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Retail Assignment 3 Updated

The document presents an analysis of sourcing strategies for a summer clothing line, recommending a hybrid approach that utilizes local suppliers for speed and quality while leveraging international suppliers for cost savings. It also addresses inventory shrinkage issues, identifying theft as a primary concern and proposing technological and process-based interventions to reduce shrinkage below 2%. Finally, it compares centralized and decentralized logistics strategies, concluding that a decentralized model is more efficient and sustainable, yielding significant cost savings and improved service levels.

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Muhammad Fahad
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4 views5 pages

Retail Assignment 3 Updated

The document presents an analysis of sourcing strategies for a summer clothing line, recommending a hybrid approach that utilizes local suppliers for speed and quality while leveraging international suppliers for cost savings. It also addresses inventory shrinkage issues, identifying theft as a primary concern and proposing technological and process-based interventions to reduce shrinkage below 2%. Finally, it compares centralized and decentralized logistics strategies, concluding that a decentralized model is more efficient and sustainable, yielding significant cost savings and improved service levels.

Uploaded by

Muhammad Fahad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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RETAIL SUPPLY CHAIN MANAGEMENT

ASSIGNMENT#: 3

ID FULL NAME

L1F18BBAM0671 MUHAMMAD FAHAD

L1F21BBAM0892 MEHAK IMRAN

SUBMITTED TO: MS SAYDA UZMA TAHIRA

DATE OF SUBMISSION:29/05/2025

SESSION OF SUBMISSION: SPRING 2025

FOR GRADING:
COMMENTS: MARKS SECURED:
Question 1: Sourcing Strategy for Summer Clothing Line

Pros and Cons Analysis


International Suppliers
Criteria Local Suppliers
(Bangladesh, Turkey)

Average Lead Shorter (15 days) – Faster Longer (35 days) – Delays in adapting
Time replenishment and agility to market trends

Higher (PKR 950) – Impacts profit Lower (PKR 780) – Cost savings per
Unit Cost
margins unit

Minimum Order Lower (500 units) – More Higher (1,000 units) – Increases risk
Quantity manageable inventory levels of overstocking

Quality Rejection Lower (3%) – More consistency and Higher (6%) – Risk of returns and
Rate less rework customer dissatisfaction

Exchange Rate
Low – Stable pricing High – Uncertainty in final landed cost
Risk

Flexibility in High – Easier to collaborate and Medium – Time zone and distance
Design iterate with vendors constraints

Recommendation: Hybrid Approach


 Main Strategy: Use local suppliers for the first wave of new styles to ensure speed-to-
market, trend responsiveness, and quality assurance.
 Support Strategy: Use international suppliers for volume-based staple products to
benefit from cost savings.
 This hybrid model balances cost, flexibility, quality ,speed and risk, while supporting
scalability.
Question 2: Inventory Shrinkage Analysis and Action Plan

Shrinkage Analysis
Shrinkage % Due to % Due to
Store Cluster Main Issue
Rate Theft Errors

Urban - High
3.8% 70% 30% Theft
Footfall

Administrative
Suburban 2.1% 40% 60%
Errors

Downtown Core 4.5% 80% 20% High Theft

Industry Avg. 1.7% — — —

 Most Vulnerable Cluster: Downtown Core due to highest shrinkage (4.5%) and theft
(80%).
 Urban Cluster also critical due to high theft levels.
 Suburban needs process improvement for error reduction.
Action Plan to Reduce Shrinkage Below 2.0%

1. Technological Interventions
o Install CCTV with AI-based theft detection.

o Implement RFID (Radio Frequency Identification) based inventory tracking.

o Use POS data analytics to monitor discrepancies.

2. Process-Based Changes
o Standardize inventory counting and reconciliation procedures.

o Conduct weekly cycle counts for high-value items.

o Improve layout to limit blind spots and restrict backroom access.

3. Training and Awareness


o Regular loss prevention training for staff.

o Introduce employee reward system for shrinkage reduction.

o Educate employees on common fraud tactics and handling policies.


4. KPIs and Monitoring
o Create a store-wise shrinkage dashboard.

o Set a monthly shrinkage reduction target.

o Conduct quarterly audits and publish improvement reports.

Question 3: Logistics Strategy Comparison


Metric Central DC (Lahore) Decentralized (Multan, Islamabad + Lahore)

Avg. Delivery Time 36 hours 18 hours (↓50%)

Fuel Cost/Delivery PKR 4,500 PKR 2,800 (↓38%)

Product Spoilage 4% 2% (↓50%)

Monthly Operating Cost PKR 2 million PKR 3 million (↑50%)

Quantitative Analysis

Assumptions:

Monthly deliveries: 10,000


Monthly inventory handled: PKR 100 million

1. Fuel Cost Savings

Centralized: 10,000 × 4,500 = PKR 45 million/month

Decentralized: 10,000 × 2,800 = PKR 28 million/month

Savings = PKR 17 million/month

2. Spoilage Reduction Savings

Centralized spoilage: 4% of PKR 100 million = PKR 4 million/month

Decentralized spoilage: 2% of PKR 100 million = PKR 2 million/month

Savings = PKR 2 million/month

3. Total Monthly Cost Comparison


Centralized:
Fuel = PKR 45M
Spoilage = PKR 4M
Operating = PKR 2M
Total = PKR 51M

Decentralized:
Fuel = PKR 28M
Spoilage = PKR 2M
Operating = PKR 3M
Total = PKR 33M

Total Net Savings = PKR 18 million month

Qualitative Analysis

Service Level: Reduced delivery time from 36 to 18 hours improves customer satisfaction and supports
same/next-day delivery initiatives.

Cost Efficiency: While operating cost increases by PKR 1 million, it is outweighed by monthly savings
from fuel and spoilage.

Spoilage Reduction: Regional hubs ensure fresher goods, especially for perishable items, improving
brand trust.

Long-Term Scalability: Enables future growth by distributing load across regions, minimizing risks,
and preparing for geographic expansion.

Recommendation
The decentralized model, with a calculated monthly savings of PKR 18 million and several qualitative
advantages, is a more sustainable and efficient strategy. It enhances service level, reduces wastage, and
aligns with long-term strategic goals.

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