International Logistics at Morrison - Case Study Example

? International logistics Morrison is one of the leading grocery retail chains within the UK market. The organization is operating with more than 350supermarket outlets within UK. The large retail supermarket chain used to offer variety of grocery products in low price range. The organization used to manage its in-house commercial operation through its key wholly owned subsidiaries, such as Farmer boy, Wm Morrison produce and many more. The organization has specialized in the distribution and retail goods through supermarket networks. The grocery retail chain market in UK has become mature enough due to the presence of several potential organizations. The distribution strategy of Morrison is quite unique among the other retail players within the UK market. It is the only largest retail chain supermarket that owns and operates healthy and fresh food production and processing facilities. The organization has implemented vertical integrated distribution operation in the food category. This vertically integrated operation has helped Morrison to produce, distribute and retail enormous bulk of its fresh and unsullied meat and dairy requirements (Doole and Lowe, 2005, p.131). Moreover, this distribution structure helps the organization to process and package the fresh vegetables and fruits effectively. The organization has expanded and strengthens its manufacturing and distribution infrastructure in the fiscal year 2006 (Ruddick, 2013, p.1). In terms of manufacturing, Morison has expanded its in-house baking effectively and capacity by acquiring Rathbone’s 80% stake. The abattoir operation of Morrison was started to expand in the year 2005 by acquiring second facility in Scotland. The organization also has extended fruit processing and packing facility in Northamptonshire. Moreover, the organization has introduced a new warehouse in Rushden in order to package the vegetables. The organization has opened a fresh and new regional dedicated distribution centre at Kettering in the year 2005 (Furrer, 2010, p.233). It was estimated that this centre may save almost 70 nearby stores in UK. The global recession and European financial crisis in 2008 has affected international distribution and logistics structure of Morrison. Moreover several unfavourable reasons have resulted the fall in sales (plunkett, 2009, p.49). Despite of an extra trading date in the year 2011, the organization has reported 2.5pc sales drop. It is feasible that, the organization has implemented vertical integration strategy in their distribution channel (Mangan, Lalwani and Butcher, 2008, p.130). The major concern for Morrison is that, the sales figure has declined since the Christmas, whereas the other competitors, such as Sainsbury and Tesco have performed relatively well comparing to Morrison. According to Philips, limited numbers of convenience stores is affecting the business performance of Morrison. The organization has only 12 convenience stores. On the other hand, the other large competitors of Morrison have strong presence in the UK grocery retail market with numerous existing convenience stores. It is indicating that, the organization has limited access to growing division of the international grocery retail market. It is expected that, the organization may face several difficulties if they try to introduce new convenience stores in near future. According to Morrison, selling the grocery food products and vegetables through convenience store will be costly comparing to the selling food products in traditional supermarket. Therefore, it is feasible that, the limited number of convenience store is hurting the sales of the organization. On the other hand it is affecting less to the business profit margins of Morrison. Moreover, the shareholders of Morrison are backing this particular old traditional sales strategy. The declined Christmas sales figure may create huge threat for the future perspective of Morrison. The organization is still utilizing supermarket chain model in order to sell their products. It is discussed earlier that, this strategy may maximize the business profit but cannot increase the market share. As the UK grocery retail chain market has become saturated, therefore the organizations within the industry need to implement new innovative ideas in order to sustain in the competitive market place. The potentiality of a market place is slowly and gradually increasing. Moreover, the current trend of the consumers is changing too. Looking into these factors, several potential competitors of Morrison has introduced several convenience stores in the potential urban and semi-urban areas within UK. Moreover, they have effectively expanded their logistical structure in global market place. It is feasible that, Morrison is trying to increase its market share in the international market too. But only depending upon the supermarket sells, it would be difficult for the organization to tap the vast global market. Currently the organization has only 12 convenience stores that are quite less comparing to the other competitors. Moreover, it is feasible that, Morrison’s distribution strategy is centralized to its main distribution centre. If the organization plans for introducing new convenience stores, this centralized distribution strategy will limit the actions of convenience stores. The stock supply and delivery process will become more costly and time consuming. Moreover, in terms of international market the organization have to pay more cost with this strategy. Looking into these above study, it is feasible that Morrison needs to accommodate necessary changes in their business operation. Introducing new convenience stores in several potential urban and semi urban areas in both domestic and international market will provide huge competitive advantages to Morrison. As it is feasible that, the convenience stores of the competitors of Morrison are outperforming the high street, therefore, it is necessary for Morrison needs to bring more integrity, visibility and inventory accession in their international logistic and supply chain system. Where the other retail giants have performed eventually during Christmas through convenience stores, Morrison has failed to raise their sales figure due to these reasons. The organization should implement this strategy and manage all the aspects as early as possible. Overlooking these matters can raise Morrison’s survival issues in near future. Firstly, Morrison should launch convenience stores in several potential areas within UK and in other potential international geographic area. Other potential competitors like Tesco and Marks & Spencer already has launched several numerous convenience stores in different parts of country. It has several benefits. First of all, it increases the customer awareness about the brand. Selling products in supermarkets can be profitable but it will not increase the market share of a company. The organization needs to tap vast market place in order to increase the market share. As it is feasible that, Morrison has only 12 convenience stores, therefore, the organization needs to divide a large area into small parts and should introduce distribution centres for specific conveniences stores. It will bring speed and efficiency in the logistics and supply chain structure of Morrison. Morrison is one of the large organizations within UK retail industry (Rosenbloom, 2011, p.127). They need to invest some capital in order to establish warehouses in the effective parts of the country. It will help the organization to stock the inventory. Moreover, it will support the nearest convenience centres by providing sufficient required stocks. Availability of reasonable priced products in all the convenience stores within the country will help the organization to increase its sales margin. Moreover, Morrison can launch navigation system for the betterment of logistics and supply chain system in order to support their international logistics and distribution structure. Navigation system is an effective and key application of modern information communication system. This system will assist the truck divers or the suppliers, if in case they find it difficult to locate proper delivery address. Through the help of web-services, it will show the map for the required destination. Therefore, the order can be delivered within the specific deadline. If the organization plans for the implementation of new business strategy in order to increase the sales, it is necessary for them to introduce new warehouse and several nearby convenience stores around the country or any potential international market place. It will bring efficiency and pace in the product distribution system. Otherwise, it will be very hard for the organization to control every single order from a centralized distribution centre. The organization has implemented vertical integration in the distribution system and their distribution network is very much centralized towards the main distribution centre. They need to decentralize this distribution strategy in order to control and support all the convenience stores. Through centralize distribution process it will be very much difficult for Morrison to control the business cost and time. Decentralize process will help the organization to utilize effective resources and raw materials in the operating country. Last but not the least; Morrison should introduce PDA system in the developed supermarkets and convenience stores. It will help the in-store staffs to reduce their work pressure. The specific PDA software will assist the employees to find the specific products from the particular self and row within the in-store product segment. This implemented system will increase the business operation efficiency of Morrison. Moreover, this PDA software can be applied in warehouse management system too. This application will help the warehouse staffs to find appropriate stocks from the specific location in a warehouse. This strategy will help Morrison to increase their efficiency in their logistics structure. Several leading players within the industry have effectively understood the current trend of the people and executed their business strategies according to these factors. Therefore, being a leading grocery retail chain, Morrison needs to introduce new convenience stores in order to recover the market share figures. On the other hand, a leading business chain cannot achieve success with limited number of convenience store. Some of the strategies have been suggested to Morrison in order to increase the efficiency of their business process. If Morrison tries to introduce new convenience stores across potential areas in the operating country, they have to introduce new warehouse in a centre area of small divided parts. The warehouse will be able to supply appropriate stocks to the nearby convenience stores. Moreover, this strategy will increase the communication process between the convenience stores and warehouse of Morrison. Introduction of convenience stores and implementation of technological appliance in the logistics structure will help the organization to create a healthy and strong relationship with the clients. Effective warehouse management system will increase the efficiency in the inventory control in a logistics and distribution structure. If Morrison decides to increase the number of Convenience stores and brings advanced technology in the stores and logistics structure several challenges may be raised. These things can affect the environmental footprint of their activities. The usage of plastic grocery bag will increase along with the increasing number of convenience stores. This will affects the environmental structure in both domestic and global market. Moreover, bringing high technology in these stores, warehouses and other logistics process may increase the number of carbon emission level. As a result, it is possible that the government of operating country can create some barriers in front of the organization. It is feasible that, limited control o these issues will bring huge problems towards the organization in near future. The nature of the market is saturated and mature enough. Moreover, there are several potential competitors of Morrison who used to sell similar kind of products. Morrison is very much dependent on their traditional sales process. They used to believe that supermarket sales will result huge profit. At the same point of time the organization is losing its market share due to this strategy. Several potential competitors of Morison have introduced numerous convenience stores in several potential urban and semi urban places in several potential geographical areas. Morrison is one of the large organizations within UK retail industry. They need to spend some capital in order to establish new warehouses in the effective parts of the country. It will help the organization to stock the inventory. Moreover, it will support the nearest convenience centres by providing sufficient required stocks. Looking into these factors it can be said that the organization needs to employ these strategies as early as possible. It will be beneficial for the organization as it has been discussed earlier. Morrison needs to bring more integrity, visibility and inventory accession in their international logistic and supply chain system. Where the other retail giants have performed eventually during Christmas through convenience stores, Morrison has failed to raise their sales figure due to these reasons. References Doole, I., and Lowe, R., 2005. Strategic Marketing: Decisions in Global markets. Stamford: Cengage learning. Furrer, O., 2010. Corporate Level Strategy: Theory and Applications. London: Routledge. Mangan, J., lalwani, C., and butcher, T., 2008. Global Logistics and Supply Chain Management. New Jersey: John Wiley & Sons. Plunkett, J., 2009. Plunketts’s Transportation, Supply Chain and Logistics Industry Almanac 2009. London: Plunkett Research ltd. Rosenbloom, B., 2011. Marketing Channels: A Management View. Stamford: Cengage Learning. Ruddick, G., 2013. Morrisons’ Online Dilemma becomes Clear after Christmas Rurkey. The Telegraph [online]. Available at: . [Accessed on May 4, 2013]. Read More