SCM Zalora Group Group Assignment PDF

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CW1: Group Assignment (3-4 students in a group) (60 marks)
Select a manufacturing or service company of your choice and the report must include:
a) Definition the industry.
b) Brief overview of the company background.
c) Critically analyze the current supply chain process of ...

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TABLE OF CONTENT

GROUP ASSIGNMENT: ASSESSMENT CRITERIA…………………………….....................1 INDIVIDUAL PRESENTATION: ASSESSMENT CRITERIA………………………………..2-4 TURNITIN REPORT…………………………………………………………………………….5 TABLE OF CONTENT…………………………………………………………………………..6 DEFINITION OF INDUSTRY…………………………………………………………………..7 BRIEF OVERVIEW OF THE COMPANY BACKGROUND…………………………………..8 ANALYZING THE SUPPLY CHAIN PROCESS OF THE COMPANY'S LOGISTICS (I) TYPE OF PROCEDURE…………………...……………………………………..9-11 (II) INFORMATION TECHNOLOGY……………..………………………………..11-14 (III) GOVERNMENT POLICY………….…………………………………………....14 CONCLUSION………………………………………………………………………………….15 REFERENCES………………………………………………………………………………..16-18 APPENDICES………………………………………………………………………………...19-22

1.0

Definition of Industry

Zalora, the Company is involved in the modern world e-commerce industry. Due to the advanced technology in this generation, e-commerce has become a trend and currently prominent. There is a rise of e-commerce, and the digital buyer is expected to be 2.05 billion by the end of 2020, which means one out of four people is an active online shopper (Oberlo 2020). E-commerce brings benefits to the society, and all the people may shop online at any time, anywhere, because it is available 24 hours a day, 7 days a week. Besides that, e-commerce is also very convenient for everyone because people are not needed to visit physical stores, instead, they are allowed to purchase their item with just clicks of a button. Virtual reality (VR) and Artificial intelligence (AI) have been developed and implemented into the e-commerce platform. This allows the consumer to have the options of trying the goods via VR and obtain answers to frequently asked questions from a chatbot which is an AI system which has the ability to auto reply.

As we know that e-commerce refers to the selling and buying of products or services through the use of the internet. Mostly, the payment of order would be online banking, while some suppliers will offer an alternative option of cash on delivery. Zalora is an e-commerce platform that is a business to consumer (B2C) business model, selling goods to the end consumer directly online. Zalora is among one of most visited e-commerce fashion platforms in Southeast Asia in the year of 2019 and has one the highest monthly active users (Appendix 1.0).

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2.0

Brief overview of the Company Background

Zalora is Asia's dominant online fashion destination that provides a wide collection of stylish and current fashion trends for both women and men. Zalora Asia Group was set up by Rocket Internet, one of the biggest online businesses around the world. Rocket Internet adventures in numerous organizations that have a solid presence in Asia, for example, Zalora, Lazada, Food Panda and others. Zalora Asia Group is mostly operated in Asian countries such as Malaysia, Singapore, Thailand, Vietnam, Hong Kong, Indonesia, Philippines, Brunei, Australia, and New Zealand (Zalora 2020).

As of now, Zalora flourishes to supply the simplest of high-end brands within the market, for example, Mango, River Island, Sephora, American Apparel, and tons more on their site. In addition, Zalora's private name, Something Borrowed and EZRA, are likewise effectively developing and profoundly cherished by clients. Other than that, neighbourhood top of the line style originators, for example, Rizalman, Jovian Mandagie and Melinda Looi are working closely with Zalora, by planning an assortment solely for Zalora. With just being in the market for a long time, Zalora Malaysia has been quickly developing their numbers with increasing their loyal client base and brands advertised. This shows Zalora is on path to accomplishing their objectives and not exhibiting any indications of easing back down from it (Zalora 2020).

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3.0

Analyzing the current Supply Chain Process of the company's Logistics

3.1

Type of Procedure

3.1.1 Warehousing The organisation, Zalora is one the giant fashion e-commerce company that sells high-end products with various brand partners such as Adidas, Pandora, Coach, and so on. Therefore the need of a massive size of e-fulfilment hub, spans a total area with 470k square feet across fivelevels in the building (Justin 2019). The size of the warehouse is equal to nine FIFA football fields. Thus, it can be considered as a private warehouse with greater control and provides better workforce utilization. This regional e-fulfilment hub serves as the sole fulfilment centre operating 24 hours a day and 7 days a week, which is located at Selangor, Malaysia. Zalora has developed an in-house Order Management System (OMS) to process all the orders in real-time in the warehouse (Enervino 2019). The system is beneficial to inventory management and able to update data in real-time regarding items exchanged, sold or returned. For example, the inventory level across the system, forecast stock quantity to avoid stock-out and also route order from warehouses based on proximity to the destination (Special Guest Contributor 2018). Besides that, Zalora has invested and developed a mobile picking system. All the employees as a picker are assigned to a particular floor and pick a specific item from the customer’s order through a mobile device. This system is proven to assist and provide better accuracy due to the real-time item verification.

Next, the use of a conveyor system has been implemented in Zalora’s e-fulfilment centre warehouse. This conveyor system helps to reduce workplace risk by minimizing the cost and human error while increasing the overall efficiency (Carolina 2020). Pickers will not need to carry bulky and heavy items to transfer from one place to another place. Whereby, the conveyor system will move the item with belts, rollers and wheels to the destination desired. The Kaizen program is also implemented to reduce the process, delivery problem as continuous improvement to the warehouse operations.

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3.1.2 Distribution and Logistics Management Zalora has developed two modes of delivery methods. The delivery methods are last-mile delivery and partner courier delivery. For the last-mile delivery, it is available in the Klang Valley area only (Donald 2019). Zalora has their own department of riders equipped with their own motorcycle to carry out deliveries around the city. There are several benefits to last-mile delivery, such as fast delivery as shorter lead time, security, and convenience (Supply Chain Game Changer 2020). On the other hand, Zalora also organized annual transportation programmes to all the consumers which purchase and subscribe as a member like “Amazon Prime.” (Zalora Malaysia 2020). Thus, consumers can enjoy zero shipping fees and faster delivery on the same day or the next day. However, there are some drawbacks to the company using last-mile delivery methods. For example, higher costs for petrol and lower efficiency due to the limitation of the vehicles size to carry products on 1 run causing the riders to make several rounds which may delay deliveries.

Next, there are partnerships with third party logistics companies to carry out deliveries. For instance, Ninja Van, GD Express, City-link Express, and others (Zalora Malaysia 2020). All these logistics companies are responsible for the area outside of Klang Valley. The third party logistics companies are able to handle more deliveries as they consolidate the product to deliver. With the assistance of third party logistic companies, Zalora is able to keep up with orders and at the same time satisfying their customers with providing them the options of within the same day delivery, next day or even 72 hours delivery (Malaymail 2019). In addition to that, a just-in-time (JIT) system was implemented to improve customer services. In conclusion, Zalora uses these two different methods to run their logistics which allows them to create shorter lead time to meet consumer’s satisfaction with efficiency and reliability.

3.1.3 Resources Management Zalora turns to the SAP and Enterprise Resources Planning (ERP) system to improve data flows and increase automation as a strong technology backbone that can support at every stage (SAP News 2017). Zalora decided to launch its e-commerce application with SAP S/4HANA on Amazon Web Services (AWS) because the platform is very flexible, high security, and compliance. The reason why saying that is reliable due to the capabilities to secure SAP 4

applications is beyond the private cloud setup or the on-premises software (Amazon Web Services 2020). This system helps to reduce cost and effort, payment completed into the bank portal with zero error. It does not require a long period of time for reconciling payment manually, it only takes five days at months end. Moreover, the benefit of using this system, which is providing the company with real-time customer insights that integrate with external partners or suppliers, customers, and internal teams. This system is mighty that leads Zalora, the overall company to handle the extremely high volume of orders per day during the peak time (Debra 2017). For example, 11.11 sales, 12.12 sales, and other promotion periods.

Furthermore, Zalora uses cloud ERP systems. It is a tool to build a stable supplier and customer relationship management and other supply chain components (Tao 2016). Zalora is able to view supplies across all the warehouses anytime, anywhere. All the supply chain members can assess the inventory availability and delivery information. It also can function as a two-way communication system to exchange data directly with suppliers and customers. All the systems that are invested by Zalora allows the company to have a better overview and better visibility to increase efficiency.

3.2

Information Technology

Zalora initially was more to apparel, and was never considered a logistic company when it needed a warehouse and other people to figure together in order to rearrange customer orders. Zalora implements supply chain management in their business to make a decision on the assembly providers and also the amount requested of clients. Zalora has this unique system for planning, monitoring, and controlling the inventory of their company. To identify suppliers and products, Supply Chain Management (SCM) is used and may be negotiated with suppliers for the best price to ensure that the company will receive the best pricing and products around the world. SCM is also in a position to manage the product flow by monitoring the procedure of delivery order from supplier to customer as well as customer return items. Besides that, delivery of customer’s order is managed, and status of delivery service is updated to sustain the service quality by SCM (Margaret 2020).

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For instance, Just In Time (JIT) system is used by Zalora to run their business with additional values provided in terms of free shipping depending on the amount purchased, cash on delivery (COD) and returning items within 30days (Investopedia 2020). The JIT system is used by Zalora which assists in monitoring and controlling the procedure through inbound and outbound processes to support inventory and warehouse management. According to the flowchart in (Appendix 3.0) the first step in an inbound process of Zalora is that it needs to collect products from the suppliers, items are checked and making sure it matches customer order and then the product’s details are checked to ensure the product is in good condition. If staff happens to find any imperfections in the condition of the products, they will capture a photo of the product and it will be recorded in the system. After that, packaging of products begins and different barcodes on every item will be placed for scanning purposes during the outbound process by the staff. Final step will be to move all packed products to a location where the barcode is scanned. Zalora’s support system (JIT), demands accurately in forecast products and Zalora spends less money on stocks to reduce cost because the supply matches with market demand (Missastria 2020). Next off, based on the flowchart in (Appendix 4.0), the first step in an outbound process is to receive orders from customers. Since Zalora is an e-commerce base, every single order should obtain validation from customer service in which the order is ensured to be true by Zalora staff, then proceeding to the next step. In step two, Customer Service, examining if the order product is a warehouse item or cross docking item will be carried out by the staff. If staff can obtain the product directly from Zalora’s own warehouse, it is known as Warehouse Item whereas if staff must obtain products from other suppliers, it is known as Cross Docking Item. Besides that, the picking and packing process with finalizing the product details and bar code is scanned as sold out status will be resumed by the staff. Lastly, orders will be delivered to customers through courier service companies such as GDex by Zalora (Missastria 2020). However, Zalora also puts effort on Customer Relationship Management (CRM) software to manage customer satisfaction, including advertising, customer service after sales and maintaining customer loyalty. Zalora assists companies where customers’ data are collected and the information of new products to attract existing or new customers is brought through this

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software. In fact, various information sources such as social media, e-mail and internet browsing are used to receive customer’s feedback is done by CRM in Zalora to improve their new products. For instance, Zalora invests in Oracle’s Marketing Cloud to upgrade customers’ experience across their virtual channel (Liu 2020). To manage customer loyalty well, customer’s data is collected by the CRM system used by Zalora. Collecting customers’ feedback through various ways like e-mail, social media or signing up an account in Zalora is the main function of CRM. Salesforce.com, Microsoft, SAP, and Oracle are the four CRM systems options that will be widely chosen by large corporations. However, Oracle Marketing Cloud is preferred by Zalora to analyze customers’ behavior and permit better understanding of customers' preferences. It is also stated in the CIO Asia article (Appendix 5.0), Zalora has a partnership with Oracle Marketing Cloud (Appendix 6.0) to virtually connect with customers. Connecting with customers through social media such as Facebook, Instagram, Twitter, and online chat is enabled throughout the Oracle system. The relationship between Zalora and Oracle commenced from 2013. Analyzing customers’ behaviour with 10 automated programmes and cost reduction in survey may lead to profit increase. According to Joshua Tan (Head of Regional CRM), he mentioned that Oracle helped them to achieve goals and allow businesses to operate successfully till date, so Zalora decided to continue serving customers even better in the coming future through digital channels. Furthermore, investment extension into Oracle’s Marketing Cloud Technology is confirmed by Zalora as they knew Oracle is a unique tool which makes their jobs easier. For example, data collected from the database to Zalora is shown by Oracle to predict fashion items for the upcoming season. Therefore, databases to analyze in the target market and make decisions on potential products to spice up sales will be referred by Zalora.

3.3

Government Policy

Our Malaysian authority, the Malaysia Digital Economy Corporation (MDEC) is devoted to enhancing our digital economy transformation and policies. This includes developing advanced e-commerce production and consumer consumption. The government is to establish as well as implement policies and business foundations which motivates and supports the continuous changing and the rapid advancement of technology. According to the Malaysian Investment

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Development Authority (MIDA), as the industry continues to grow, the logistics industry will also continue to be affected and further evolve with the services and operations in the industry. Companies such as Zalora, which consolidated their fulfilment operations from several countries into a single hub in Malaysia. This also further explains how the Malaysian Government is taking advantage of Malaysia’s strategic geographical locations which provide multinational companies with the ease to operate their global supply chain activities in Malaysia. Resulting in heightening the roles as a global hub where supply chain convergence. Both MIDA and the Ministry of Transport has established a special task force called the National Logistics Task Force comprising members from the ministry’s top officials from related government agencies and industry experts which are responsible for overseeing the overall logistics sector. From monitoring programmes and relevant logistics activities to coordinating strategies, regulations and policies which are relevant to the logistic industry of the country (MOT 2020). In addition to that, according to an article by New Strait Times, stated that the government has an important role in the country’s supply chain. Whereby, the government supports in ensuring organisations are optimising their resources and operations by focusing on improving and integrating modern processes such as planning, logistics, warehousing and procurement (Hays 2020). 4.0

Conclusion

In conclusion, we are able to learn how Zalora operates in terms of logistics and have a better understanding of their success in the ecommerce industry. We also learned the importance of having a good supply chain management and third party logistics companies which can assist in improving Zalora’s delivery efficiency. It is also seen that Zalora tries their best to control the quality of products to establish a good relationship with their customers. Thus, it is a good way for brands to gain reputation and establish product quality in customer’s mindset. Zalora also enhances their improvement by using the JIT system to keep track on monitoring and controlling the procedure through inbound and outbound processes to support inventory and warehouse management.

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