The objective of this case study is to provide a real logistics management situation. Imagine that you are assisting in the business development of a new online retail business initiative and are asked to write a short report about relevant logistics activities. The business background and the high level operations of the business are described in the case study described in assessment item 1: Online Store. The Case Study Online Store is as following.
Case Study Online Store
Members of a newly formed consortium of domestic and overseas investors have joined forces to create an online retailing company. The members believe that there is a growing market for online retailing in Australia for the following product groups:
Car accessories and tools, competing with for example Supercheap Auto retail stores
Leisure products for boating, camping and fishing, competing with for example BCF Boating- Camping-Fishing retail stores
Electrical household appliances, competing with for example Harvey Norman retail stores
Online retailing is a subset of e-commerce and refers to the purchase and sale of goods and services between consumers and retailers using the Internet (Commonwealth 2011).
The members of the consortium have researched that Australian consumers are attracted to online shopping due to three main factors (Commonwealth 2011):
Wider range of goods to choose from than those available form bricks and mortar in-store retailers
The reduction in Australia s manufacturing to about 10 percent of the gross domestic product has resulted in an increase in imported consumer goods from for example China (Commonwealth 2007). Due to low cost manufacturing capability in China and a reduction in international trade barriers since China entered the World Trade Organisation, many large retail chains have established region based sourcing offices in Asia and China. The new company is to pursue the strategy of procuring low cost manufactured goods in China.
The consortium has investigated if it should locate the company s distribution centre(s) in China or in Australia. The conclusion is that the distribution centre(s) should be located in Australia due to transportation cost and the insufficient logistics networks for distribution from China to Australia.
The consortium wants to establish a new company and has developed the following outline of its operations. Products for resale are to be purchased domestically and through the China based overseas sourcing office. The intention is to have suppliers deliver their goods to collection centres in Hong Kong and in Shanghai and then ship the goods in bulk in containers to distribution centre(s) in Australia.
Although the ultimate intention is to have distribution centres in Sydney, Melbourne, Brisbane and Perth, the company will start with one distribution centre located in Sydney and then distribute products to customers in Australia from there. Due to the differences in execution between online retailing and in-store retailing operations the company has decided to build a new distribution centre within the next 18 months.
The company has not yet decided if it should outsource its international and domestic logistics activities.
Commonwealth 2007, Australian Manufacturing: Today and Tomorrow, House of Representatives Standing Committee on Economics Finance and Public Administration, Commonwealth of Australia, viewed on http://www.aph.gov.au/house/committee/efpa/manufacturing/
Commonwealth 2011, Economic Structure and performance of the Australian Retail Industry July 2011, Australian Government Productivity Commission, Commonwealth of Australia, viewed on http://www.pc.gov.au/projects/inquiry/retail-industry/draft
In this instance the report must be formatted as a short report.