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Costco Supply Chain Model

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In recent years, CFCo has suffered from low consumer satisfaction, driven mainly by product in-availability/inconsistency and difficulty to shop based on some business and supply chain deficiencies. This has cost us the loss of profit and reduction of business size. In my report, I will be bringing to light our current supply chain practices and proffer solutions/strategies which will co-ordinate our supply chain system to make our business become profitable.

Currently, our supply chain model adopts

1. Responsive supply chain policy which emphasizes high service levels and responsive supply to the end customer with high-frequency delivery in small batches across stores. (Slack et al., 2016, p195)
2. Large warehousing and distribution approach …show more content…

No brand identity Disconnected customer experience across stores, reducing consumer loyalty. Lost sales. Depleting profit
Autonomy of independent stores No control over suppliers

Customer Relationship Management Disparity pricing across stores, confusing consumers on ‘real’ price. Consumers turn to competition in search of a bargain.
No information flow due to poor information sharing infrastructure or in cases where available, not being fully utilized. Supply chain integration Instances of out-of-stock, business perceived as not- dependable. Over-forecasting, leading to high inventory (tied capital) or under-forecasting leading to lost sales
Poor implementation of Electronic-Data-Interchange. Forecasting and EDI Loss of funds on implementation fees.
High replenishment patterns with low drop size. Responsive supply chain Cost transferred to the consumer, thus higher prices. High distribution and logistics cost, depleting profit
High cost, as trucks return empty Logistics Management

Following an in-depth analysis, three root causes of CFCo’s current state have been identified …show more content…

Chang, K.P. and Graham, G., 2012. E-BUSINESS STRATEGY IN SUPPLY CHAIN COLLABORATION: AN EMPIRICAL STUDY OF B2B E-COMMERCE PROJECT IN TAIWAN. International Journal of Electronic Business, 10(2), pp.101-112.
3. Chen, F., Drezner, Z., Ryan, J.K. and Simchi-Levi, D., 2000. Quantifying the bullwhip effect in a simple supply chain: The impact of forecasting, lead times, and information. Management science, 46(3), pp.436-443.
4. Harvard Business Review. (2016). What Is the Right Supply Chain for Your Product?. [online] Available at: https://hbr.org/1997/03/what-is-the-right-supply-chain-for-your-product [Accessed 27 Nov. 2016].
5. Kannan, V.R. and Tan, K.C., 2005. Just in time, total quality management, and supply chain management: understanding their linkages and impact on business performance. Omega, 33(2), pp.153-162.
6. Mason, S.J., Ribera, P.M., Farris, J.A. and Kirk, R.G., 2003. Integrating the warehousing and transportation functions of the supply chain. Transportation Research Part E: Logistics and Transportation Review, 39(2), pp.141-159.
7. Referenceforbusiness.com. (2016). Supply Chain Management - strategy, organization, levels, system, model, company, business, competitiveness, system. [online] Available at: http://www.referenceforbusiness.com/management/Str-Ti/Supply-Chain-Management.html [Accessed 27 Nov.

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