Time-Based Competition in the Grocery Retail Industry

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Introduction

One of the recently emerging operational strategies for firms in the modern economy is time-based competition (Inman, 2010 p 1). Time-based competition generally refers to a competitive strategy that emphasizes on efficient management of time as the key determinant of a company’s attainment and sustenance of competitive advantage (Inman, 2010 p 1). This operational strategy is commonly utilized by companies to considerably minimize the time required for a company to manufacture and deliver its products to the consumers (Inman, 2010 p1).

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To achieve the competitive advantage associated with efficient time management, a company has to improve its current processes and adjust its design structures used in the process of manufacturing and delivering the goods to the intended consumers (Inman, 2010 p1). Companies aiming at achieving fast production emphasize more on efficient response to consumer demands in the existing products while companies aiming at reducing the time taken to avail goods to the consumers focus more on logistic management (Inman, 2010 p1)

Wal-Mart Company, a major corporate retail company based in the United States has managed to retain competitiveness in the retail industry primarily due to its efficiency in implementing time-based competitive strategy in its operations. The company ensures that it replenishes its stores twice as first as its competitors in the retail industry (Inman, 2010 p1). The company’s major focus is the reduction of time period ordering of goods and the delivery of these goods (Lead time).

For the company to deliver a new product into the market, it has to effectively manage its logistic networks throughout supply chain. Effectual logistic administration is principally concerned with the firm’s capacity to deliver the right items to the clients at the exact time and place (Sparks & Fernie, n d, p 5). Wal-Mart management has to put into consideration the flow of products within the supply chain and in the wider supply chain to avail products to the consumers at the right time which entails efficient management of logistics in terms of product movement and demand management (Sparks & Fernie, n d, p 6). For the company to deliver its product in the market, the product must undergo the following processes;

Manufacturers [Wal-Mart would order napkins from manufacturing companies].

Inventory [Storage in regional distribution centers].

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Transportation [Transportation fleets such as trucks and trailers]

Unitization and packaging [Promotion of selling ability through packaging]

Communication [Effective information management and advertising]

Evolution of Retail Grocery Industry Supply Chain

In order to understand the progress that has been achieved in the retail grocery industry supply chain, we will look at the logistical advancement in the United Kingdom. The evolution of the retail grocery industry in the region took place over a short period (Sparks & Fernie, n d, p20). The industry orientation was significantly altered when the initial dominant method where manufacturers supplied to retailers directly from their factories and warehouses started changing towards a trend where retailers heavily invested in regional distribution centers to receive deliveries from suppliers and facilitate onward delivery to the store (Sparks & Fernie, n d, p 20).

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This initial change in the industry’s supply chain led to the minimization of supplier’s ultimate control of the supply chain with the distribution of products becoming the central function in retailing and logistical infrastructure (Sparks & Fernie, n d, p 20). This evolution further led to substantial improvement evidenced in overall reduction in lead time, minimizing inventory as well as promotion of greater availability of products to consumers (Sparks & Fernie, n d, p 20).

Another remarkable achievement in the industry was the introduction and implementation of the Just in Time model in the 90s, whereby retailers started emphasizing their primary distribution networks consequently demanding more frequent deliveries of smaller quantities (Sparks & Fernie, n d, P 20). This served to promote efficient delivery of goods to consumers as well as promotion of time-based competition in the industry which is especially vital since goods in the grocery industry have limited shelf life which calls for an understanding of exact real-time in delivery (Lowson et al, n d p3).

Efficient Consumer Response

This is an operational strategy commonly utilized in the grocery retail sector in the modern economy to achieve time-based competitive advantage and utilizes such components as PoS data, EDI, fast re-estimation and reorders to drive supply to meet demand of the consumers (Lowson, n d, p 3). A simple demonstration would be a customer’s order of frozen greens in a greengrocery shop. On receipt of the order, product data and information is transmitted to the manufacturer and the growers through electronic data interchange which enables efficient transmission of data throughout the supply chain allowing the store to link supply with real-time demand (Lowson, n d, p 3). This process is highly facilitated by advanced technology further promoting efficiency in terms of time and other resources.

Wal-Mart’s association with other major companies such as Proctor was the pioneer of efficient consumer response in the United States (Sparks & Fernie, n d, p48). This move was highly influenced by increased competition in the traditional grocery industry in the 1990s as well as recession that had hit the region during the time (Sparks & Fernie, n d p 48).

Europe on the other hand adopted the efficient consumer response programs in 1993, where they conceptualized the operational strategy as a global movement in the grocery industry emphasizing the total supply chain which was inclusive of suppliers, manufacturers, wholesalers, retailers working together to effectively provide for the changing demands of the consumers at a convenient and efficient way (Sparks & Fernie, n d p48). Consequently, the region received remarkable sales turnover.

Initially, the strategy sought to ensure efficiencies in replenishment and standardization of materials and equipment and aimed at eliminating unnecessary handling through the supply chain (Sparks & Fernie, n d, p 49). Efficient consumer response later shifted its focus towards efficient consumer response management through category management, product replenishment and enabling technologies which were further broken down to other areas where improvements were made to enhance efficiency and ensure delivery of products on time to the consumers (Sparks & Fernie, n d, p48). On performing ECR activities, a company can evaluate its outcomes and performance through demand and supply–related indicators (Sparks & Fernie, n d p 52).

Demand-related indicators are concerned with sales and store variables as well as consumer and shopping measures (Sparks & Fernie, n d p 52). The supply-related indicators on the other hand are strongly concerned with issues regarding consumer satisfaction and can be classified further into logistics costs, logistics reliability as well as administrative accuracy (Sparks & Fernie, n d p 52).

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Grocery retail industry is becoming more advanced in their approach to demand and supply management and has evidently moved from the traditional organizational structure into a multi-functional team structure which has led to overall restructuring of the relationship between retailers and their suppliers (Sparks & Fernie, n d p 52). Category performance in the industry has been improved through enhancement of consumer experience by remerchandising traditional layouts and these approaches are continuously being adopted by diverse companies regardless of size, location and popularity (Sparks & Fernie, n d p 53).

In addition, the greengrocery industry highlights success in various regions in terms of category planning which has promoted time management in the supply chain and although logisticians would prefer a consistent flow of products through the supply chain, many retailers use tactical promotions as a way of their marketing strategy (Sparks & Fernie, n d p 53). Further, in order to integrate demand-side planning with continuous replenishment, collaborative planning is necessary and Wal-Mart and Warner Lambert are cited as the key partners in sales forecasts collaboration in the 90s which set a successful example for other companies to follow (Sparks & Fernie, n d p 53).

Market Changes and Demand Uncertainties

Retailers in the grocery industry can experience great losses especially because of sudden market changes as well as missed sale opportunities (Sparks & Fernie, n d p 53).General slowdowns in the market may result in consumer dissatisfaction which may significantly reduce sales in a company and lead to the accumulation of unsold stock causing further losses to the company. To counter these occurrences, retail companies may adopt the agile merchandise approach business framework commonly used in the fashion industry and incorporate outsourcing in other regions (Sparks & Fernie, n d p 53). Through agile merchandising, domestic manufacturers can be used to supply to those parts of the consumer base that are difficult to predict through the provision of smaller batches on the basis of real-time demand (Sparks & Fernie, n d, p 124).

Grocery retail companies may utilize overseas companies through outsourcing to meet cost requirements while it utilizes its local manufacturers to provide for quick replenishment orders and small batches in order to respond to unpredicted surges in demand (Sparks & Fernie, n d p 124). The goods supplied in the grocery retail industry have to further compete in the marketplace supply chain which calls for matching of lifecycle attributes of greengrocers as well as the characteristics of the product (Sparks & Fernie, n d p 124).

A study conducted in the UK revealed that careful matching between product lifecycle character, demand attributes and supply alternatives maximizes overall competitiveness of a company (Sparks & Fernie, n d, p 125). In addition, through this business framework, Retail Companies can significantly reduce the chances of negative implications which are associated with uncertainties in demand.

Agile merchandizing represents the incentive of simultaneously planning and controlling the supply network in such a way that the value chain complies with consumer expectations as well as the expectation of suppliers (Sparks & Fernie, n d, p 130). Consumer integration is the main driver of business network providing the information required to ensure that the value proposition offered to consumers conforms to the value that they are expecting to receive and as the market conditions changes, adjustment to the value propositions need to e carried out accordingly (Sparks & Fernie, nd, p 130).

However, agile supply chain focuses on fulfilling consumer demand rather than market mediation and consequently its main objective is directed towards planning the supply base rather than actively and accurately managing the complex planning and control activity involved in management of the value chain (Sparks & Fernie, n d, p 129).

Modern Logistic Management

The logistic sector in the United States has developed over the years with the emergence of new and advanced modes of transportation. The public sector in the country is advanced which serves to facilitate the movement of people and goods in the region (Nordahl, n d p 75). Numerous essential factors are put into consideration when developing the transit system with much focus being accorded to passenger enrichment as well as efficient transportation (Nordahl, n d, 116).

Transport decision-makers in various regions have recognized that transit vehicles considerably utilize public space and have consequently formulated strategies in line with ensuring that the design of the transit system is developed in such a way that it provides the experience afforded to the customers (Nordahl, n d, p 98). Consequently, developers aim at building an attractive transit system that not only promotes tourism in the region but also provides an efficient means of transport for both people and goods consequently enhancing the delivery of goods to customers (Nordahl, n d, p 115).

Further, due to improved technology and communication techniques being enjoyed y the modern-day economy, time-based competitive advantage can easily be achieved through demand forecasting which has been made possible through the numerous commercial software packages that have been invented for forecasting (Gung, 2002 p1). This serves to promote speed and responsiveness in the retail grocery industry and provides the companies with a major competitive advantage (Gung, 2002, p 1). In addition, the mode of transaction in the modern economy is leaning more towards the business transaction where the buyer and the seller contract electronically and the buyer consequently expect to be availed with the product more efficiently as well as provision of adequate information regarding the availability of the product (Gung, 2002 p 1).

For a company to meet these demands, it must ensure that it adopts lean and efficient responsive measures towards addressing consumer demands by putting more effort into its logistics planning as well as promotion of business strategies (Gung, 2002 p 1). Demand forecasting is an initial step towards this achievement and also serves to enhance business implementation in the greengrocery industry (Gung, 2002 p 1).

Since the modern business environment is characterized by dynamism and may fail to follow a historical pattern of demand changes, future demand may not be accurately measured by past demand information alone (Gung, 2002, p 1). Demand can therefore be forecasted using models such as proprietary forecasting tools, forecasting using consumer surveys among other models to overcome challenges associated with sudden changes in demand in the retail grocery industry (Gung, 2002, p 1). In conclusion, grocery retail companies should focus on logistics and supply chain management as well as the implementation of business to enjoy advantages associated with time-based competitiveness.

Reference List

Gung, R. R. (2002). Demand forecasting today, Institute of operational research and the management sciences. Web.

Inman, A. R. (2010). Time based competition, Advarneg Inc. Web.

Lowson, R. (Not dated). A taxonomy of operational strategies and their application in the fast moving consumer goods sectors, UK: Strategic operations management centre. Web.

Nordahl, D. (Not dated). My Kind of Transit: Rethinking Public Transportation in America. Chicago: Center for American Places at Columbia College.

Sparks, L., & Fernie, J. (Not dated). Logistics & Retail Management: Emerging Issues and New Challenges in the Retail Supply Chain. New York: Kogan Page.

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BusinessEssay. "Time-Based Competition in the Grocery Retail Industry." February 16, 2022. https://business-essay.com/time-based-competition-in-the-grocery-retail-industry/.