Table of Content

Table of Content

A.1.1: Nature of business (Argos) .. Page 3

A.1.2: Level of competition Page 4

A1.3: Target customers Page 6

A1.4: Recent financial performance Page 7

A2. 1: Supply Chain Practices Page 8

A2.2: Operation Management Practices . Page 8

A2.3: Argoss on-going relationship with other firms . Page 9

A2.4: Argoss operations and supply chain management practices and its resilience to future disruptive events . Page 10

A2.5: Recommendations for Argos to maintain/improve sustainability and resilience of their operation to future disruptions . Page 11

Appendices . Page 12

References .. Page 13

A.1.1: Nature of business (Argos)

Argos is one of the leading digital catalogue retailers based in the United Kingdom. It was acquired by and is currently a subsidiary of the British retail firm Sainsbury since 2016. Argos boasts a whopping 29 million in-store foot traffic across their 850 physical stores throughout the UK and Ireland, with their online presence garnering over a billion site visits.

As a retailer in the non-food category, Argos has a range of over 20,000 products from technology, jewellery, baby care, home & gardening, sports & leisure, and much more. Argos presents consumers with three main ways to order from their catalogue, through the Argos app, website, or voice. Having fine-tuned fast-track delivery and click and collect.

These convenience features have been made possible due to Argos implementing a hub and spoke fulfillment model where items are shipped to a central fulfillment station in each area that then conducts last miles delivery of individual orders to Argos stores, collection points, or customer addresses. This has made it possible for Argos to designate three delivery slots within the day where customers can choose to have their products delivered. The customer journey order ordering from the catalogue to Argos fulfilling the order and giving can be seen from the diagram presented in Appendix 1.

A.1.2: Level of competition

With the shift to e-commerce, the non-food retail environment Argos operates in has faced significant changes. The closure of traditional stores and the emergence of giant dominant online juggernauts with global supply chains and goodwill at their disposal have threatened Argos's home market.

5 Forces Level of competition in industry The industry is populated by 5 locally competing firms experiencing major shifts in process innovation with the move to Omni channel distribution models (Omnichannel integration in non-food retail | McKinsey n.d.).

The threat of new entrants Argos has positioned its business model close to online retail giants like Amazon. Entering the online retail market in any country is relatively easy and has little to no barriers to enter (Amazon to become UKs largest retailer by GMV sales by 2025 | Edge by Ascential n.d.)

Bargaining power of suppliers Given the size of online catalogue retailers and their distribution system which gives access to million of customers, they can negotiate better terms/prices from suppliers (Navigating inflation in retail: Six actions for retailers | McKinsey n.d.).

Bargaining power of customers Much of the competition is shifted to branding and utilities provided by process innovations, away from price competition (Faster omnichannel order fulfillment for retailers | McKinsey n.d.).

Threat of substitutes The only concern for Argos would be similar products offered by competing firms who might offer similar yet cheaper products across their platforms (Top 9 Amazon Competitors and Why They are Successful (2022) 2020).

The level of competition Argos faces in non-food retail can be highlighted by two significant process innovations sustained by technological development.

The first is the proliferation of the internet across society and demographics has expanded the reach of digital catalogue retailers like Argos as well as opened the market by eliminating barriers to entry for foreign e-commerce conglomerates like Amazon and eBay to enter and compete with local e-commerce retailers (how has amazon affected shopping centers in the UK? What are the growth trends in market share and turnover? Is there any correlation between the growth of online retailing and the growth of retail sales through physical stores? n.d.).

The second is the digitalization of supply chains and logistics that has given access to data for both retailers and suppliers to view the demand for their item/s, map where shipments are currently in the delivery process as well as be able to forecast with a high probability the delivery times of orders (PricewaterhouseCoopers n.d.).

A1.2: Target customers

Argoss categorized their customers as internal and external customers. Internal customers are its 30,000 employees who work to serve their customers across their value chain. The external customers for Argos are characterized by their preference for low-price and convenience. These customers know what they want and shop around to find the stores which offer them the best value.

This group of customers accounts for a large section of the non-store retail category and has been the driver of growth for value and volume for the entire retail sector in the UK. According to various reports, click and collect would account for nearly 11% of UK online retail sales (United Kingdom (UK) Online Retailing Market Report 2022: Click & Collect will Account for Almost 11% of UK Online Retail Sales in 2025 - ResearchAndMarkets.com 2022).

Although these customers might be tech savvy and shop online, they still would like the experience of shopping for physical products in stores (Petro n.d.). This is where Argoss Omni channel distribution network would help bolster their digital catalogue to work together to retain customers, as the report suggests that consumers who are serviced both through an online and offline channel are 89% more likely to be loyal to Argos as well as purchase 4% more instore and 10% more online (Ahmed, Mazid & Ahmed 2020).

A1.3: Recent financial performance

At the start of 2022, many retailers were optimistic about their ability to move past the challenges they had faced in the previous two years. Argos is one of the most well-known names on the British high street; the firm is the UK's largest high street online retailer, with over 430 million internet visitors per year and over 130 million consumers served yearly through its network of 740 locations (Find Out How Argos Are Leading The High Street Revolution, no date).

Source: (Correa, no date)

The introduction of Omni-channel within this sector was vital in improving financial outcomes. An omnichannel network is a process innovation Argos implemented that offers customers a seamless buying experience across multiple platforms. Omni-channel designs connect customer experiences across numerous platforms, such as physical stores, websites, and mobile apps (Omnichannel Strategy: Definition, Guide, and Examples (2022), no date).

Applying the sustainability tool from the theory of strategic perspective on operation management, the financial performance is enhanced by the traditional retailers. They have adopted multi-channel retailing in this changing landscape of non-store retail. Based on providing a seamless shopping experience in physical stores and across multiple digital channels, an omnichannel strategy not only differentiates retailers from their competitors but also gives them a competitive advantage over online-only retailers (Sopadjieva, Dholakia, and Benjamin, 2017).

A2. 1: Supply Chain Practices

Argos has a diverse general product offering. As a result, it must compete with the industry leaders in terms of speed, convenience, and value. It uses a hub-and-spoke model, with bigger region-specific stores serving as mini distribution facilities. The hub-and-spoke model created with the guidance of Llamasoft, Inc. had to consider the operational expenses of maintaining a hub and the transportation associated costs to each spoke, and it had to provide the intended efficient shipment amid confined time windows for delivery of goods. The massive shift from a centrally controlled, i.e., formal supply chain in place, allows for faster product delivery and enables the famous fast track delivery and collect at store options. To ensure same-day delivery is practiced, every distribution location should not be more than an easy drive from the customers.

Argos also used a logistics practice known as cross-docking to increase the productivity of its supply chain. Under this technique, finished articles were immediately collected from the factory, inspected & organized, and then delivered to users. Effective communication is essential for customers and Argos to reach out to each other promptly by providing the product to the end user. Staff was given a hand-held device connected to in-store terminals via a radio frequency channel.

A2.2: Operation Management Practices

The large variety of goods held at an Argos facility need an effective internal operations management team with a reliable external supply chain to deliver information to different functional departments to meet business needs successfully. The information should be accurate and always on time for effective workflows. This data collection and sorting did categorize the needs of various internal and external customers to serve different departments and business functions.

The company employs cutting-edge technologies to handle sales and operations, ranging from voice shop, augmented reality, visual search, and even a self-service digital store. Disruptive technologies like these facilitate analysts to estimate relevant data and translate them into demand for future campaigns creating a base to formulate operational plans for obtaining & procuring products from various suppliers.

A2.3: Argoss ongoing relationship with other firms.

As an e-commerce retailer, Argos faces challenges when building relationships with other firms. In the US market, Amazon possesses the dominant power in controlling the retailer market environment with 437 million visits monthly; however, Argos is a top UK general merchandise with an estimated monthly traffic visit of 60.5 Million (Disfold, 2021). Argos faces competitive and cooperative relationships among other retailer markets in the e-commerce space. In the face of competition, Argos and Amazon go head to head in their mode of operations; however, Argos has embarked on an ambitious transformation plan to transform its business from traditional catalogue retail to a leader in digital retailing. The goal is to increase revenue by 15%, focusing on online, mobile, and tablet transactions. Argos is replacing its laminate catalog with a web-based touchscreen as part of a brand overhaul. The general retailer also plans to bring its Wi-Fi to more than 700 of its stores by the end of the year, allowing shoppers to browse the web in-store to find the lowest prices. It tackles the growing showrooming trend head-on. Argo's CEO believes retailers must improve price transparency as consumers increasingly dominate technology. The showrooming problem is fuelled by the increasing dominance of giant web Amazon, which can be price competitive as it operates without the physical overhead.

The ongoing usage of the Omni-channel distribution strategy within Argos logistics created several dimensions and integration between Argos and its parent firm Sainsbury. With its acquisition of Argos in 2016, Sainsbury hoped to put Argos stores within its supermarket, thereby introducing homeware and non-food ranges to its product mix to be more competitive against other retailers (Farrell 2016). This relationship has yielded synergies for both firms as Argos now operates click and collect points out of many Sainsbury supermarkets (Sainsburys launches Argos Click & Collect service in convenience stores n.d.).

Argos harmonized a cooperative relationship with Pinterest in creating the first Mood hotel. Argos Mood Hotel brings new internal trends from Pinterest. All that is shown in a hotel is already available in the Argos purchase process at the store, and on the internet, customers can place their homes at the Argos Mood Hotel (Argos partners with Pinterest to launch The Argos Mood Hotel - a world-first hotel concept that brings upcoming interior trends to life, no date)

A2.4: Argoss operations and supply chain management practices and its resilience to future disruptive events

Argos currently operates a hub and speaks distribution model inspired by a bicycle wheel, where a central hub with individual spokes connects. Similarly, Argoss supply chain has large distribution centers (hubs) that cover a large region with many stores/click and collect points (spokes) and are located (Ahmed, Mazid & Ahmed 2020).

Using this method, Argos has been able to simplify its operations using a delivery method suitable to large distribution centers and transportation suited for delivery to delivery points located in crowded areas, neighborhoods, city centers, etc. to make last-mile delivery more convenient and convenient, cost-effective (Greasley & Assi 2012).

A disruptive event is characterized by an organization's comprehensive emergency and disaster event that occurs outside standard operating procedures. No event embodies this other than the supply chain disruption during the COVID-19 pandemic. Trouble on the scale of COVID-19 requires operations and supply chain managers to find out how theyre able to serve their customers and meet business goals as they respond to the initial shock of lockdowns being imposed in different regions simultaneously and the ongoing crisis of working around other parts going in and out of lockdowns as the virus causes havoc in the areas it spreads (Supply Chain Disruption & How to Respond | Accenture n.d.).

Argoss hub and spoke distribution network is especially susceptible to supply chain disruptions as the closure of a central crossing to lockdown or another emergency will render the logistic network spokes in that region inaccessible, resulting in customer dissatisfaction (How Shanghais lockdowns are affecting global supply chains | McKinsey n.d.). From an operational perspective, relatively minute disruptions could have a disproportionate effect further down the supply chain. A tempest of freight transport to its regional hub disrupted due to traffic could cause long queues of smaller transport vehicles to unfulfilled/delayed orders for its customers, resulting in lost revenues, market share, and damage to Argoss reputation. A reputation has been built on the promise of quick delivery (Dolgui & Ivanov 2021).

A2.5: Recommendations for Argos to maintain/improve sustainability and resilience of their operation to future disruptionsAs the previous section identifies, Argoss heavy reliance on entire regions on a single hub can cause severe disruptions to the logistics network in that region. As Argos grows its business, it should focus on improving the resilience and sustainability of its operations to future disturbances.

Recommendation 1

Argos should designate a 10% rolling buffer stock level for their fastest-moving items and other items in lesser quantities. This rolling stock level will not be a stagnant level of stock stored in a warehouse but the extra quantity of the product at its main hub facilities. This concept of holding rolling stock of critical/high-demand items was proven in the case of Johnson & Johnson (J&J). They are a significant provider of medical supplies for the US military and many hospitals and pharmacies. As the quality of these supplies in emergency stockpiles deteriorated, much of it was wasted past its use date. To get around this problem, J&J kept a rolling buffer stock in their daily inventory. This buffer stock can only be accessed with the direct permission of the President of the United States (Sheffi 2020).

This concept of holding rolling stock at Argoss distribution hub would provide them the time needed to address any short-term supply chain disruption. At the same time, any product order can be serviced using the buffer stocks. r

Recommendation 2

Another avenue that Argos should explore is locating major hubs using modeling (particle swarm optimization) that would identify each hub in a manner that would facilitate any one of them to temporarily fulfill orders if capacity at a nearby corner were to be disrupted (Azizi 2019).

Argos would have to optimize transport routes and communication between hub facilities to facilitate the transformation of their supply chain. Such an organization's broad change was seen when IBM, in its 2003 annual report, set out its intention to become an agile on-demand business in response to turbulent and volatile markets. This transformation was facilitated by the E2Open software developed by IBMs Integrated Supply Chain Division (ISCD), which enabled customers to place a single order for multiple parts and give suppliers a single point of reference within the organization (White, Daniel & Mohdzain 2005).

Implementing a similar organization comprehensive software at Argos to enable hubs to see operations in nearby hubs and, if any disruption occurs, how they would be able to respond to fulfill capacity that was affected due to the disruption event.

Appendices

1).

Reference list

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