ChipSupreme (Chip) was established in the year 1995; with a single specialty retail outlet in chocolate chip cookies by the time stores has increased to 30 retail stores with annual profit of $50 million. Knowing the exclusivity of the idea and rareness of such business, four women entrepreneur has blend the traditional products manufacturing with the customized designed versions of bakery items. Initially, to setup the business financing was arranged by partners’ capital as well as to cover the start up expenses and flourish, managed by Tami Bbarnes, Beth Bower, Teresa Lehman and Janie Jones in partnership.
The aim of this bakery is to offer its products at a competitive price to meet the demand of the local market area residents. It focuses on making available the items that customer buy on daily basis therefore, bakers are successful in catering broad variety of products for regular loyal customers. Since its establishment it has been doing well in making position in the local market. Moreover, it hires full time as well as part time bakers who work to handle customer service and day to day operations.
ChipSupereme enjoys the good image in the market and is found as a well reputed brand among the customer with little competition. One of the founders comes up with the idea of expansion, and thus explores and investigate click and mortar setup with the physical presence in market. Four women agreed with the idea and begin to develop the plan the strategy to implement for business operational success to get the range of risk and opportunities associated with the plan.
The idea of expansion is worthy as the business has not gone for an innovation since its beginning and market keeps on changing if the business would not adapt the change may lose its figure shortly. There is example of many businesses in the history of retail that has gone virtual and gained strength. Internet has positively improved the supply chain management by unveiling new business prospects. The advantages of e-business in dealing with the supply network reach out a long ways past basic cost decrease and increments in benefit (Fallis, 2013).
Although the idea is doable business founders has to consider the demand management process to tackle with the growth there need to be creation of balance and improvements with the present capabilities of the supply chain. That also consist the potential adjustment in distribution any changes in procurement and demand forecasting. At present, founders have acknowledged that with the current capacity of the product offering would not be affected if expansion takes place as well as product are place in the warehouse for short period and sold as demanded (K.Croxton, D.Lambert, S. Garcia-Dastugue,et al, 2002). Also, there has been discussion on the how to adopt with online marketing channels and offer free shipping to the customer to grab the market. This report is focusing on the increasing importance of electronic commerce to the bakery to keep the pace with the trend.
Industry benchmarks are critically important most of the companies keep the best practices of the similar industry that is already doing well in the market and try to implement in their own business to progress. ChipSupreme (Chip) has bench marked bakery company Amos a designer baked backed items seller in their decision to expansion. The fundamental idea to go online was to access and improve their performance by providing products to the customer not only in physical outlets but they can order online with free shipping facility. Famous Amos serves as a specialized cookie boutique in USA where customers can ask for fresh-baked cookies, brownies and other related products; it was surprising to know at first that it is possible to much of the money can be made out of selling cookies (Taylor, 1985).
Business Expansion and Competition
ChipSupreme is an established brand with the sustainability in their business they are ready to experiment the different aspects of business. It has a good line of credit and enjoys little competition among the market. If it increases its volume and increase its transportation would not be a loss. With the emergence in online business could bring them more revenues. In order to improve competence and the goal to better understand the growing customer needs, has forced companies to become innovative in their offerings to develop their product lines, break through new markets and expand their business to reach global customers.
In today’s competitive environment eCommerce is the top growth strategy for the majority of companies including the ChipSupreme, with most of the retailers focusing on expansion via ecommerce systems it has reached to the almost optimum level. The reason of going with virtual setup makes companies to be in competition. Organizations are tuned into client interest for a more extensive scope of better items, and also business is able to endeavors to cater to more extensive markets, drive with large number of customers and achieve a competitive distinction (NetSuite, 2013).
Bricks and Mortar to Click and Mortar
For the long term success in business it is significant to give substantial value to the changes that takes place in the retail industry. It has been found profitable that business adopt both way selling products physical and virtual. Amazon is one of the giant online stores that are more than single the retailer it provides platform to the small retailer under its zshops online marketplace which provides platform to the small business by generating traffic on its sites with the presence of various brands and products under on website (Chatterjee, 2000). With the availability of Amazon Virtual Private Cloud Connectivity Options it has take hold of small and large retailer to do business with Amazon. Amazon VPC provides platform to the retailer by giving them separate web services to do business (Noroozi, 2014).
This is one of the productive steps for the new entrant in the online business such is the case with ChipSupreme (Chip) to sell its product under the already established business. It will get the free publicity and promotion. Most importantly would be trusted among other shop in competition easy to build the reputation and can rent the technical services (Chatterjee, 2000).
Integrated and Dedicated Network
Companies look for the new business paradigm that can lead the business to the next level. Though there is expressed by most of the customer feedback that coordinating and integrating the flow of goods and services to market customers makes renowned sense of doing business, majority of the firms have a troublesome time relegating a valued payback figure to this activity. In order to reach to the benchmarked companies with the great exposure of digitalization in the present economy, it is essential and challenging for organizations to manage the integration of business, technology, people, and processes (Morad, 2014).
The most usual issue that has been repeatedly reported as a primary concern on reduction of expenses in such ranges creating ways to improve inventory administration, overall logistics, transportation, warehousing, distributing and packaging, enhanced administration through systems, time-based conveyance and make-to-request, and improved incomes from business, which come about because of such supply chain accomplishments as higher item accessibility and more tweaked items (Gale, 1999).
ChipSupreme to keep up with the competition understand the customer demand the want the product offering via multichannel, not only limited to the physical retail stores, but availability on mobile phone as an application, online access via website with a secure paying methods. Like the Wal-Mart has dedicated distribution strategy it has a traditional supply chain management and for its online setup it has outsourced the e-commerce function to reduce the risk and get undisputed supply chain for the physical business (Robinson, Fernandez, & Goode, 2004). It is suitable for ChipSupreme to have a dedicated supply chain model. While actualizing this decision, the organization underscored that it needed a satisfaction and dispersion accomplice that could keep costs low while meeting the administration necessities, brief satisfaction, facilitated delivering alternatives, and bundle following that clients have generally expected of online retail.
Free Shipping Strategy
Shipping on time is among the top challenges for e-commerce companies ChipSupreme has decided to provide the free shipping service to the customers in order to penetrate in the new market. This is the good strategy and company can get great benefit out of it in the form of large market share however, it should take into account the cost and benefit analysis. As currently, the company is good with the physical setup in retailing, but they have to do marketing of its online business so free shipping for a specific period is worth investment.
It should be the goal of retail when expanding that will current employees is there need to do hiring for potential business. Staff stays visible and available providing quick service with needed goods with that purchase extra inventory for special events, Chose location where customer has easy access to the bakery product information maintain our brochures and flyers for occasion’s specials. Moreover, business should be maintaining and updating web page for customer feedback.
Sales and operation planning
With the business goes for the expansion it has to decide the multichannel sales and distribution as the type of customer would be same or different peoples preference is different while purchasing product to cater the need of online order ChipSupreme has to decide the sales and operation planning as this type of product has short life and is perishable product, although the production process is repeated customer needs changes on daily basis affected by the interest example as well as the way the organization reacts to the interest as far as recurrence of generation (Noroozi, 2014).
Demand Fluctuation and Supply Chain Investment
In today’s tough economy it is difficult for business to predict the actual demand as customer are switching to products on daily basis due to large variety of product availability and choices. The exact forecast of the customer demand is not possible the excess and shortage of product in market both are costly to the retail business. Companies has to figure out middle way as they cannot stop selling a product line for which demand has decreased because still there are a few those who buys it. Client request and can meet their necessities without either conveying overabundance stock or experiencing stock outs.
Companies need to constantly put resources into new frameworks and innovation to guarantee their frameworks are in sync with continuous changes to the store network and keep it functioning admirably (Santhanam, 2009).
Investment in supply chain can be made among the following areas:
- Effective forecasting and inventory management helps in improving the overall operational cost, so ChipSupreme should optimize the internal process to get the benefit.
- Cater the border scope although the business manufacturing the product that have short life time can be rotten however, increase scale helps such as higher demand is accommodated on time
- Train the staff on the areas that need attention and adopt the monitoring and process control system
- Improve the sales channels and increase the flexibility in product offering other channels (Santhanam, 2009).
Lean management actually defines the current state of the business and where it wants to reach. This system has no worth when the process are repeated in nature and larger volume is involved. It focuses on the continuous improvement in offerings by making incremental changes in routine. ChipSupreme as the business is going for the expansion it need to look for the transportation, over production or underproduction or any other area that is useless to current business operations and cause unnecessary time of workers or process. Moreover, the current lean system under which business is operating is workable ChipSupreme owns two of the distribution centers that are used to fulfill customer orders on the basis of demand.
For more term effect and manageability, usage of incline ought to be fixing to additional vital destinations. By handling the hindrances and guaranteeing the procurement of the components adding to achievement, this examination finds that Lean is a suitable philosophy for moving forward execution and installing a consistent change society in the general population segment (Z. Radnor, P. Walley, A. Stephens, et al, 2006).
Sustainability of Business
ChipSupreme is operating as the retail bakery over the decade with turnover values $50 million annually. The importance of supply chain in ecommerce has gained the positive momentum it has not only balance the cost benefit analysis but its profitability has gone beyond the maximum value. With web enabled business there would not be need of large setup but a website would work. It will also save the labor cost as the business has in physical setup.
It is saving to go for the online setup as company is itself a strong brand in market and has loyal customers. In addition to this, big names in bakery like Famous Amos cookies have been dedicated in operating the business with internet in order to serve its customers, has proved profitable for then which highlights the attempts made by successful companies.
It is important to understand the business operational requirement first in order to understand which model to carry in supply chain in this case ChipSupreme should go for the dedicated supply chain model it makes sense because it is specific to the business that are new entrant in ecommerce although the retail has physical setup and can integrate some feature in their current system however, any unfamiliar step can make the major impact in the overall business model. It is suggested that with fine distinction of online retailing ChipSupreme should not involve in risking and compromising on already in operation retail supply chain by integrating the redundant complication of fulfilling orders of online channel including in it.
The future outlook for the bakery is very promising; the bakery has already established a good will and fame for quality products. Moreover, the founders are greatly relying on the fact that the customers are very loyal to the bakery. The founders are of the view that if in future they do have competition however, by implementing the expansion plan to going online would be worth favor of the company and bring positive results in future or long term.
Amazon is the large platform for the small retailer and new entrant to exhibit its products offering among various other brands that customers trust and buy. So with the help of already establish and trusted brand ChipSupreme can display its product and do pilot testing if required. It will bring positive result as the similar business has already been through such changes. It would be the right time for ChipSupreme to capture target audience through online setup as competitors have already started on this service. Otherwise soon this business would be out of companion and be find struggling to meet the profitability figure of past years. This has happened with business earlier as market offering are changing quickly so are the customers need and choices.
The conclusion derived from this case is that the ChipSupreme has been successful on deciding to expand the current operation of the business there is a little competition in the present market which enabled retailing business to experiment on online setup. However, due to sustainability and continuous growth and good credit record company can confidently adopt the new process. Dedicated supply chain strategy would work for the business. In addition to this, there are still some of the flaws, which need to be catered by the ChipSupreme.
How it will address the new customers initially offering online services to its customers and to make the extensive use of the internet. Free shipping is the good strategy to penetrate in the existing market moreover; it will help in sales growth and generate the traffic on the website. For gaining the competitive edge, ChipSupreme need to focus on identifying the area to invest in the strong supply chain network while as well as retain its loyal customers.
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