customer needs and preferences is constantly changing, and in order to attain all related goals to such aspects, it is vital that employees adapt to flexible behaviour. It has been identified that many employees and other related stakeholders of companies today are resistant to change, and they do not wish to evolve in accordance with the changing environment. This resistance to change often occurs due to its fear, vulnerability, and uncertainty (Fawcett et al, 2015). If employees and all such related individuals of a firm do not change, they may not be able to inculcate the new ways and techniques of business operations through which the desired performance related goals could be attained. Due to not changing with the requirements, employees often underperform and it eventually leads to creating an adverse impact on the culture of the organisation. Individuals create self-built barriers and this lowers their work performance and engagement with the company (Silvestre et al, 2020).
2.6 Summary of Chapter
SCM and efficiency for online retailers
Factors contributing to Supply chain efficiency
Challenges related to Supply Chain efficiency
CHAPTER THREE: METHODOLOGY
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The particular chapter provides information regarding the methodology of the study that inculcates areas such as research philosophy, approach, design, data collection, sampling technique, data analysis, and ethical considerations.
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3.1 Research Philosophy
Research philosophy could be regarded as the strategy of the researcher, depicting how he/she plans to carry out the rest of the study (Saunders et al, 2015). It is the belief about the way in which data about a phenomenon should be gathered, analysed and used. If the researcher is unable to rightly identify and adapt the philosophy of the research, it may eventually lead to an impact on the way of data collection and eventually affect the final outcomes. It is the role of the researcher to assess the type and nature of the research, and then carry out the related processes in accordance (Mayer, 2015).
Epistemology could be regarded with aspects of scope, validity and methods of gathering knowledge. It is concerned with possibilities, nature, sources and limitations of knowledge in the field of study. Through this philosophy, the nature and sources of knowledge are taken into consideration, along with defining how the knowledge has been gained and from where (Boon & Van-Baalen, 2019). Moreover, ontology allows the researcher to identify how certain they can be about the nature and existence of objects they are researching, Ontology in other words allow the researcher to be sure about the dynamics that are being explored and the extent to which the elements of the study are reliable. Ontology is a system of belief that reflects an interpretation by an individual about what constitutes a fact (Zhong et al, 2019).
The three main types of research philosophies are interpretivism, positivism, and pragmatism (Creswell & Creswell, 2017). Positivism philosophy is the one that is associated with quantitative research, as it inculcates the collection of concise information from particular sources. In such research philosophies, the main aim of the researcher is to retain the objectivity of the study during the process of data collection and analysis (Park et al, 2020). In this philosophy, detailed data is not made part of the study, and no in-depth analysis is carried out at
