Creating competitive advantage in supply-chain management – (Issues and case studies related to the evaluation of suppliers and risks to value creation of poorly managed supply chain. E.g. Labour management in the fashion industry in foreign suppliers) of JB HI FI.
Supply chain management is a typical network system of facilities and distributions that handle procurement of materials, transforming these materials into the intermediate goods and finally into finished products, and lastly distribution the finished goods to the customers. There is use of supply chain network in both the manufacturing and service industry. The level of complexity in supply chain management varies from industry to industry and also from size of firm. Supply chain management is referred to effectively managing the supply chain activities in order to maximize the customer value and to create the competitive advantage among the competitors (Harrison, 2011).
In this paper there will be discussion of supply chain network in JB Hi-Fi in order to provide some competitive advantage to the firm through using its existing supply chain network with some improvement. For this purpose issues and similar cases will be discussed in detail for understanding the supply chain network of JB Hi-Fi and to give recommendations to improve supply network.
JB Hi-Fi is one of the famous Australian retailers that deals in consumers electronic goods and also sells video games, Blu Ray, DVD and CDs. JB Hi-Fi is well known chain store that sell products through online shopping website and other network channels. Headquarter of JB Hi-Fi is situated in Melbourne, Australia. JB Hi-Fi offers Australia’s largest range of home entertainment products at particular place and they are priced at very attractive price that appeals to both enthusiasts and price sensitive customers (JB Hi Fi Annual report of 2011, 2012). The objective of the company is to provide quality products at one place and at lowest price through maintaining best supply chain network as compare to other firms in the same market. JB Hi-Fi maintain low cost operating model in order to give competitive pricing at the store level.
Company targets high growth segments in the home entertainment market for receiving maximum profit from there sale. On looking at the entertainment industry in Australia it can be said that there is huge potential in growth of business and in future this market will definitely flourish. A sale of domestic appliances and recorded music market in Australia has grown up significantly in year 2013 as compared to previous year. There are many internal and external drivers that drive supply chain network of merchandise goods in such industry. Technology change is most crucial factor that impacts the sale of electronics product worldwide. People are easily adaptable to change technology due to increase in product quality and decrease in price.
JB Hi Fi has achieved flexibility in the supply chain network through integrating the supply of goods from importing them from abroad or from local suppliers. It is the famous supply chain organization that is equipped with the executive buying authority program. The process and system of supply chain is managed by real time tracking system that allows higher and quicker information availability that helps in decisions making process. The leaner and supply chain network operates at more efficient and faster speed that delivers product at time and also reduces the overall cost incurred on logistic management (Harrison, 2011). JB Hi Fi greatly depends upon the supply of products from abroad in order to keep their working capital and also to lower down the interest figure. To timely procuring of products from abroad company has appointed their agents in almost all countries from whom they buy the goods. Products from abroad are of best class quality and also it eliminates middle man or local distributors.
There are four main store operations that keep the track on the supply of goods in JB Hi Fi, they are stock on floor, communication, customer service and store assessment. Online retailer like JB Hi Fi must keep a control on the stock for rapid and timely procurement of goods from the store. JB Hi Fi keeps their product at large warehouses with tag on each item and also maintains the lag of traveling of product from one place to another. Tracking is done on real time basis so that there is no handling of product. JB Hi Fi also maintain good communication network between all classes of workers for efficient supply of products to their valuable customers in shortest time possible. The below graph shows the relationship of different elements in supply chain network:
JB Hi Fi greatly depends upon their suppliers in order to maintain hassle free and sustainable flow of products. JB Hi Fi does not produce or manufacture the goods it puts on its shelves, instead, they provide a variety of products to the consumer by securing supply from their suppliers.
JB Hi Fi takes all possible measures to maintain efficient and timely delivery of goods to their valuable customers. Despite of this, there are some unavoidable problems that hinder the timely procuring of goods from supplier and also to supply them in proper time. While procuring the goods the from outside the country, JB Hi Fi has to take special permission from the Australian government in written format and this process takes huge time to be done (Slade, 2010). Another major problem that was faced from procuring the electronic products from outside country is the safety of products. The problem with JB Hi Fi is that it has huge category of products to sell but no proper supply chain management program to look after the supply of goods. It is maintained by normal staffing of required personal in supply chain management. Major product sell by the JB Hi Fi requires no shell life but there is technology change of most of the products that renders the goods useless. This the similar case with the Amazon who look after the customer demand to maintain the store running at low cost budget (Hassan, 2009).
To achieve the competitive advantage in the supply chain management system JB Hi Fi must ensure that every department poses same understanding of supply chain. It can be achieved through staff training including store staff and senior management. The understanding of supply chain improves the internal communication between the departments that comes under the supply chain process. Company must introduce express delivery within 24 hours at very low cost or at no cost in order to different from other online retailers in the same category (Sachs, 2003). This will add those customers that require fast delivery of products at their doorstep and at very cheap price. The issues that are mentioned above can be overcome with little efforts. Company must invest some amount of working capital for advance procuring of goods from international suppliers. JB Hi Fi must maintain the efficient communication network for timely supply of goods.
The organization that heavily depends upon the supply chain network must link the physical flows and information flows of product on real time basis. Companies like JB Hi Fi must invest huge amount in supply chain process in order to increase the customer value. Supply chain management is the active management of supply chain activities that helps in maximizing the customer value and achieving the sustainable competitive advantage.
Harrison, T.P. 2011. An Introduction to Supply Chain Management. [Online]. Available at: https://lcm.csa.iisc.ernet.in/scm/supply_chain_intro.html [Accessed on: 12 September 2014].
Hassan, H. 2009. Internal Supply Chain Management System. John Wiley and Sons.
JB Hi Fi Annual report of 2011. [Online]. Available at: https://www.jbhifi.com.au/Documents/Annual%20Reports/110_2011-09-09_4-04-34.pdf [Accessed on: 12 September 2014].
Sachs, G. 2003. Jb Hi Fi. [Online]. Available at: https://www.jbhifi.com.au/Documents/Announcements/JB_Hi-Fi_Limited_Prospectus.pdf [Accessed on: 12 September 2014].
Slade, M. 2010. Darkest before dawn for retailers. John Wiley and Sons.