Expert answer:SWOT on Best Buy
Expert answer:Begin by reading the linked article:Kuzeljevich, J. (2013). A need for speed. Canadian Transportation & Logistics, 116(3), 30-33. Best Buy’s supply chain manager, Ms. Thompson, has asked you to provide a situational analysis on the transportation aspect of the business. Complete this task using the information from the linked article for Best Buy specific information as well as 2 other sources relating to transportation in general.Create a memo to Ms. Thompson that includes:An introduction on the topic (1 paragraph)SWOT analysis of Best Buy’s current transportation system with 3-5 aspects under each of the headingsCreate a table and ensure it is professionally presentedUse full phrases to share your findings clearlySupport your statements with further detail in the memo. In paragraph form, support the SWOT grid with further details on how the different aspects are impacting Best Buy. (2-3 paragraphs for each of the SWOT= 8-12 paragraphs total)Conclusion with 2+ recommendations based on the analysis presented (2 paragraphs)Include your APA formatted reference page and in-text citations with your memoRemember, you must present yourself professionally to Ms. Thompson. Check for grammar and professionalism!
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Electronics is fast becoming like the fashion industry – technology comes in and out
almost by season. What supply chain strategies can best address this harsh reality?
By
Julia
Kuzeljevich
F
alling prices, quicker inventory turns, and an
its footprint to more than 700 stores.
High return rates in
increasingly savvy consumer are factors
Fifty of its existing locations will also be
contributing to the need for an ever more electronics are due
renovated in 2013, to create a sleeker retail
streamlined supply chain in the electronics
strategy with smaller storefronts, and to position
vertical.
stores within 5 km of where 70% of the
to a combination of
population lives.
“It’s a difficult market. The price point for
This January, another major electronics
hardware, for televisions and computers, has
factors, like buyer’s
retailer. Best Buy Canada, launched a long-term
really come down and, along with these, the
transformational strategy to optimize its stores
margins. I think all electronics retailers are facing
across the country. As part of the plan, the store
that reahty,” said Bryan Tremblay, vice-president remorse, but also
will close eight Future Shop and seven Best Buy
of supply chain and logistics with Barrie, Ont.beoause new product Big Box stores in select markets nationwide, and
based The Source.
over the next 36 months, will move into the
“We have a private label program for many of
lines in eiectronios are second phase of its “Renew Blue” strategy with
our accessories, and we’re seeing good growth
plans to open new Future Shop Small-Concept
there. There is also growth in the wireless and
Web stores and new Best Buy Mobile locations
handset business, in mobile music, small stereo introduced so quickly
across Canada, where and when appropriate.
speakers, Bluetooth, etc.,” he said.
Best Buy Canada also introduced a priceFlectronics products now have seasonality to that obsolescence
beating model in July, offering to knock 5% off
them, he added.
any Canadian online retailer’s price.
“You need to watch your inventories. It’s comes into piay.
Best Buy Canada did not respond to CTSCL’s
almost like the fashion industry – technology
request for an interview, but in a release, the
comes in and out almost by season now. You have
to have a really good entrance and exit strategy, and watch the company said the move was “based on an extensive review of
downward curve very closely. Our strategy is we’re making sure Best Buy’s retail footprint in Canada in an effort to reduce
we have visibility into tracking inventory. We have great stores unnecessary costs, ehminate redundant operating systems and to
that turn their inventory over very quickly and these stores are optimize its real estate strategy to reflect a more a changing
treated differently from a retail perspective. We treat a lot of retail landscape.”
Transportation and supply chain partners are responding to
categories as life cycle management – how do we prepare for the
downward trend but keep fulfillment for the percentage of this changing landscape as well, gaining increased visibility into
clients’ needs and providing services to accommodate the
customers who still want that product?” he said.
The Source plans to open 20 new stores across Western dynamic market.
“The trend of JIT (just-in-time) inventory has become the
Canada, Ontario, Quebec and Newfoundland in 2013, bringing
CT&L APRIL 2013
www.ctl.ca
focus: electronics
standard. Since manufacturers and retailers are
continually trying to reduce their inventory
carrying costs, we do have customers with
regional manufacturing facilities or regional
distribution centres. They are always trying to
reduce lead times to their customers while
keeping transportation costs low,” said Atlas
World Group subsidiary AWG Logistics vicepresident and general manager Matt Van der
Linde, who also oversees the Atlas Specialized
Transport Group (STG], an asset-based, lessthan-truckload carrier of AWG Logistics.
“Customers are requesting time-specific
pick up and deliveries to help satisfy their
clients’ JIT needs. In many cases they are
requiring inside, white-glove delivery service to
reduce claims frequency and so they receive a
high level of customer service,” he said.
Atlas has developed a network of Specialized
Transportation Express Centers enabling the
company to offer service on electronics shipments
of 3,000 lbs or less within 24 hours of notice.
Some service providers, such as Ryder, have
become increasingly involved in the
configuration of electronics products through services at their
product completion centres.
“In the past, product was shipped to us in the retail
configuration, already in the clamshell that goes on the shelf, and
already configured for each different retailer. What we’re seeing
now is a trend for those customers to ship in bulk, and for us as
a 3 PL to configure to order, to eliminate inventory obsolescence.
This allows customers to be more responsive, to change the
display, and the wording, on-site,” said Steve Sensing, Ryder’s
vice-president of supply chain solutions for high-tech and
consumer electronics.
Configuration and packaging is worth some US$85 million
[CDN$88 million) per year in revenue for Ryder, and is offered
through their retail, consumer product goods, and electronics/
high-tech verticals.
“If you can configure it right and be more responsive to the
customer on the front-end, you will reduce the back-end return
volume. We see the packaging component as part of the supply
chain. Depending on the company, I’m seeing a trend that the
customers are more collaborative. We’re getting better data,
more visibility to orders, down the supply chain, back into Asia,”
said Sensing.
The demand for reverse logistics and repair of products are
two other major trends Ryder has been seeing increase over the
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CT&L APRIL 2013
focus:
past three to four years.
“These are continuing to grow across our customer base.
Increasingly, now, with e-commerce, we’re seeing a retum rate of
10-15%. You have electronics manufacturers shipping into major
retailers, and then the product gets returned back into their
network. We manage the process and the transportation of it
back into our distribution centre where 70-75% of it is ‘no fault
found.’ We find we’re able to co-locate that product in our
facility,” said Sensing.
Sometimes the OEMs will tender some product on
consignment or will introduce a new product in the market, and
Ryder may get a fuU pallet back that has not been touched, and
it will be redistributed, either through the same A channel of
top-name retailers or through a B channel where it is bought in
bulk quantity at a discounted rate. There are also situations
where the product is moved to a different region, such as South
America or Europe, he said.
“We think there is great value in being able to tum it very
quickly. We also see a trend in providing technical repair
capabilities within the same facility. We go through an initial
triage and determine what is wrong, and we work with the OEM
to maybe repair the product on site or scrap it in the proper way,”
said Sensing.
He said the company is looking to expand on its reverse and
CT&L APRIL 2Ü13
repair service solutions, with plans to offer a critical spares
delivery service over the next few months. Ryder will also add
procurement execution functionality to their systems, probably
this July.
“This will allow us to procure any raw materials from an
identified source in Asia with whom the OEM has an agreement,”
said Sensing.
High retum rates in electronics are due to a combination of
factors, like buyer’s remorse, but also because new product lines
in electronics are introduced so quickly that obsolescence comes
into play.
‘Showcasing’ is another factor, referring to individuals testing
the product in store but purchasing it off the Intemet.
“We’re working with a number of high-tech OEMs and hightech retail storefi^onts in reconfiguring their networks, as the
challenge now is how retailers can get that product to the customer
the next day. They are trying to drive down their cost as much as
they can,” said Sensing.
They are also trying to reduce touches to drive a more
efficient system.
“Our strategy for technology is to buy off-the-shelf-shop
floor management tools. We have an arrangement with a
provider for shop floor management functionality and it also
manages the reverse and repair component. We did deploy it at
www.ctl.ca
lelectronics
four of our locations, and it is
integrated
with
our
customers’ ERP,” he said.
Many OEMs now have a
more ‘balanced manufacturing’
strategy, from both a price and
disaster recovery perspective,
to be able to shift their
manufacturing back and forth
from Asia to North America,
he said.
“If you can manufacture
that configuration in the US, it
is at least a break-even from
what you were doing in Asia
but you also have the flexibility
and you can respond quicker,”
said Sensing.
Apple Canada spokesperson
Lorraine Doherty, responding
to a question about the
company’s possible plan to
bring back some of its
manufacturing from Asia to
North America, said that the
recent State of the Union
speech by US President Obama
addresses this issue.
In the speech, President
Obama confirmed that the
first priority is making the
country “a magnet for new
jobs and manufacturing. This
year, Apple will start making
Macs in America again.”
As supply chain accountability
becomes more stringent, some companies
are now putting their entire supply chains
under audit.
Apple just released its 2013 Supplier
Responsibility Progress Report, and said it is
the first technology company to open its
supply chain to the Fair Labor Association
(FLA) to ensure compliance with its
Supplier Code of Conduct by conducting
hundreds of audits per year worldwide.
“At our request, the FLA launched an
unprecedented audit of our largest final
assembly supplier, Foxconn. We’re reporting
extensively on the problems we’ve found in
our supply chain. That includes the tough
issues like underage labour, excessive work
hours, and environmental violations. We’ve
opened our supply chain to outside
organizations to conduct their own audits.
We’re joining industry groups to gather and
share ideas. We’re even partnering with
some of our most vocal critics. And we do
all this because we believe candidness and
transparency are critical to improving
www.ctl.ca
conditions for workers around the world,”
said Apple in a statement.
That very transparency will be a key
factor in getting and keeping consumer
loyalty in the electronics industry vertical.
OEMs and retailers know it’s a matter of
watching consumer interest very carefully
and the effect of changing trends on
supply chains.
“The best option for the consumer is
to have many options, whether a store in
close proximity or an online option. We
try to say we’ll ship for free to the closest
store to their house and hopefully we
gain that extra traffic into our stores. Or
we offer direct shipping to the home.
We’re in the game of ‘omni channel,’
offering as many channels as possible.
That’s where we want to play,” said
Tremblay.
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