Jb Hi Fi Supply Chain Management Case Study

Question:

Creating a 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.

Introduction

Supply chain management is a typical network system of facilities and distributions that handle the procurement of materials, transforming these materials into intermediate goods and finally into finished products, and lastly distributing the finished goods to the customers. There is a use of a supply chain network in both the manufacturing and service industries. The level of complexity in supply chain management varies from industry to industry and also from the size of the firm. Supply chain management is referred to as effectively managing the supply chain activities in order to maximize the customer value and to create a competitive advantage among the competitors (Harrison, 2011).

In this paper, there will be a discussion of the supply chain network in JB Hi-Fi in order to provide some competitive advantage to the firm by 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 the supply network.

Understanding the Company: JB Hi-Fi

JB Hi-Fi is one of the famous Australian retailers that deal with consumers’ electronic goods and also sell video games, Blu-Ray, DVD, and CDs. JB Hi-Fi is a well-known chain store that sells products through an online shopping website and other network channels. The headquarters of JB Hi-Fi is situated in Melbourne, Australia. JB Hi-Fi offers Australia’s largest range of home entertainment products at a particular place and they are priced at a 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 in one place and at the lowest price through maintaining the best supply chain network as compare to other firms in the same market. JB Hi-Fi maintains a low cost operating model in order to give competitive pricing at the store level.

The 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 the growth of business and in the future, this market will definitely flourish. The sale of domestic appliances and recorded music market in Australia has grown up significantly in the year 2013 as compared to the previous year. There are many internal and external drivers that drive the supply chain network of merchandise goods in such industry. Technology change is the most crucial factor that impacts the sale of electronics products worldwide. People are easily adaptable to change technology due to an increase in product quality and decrease in price.

Supply chain network at JB Hi-Fi

JB Hi-Fi has achieved flexibility in the supply chain network by integrating the supply of goods from importing them from abroad or from local suppliers. It is a famous supply chain organization that is equipped with the executive buying authority program. The process and system of the supply chain is managed by a 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 a more efficient and faster speed that delivers products at a 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 products from abroad company has appointed their agents in almost all countries from whom they buy the goods. Products from abroad are of the best class quality and also it eliminates middle man or local distributors.

There are four main store operations that keep track of the supply of goods in JB Hi-Fi, they are stock on the floor, communication, customer service, and store assessment. Online retailers like JB Hi-Fi must keep control of the stock for the rapid and timely procurement of goods from the store. JB Hi-Fi keeps its product at large warehouses with a tag on each item and also maintains the lag of travelling of products from one place to another. Tracking is done on a real-time basis so that there is no handling of the product. JB Hi-Fi also maintains a good communication network between all classes of workers for efficient supply of products to their valuable customers in the shortest time possible. The below graph shows the relationship between different elements in the supply chain network:

JB Hi-Fi greatly depends upon its suppliers in order to maintain a 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 supplies from their suppliers.

Issues faced by JB Hi-Fi in supply chain management

JB Hi-Fi takes all possible measures to maintain the efficient and timely delivery of goods to their valuable customers. Despite this, there are some unavoidable problems that hinder the timely procuring of goods from a supplier and also to supply them in proper time. While procuring the goods 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 by procuring electronic products from the outside country is the safety of products. The problem with JB Hi-Fi is that it has a huge category of products to sell but no proper supply chain management program to look after the supply of goods. It is maintained by the 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 render the goods useless. This a similar case with Amazon who looks after the customer demand to maintain the store running at a low-cost budget (Hassan, 2009).

Creating a competitive advantage in supply chain management

To achieve a competitive advantage in the supply chain management system JB Hi-Fi must ensure that every department poses the same understanding of the supply chain. It can be achieved through staff training including store staff and senior management. The understanding of the supply chain improves the internal communication between the departments that comes under the supply chain process.

The company must introduce express delivery within 24 hours at a very low cost or at no cost in order to differentiate 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 a very cheap price. The issues that are mentioned above can be overcome with little effort. The company must invest some amount of working capital for the advance procuring of goods from international suppliers. JB Hi-Fi must maintain an efficient communication network for the timely supply of goods.

Conclusion

The organization that heavily depends upon the supply chain network must link the physical flows and information flows of the product on a real-time basis. Companies like JB Hi-Fi must invest a huge amount in the supply chain process in order to increase customer value. Supply chain management is the active management of supply chain activities that helps in maximizing customer value and achieving sustainable competitive advantage.

References

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.

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