Companies belonging to innovative and technological sectors, operate today on highly competitive markets, which put their ability to beat the competition to the test.
In particular, they must focus on their internal logistic process, because the demand for products can become unpredictable at any moment and the expectations of the final output are increasingly growing.
Furthermore, in an increasingly global market, the distances to be covered are getting longer.
To develop, it therefore becomes inevitable to build an efficient and flexible supply chain, equipping oneself with a Supply Chain system adapted to the times.
Supply Chain management has two fundamental objectives: the service offered’s improvement to the customer and the costs’ reduction.
This study aims to focus on four decidedly complex sectors: automotive, fashion, pharma and large-scale distribution.
Each sector has specific needs, deriving from the different type of final product, the sector of origin, the type of communication it makes to reach its customers and the price it offers.
The automotive sector is confronted with new needs from its end consumers and facing new technological challenges. An efficient Supply Chain management represents the optimal solution to solve organizational complexity and guarantees a competitive advantage over the competition.
In the fashion sector, there are two different types of organization: “planned” and “fast fashion”. The “planned” aims to achieve quality and durability objectives over time through a stable supply chain; on the other hand, “fast fashion” produces trendy items in the short term and requires dynamic and flexible logistics.
The pharma sector deals with health protection and must guarantee a constant level of efficiency. It manages different products, develops new techniques to monitor the quality of its service and manages patient information through a highly advanced Supply Chain.
Within the large-scale retail trade, the critical success factor is the quality of the service offered at a low cost, and moreover it must reduce waste and enhance back office activities.
The comparison model
Having described these premises, the analysis focuses on four perspectives: financial, customer, process and innovation. For each of them, the different performance needs of the four sectors’ Supply Chain listed above are identified.
From a financial point of view, all sectors aim to increase their profit margin. In particular, in the automotive, pharma and fashion sectors the incidence of logistics costs on turnover must be estimated, in the large-scale retail sector the costs associated with each kilometer traveled are calculated, to evaluate the efficiency of deliveries, both in terms of planning and for the selection of the most suitable means of transport.
Calculating logistics costs allows you to verify the impact of Supply Chain management on turnover, as excessive costs force you to increase the final sales prices to customers, penalizing the competitiveness of businesses.
As for the customer-oriented perspective, different philosophies are pursued, based on the type of sector. The automotive industry focuses on offering a customized product, the fashion sector is based on the response’s speed, in terms of “time to market“. For the pharma sector, the degree of the service’s usability by citizens is assessed. Finally, for large-scale distribution, the satisfaction of consumers’ needs concerns the respect of delivery times and the number of orders managed correctly.
The satisfaction of market demand allows companies to improve their image, strengthen visibility on the market and increase reliability, signaling good coordination at the logistical level.
Orientation to Just in Time
From the point of view of processes, the automotive and fashion sectors are oriented towards “just in time” and aim to reduce warehouse costs. This pushes the automotive industry to search for suppliers, able to make deliveries quickly, to improve the entire logistics process.
The pharma and large-scale distribution sectors aim to achieve a continuous flow, which is efficient and planned, without excessive fragmentation in the distribution chain.
Monitoring the processes makes it possible to verify that there are no particular criticalities in the distribution chain and to minimize waste along the logistics chain. More specifically for the fashion sector, the efficiency of the production and logistics process is given by the production of a certain quantity of items in a given time and the ability to optimally exploit the capabilities of the machinery. In the pharma sector, the continuity of the logistic flow is given by the percentage of orders satisfied out of the total. This figure represents a focal point of every company in this sector and must be constantly measured.
Another important fact to monitor, in the various sectors, is the relationship between the value and the cost of the finished product. This is because a product with an average high quality and low cost represents a positive aspect for the logistics chain.
Within the Large-scale distribution sector, the Supply Chain is characterized by strong heterogeneity and complexity, which is why without coordination, the quality of the service offered is lowered. Delivery times must therefore be constantly monitored and the various means used must be evaluated, in order to have a correct programming in order to optimize logistic flows.
Customer satisfaction and customization
The ultimate goal of the logistics cycle and supply chain management is to measure customer satisfaction. In particular, the automotive sector estimates consumer satisfaction based on the degree of the offer’s personalization. The evaluation of the number of specific requests satisfied out of the total appears to be very impactful in this sector. The world of fashion, on the other hand, aims to create collections that satisfy a large number of people and meet the needs of the market.Large-scale distribution aims to be efficient and not to offer customized solutions, as well as in the pharmaceutical sector, where customized solutions are available only in exceptional cases.
As demand increases, the organizational complexity of the Supply Chain increases and consequently the ability to satisfy the different demands of end consumers.
Another difference between the automotive sector and the rest relates to supplier management. The success of this sector strongly depends on the materials’ quality and components supplied, which requires specific performance evaluations. In the fashion industry, on the other hand, it is based on convenience and on different situations. In the pharmaceutical sector, particular attention is paid to the quality and not to the agreements’ durability with suppliers.
Regardless of the buyer-supplier economic agreements, companies must monitor the punctuality and correctness of deliveries, as they strongly affect the logistic flow’s continuity.
A distinction in the fashion sector concerns the evaluation of performances linked to the reactivity of the supply chain. Especially for fast fashion companies, because they have to respond quickly and punctually to consumer expectations.
The measurements are made on the time between the design phase of the new garments and the sales phase of the same. These same assessments take on a secondary aspect for the other sectors. As for the pharmaceutical sector, the focus is on social equity and customer accessibility in purchasing medicines and therapies. Therefore, the more efficient the production flow and the logistics flow, the lower the costs for consumers. In the automotive, fashion and large-scale distribution sectors, the focus is more on the quality / price ratio than on accessibility.
Finally, what distinguishes large-scale distribution from other sectors is distribution planning, which plays a fundamental role in the logistics flow. Programming to have an optimal flow, limit movements and maximize the use of transport.
Although in any sector there are similarities in the strategic objectives, each area has specific needs, due to the specificity of the context.
The logistic processes management represents the key to the success of companies. The work’s organization, the internal organizational choice, strongly affects the company organization in the automotive fashion, pharma and large-scale distribution sectors.
Supply Chain Management is therefore one of the most current and interesting challenges for all sectors on the market.
- Silvia Serafino, Carlo Raffaele, Dipartimento di Ingegneria Gestionale e della Produzione, Politecnico di Torino. “Un’analisi comparativa tra Supply Chain: Automotive, Fashion, Pharma e GDO”. Logistica Management, April 2021 https://www.logisticamanagement.it/it/
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