MGT 4953 Individual Case Study Assessment Brief 2023-24

Assessment Brief

1) Case study 1 

Gorillas, Deliveroo and Getir: delivering on a faster promise; Operations and Logistics, 19 Apr  2022 by Emma Herrod 

• The competitive ultrafast delivery sector is in a state of flux driven by innovations, partnerships and  acquisitions. Before the pandemic, it seemed that consumers wanted to receive their online orders in ever faster ways. The number of retailers offering next-day delivery was growing, as were same-day delivery  options. Just look to Amazon for examples of swifter delivery with Prime and Premium services.
• As covered earlier in this report, the pandemic has substantially altered retailer delivery promises. Taking the  grocery sector as an example, UK supermarket Tesco scaled rapidly to double online delivery capacity to  1.3m when the country went into lockdown in March 2020.
• While the trend for retailer’s own fulfilment services is towards standard delivery, with no charge over a  certain order value, there’s still consumer appetite for under one-hour delivery from the likes of app-based  challengers such as Gorillas, Deliveroo and Getir.
• Consumers accustomed to receiving rapid takeaway food orders have embraced similarly speedy services  Delivering on a faster promise. The competitive ultrafast delivery sector is in a state of flux driven by  innovations, partnerships and acquisitions for groceries, last-minute requirements and forgotten ingredients.
•   Across Europe, 77% of online grocery shoppers say they have already used, or would use, a fast delivery  service for groceries. Dutch consumers are thought to have spent around €40m with these app-based services  in 2021. This year, that figure – which is based on average spend per order and order frequency – is predicted  to rise to a total turnover of €1bn. 

A closer partnership 

• From the retail perspective, these companies accelerated their growth during the pandemic as shoppers  ordered from their apps with orders that were either picked in the same supermarkets that staff were already  picking in or from stock in their own dark stores.
• The relationships are now getting closer and more extensive. Morrisons and Deliveroo have partnered in a  delivery only grocery store in Central London. Deliveroo Hop sees Morrisons acting as wholesaler and  Deliveroo as a retailer able to set its own prices. The new service complements Deliveroo’s existing grocery  offer which delivers from over 4,600 UK grocery stores. Hop will also mark Deliveroo’s first move into  becoming a retailer itself. 
• Deliveroo says that Deliveroo Hop offer a better customer experience through:

           ->Greater stock accuracy – its grocery management technology enables real-time inventory control  providing reliable item availability to consumers and eliminating the need for item substitution. • Increased speed – Leading warehouse management technology, combined with Deliveroo’s logistics  algorithms and existing network of over 50,000 riders in the UK, enable delivery in as little as ten  minutes. 

         ->Wider product range – Deliveroo’s partner-led model enables a range of up to 2,000 items, including partner-branded and own-label products.

• Other grocers are looking at co-located warehouses in urban areas in order to fulfil more, with faster orders.  In October, Tesco started a trial with Gorillas with a dark store operation using excess warehouse space at  existing Tesco sites in Thornton Heath and Lewisham.
• The trial sees customers ordering from a selection of 2,000 Tesco products on the Gorillas app, with their  order then picked and packed at Thornton Heath for delivery.
• Commenting at the time, Jason Tarry, Tesco UK & ROI CEO said, “The idea that we can reach our customers  in just ten minutes is really exciting. We are committed to being easily the most convenient choice for our  customers, enabling them to shop whenever and however they want.
• This pilot with Gorillas will help  customers get their products right away, supporting those looking to buy food for tonight or last-minute  forgotten items. We look forward to hearing what our customers think.”
• Adrian Frenzel, Gorillas COO, agreed with the sentiment, saying, “We’re thrilled to be announcing this first of-its-kind commercial and real estate partnership with Tesco.
• As a fast-paced company at the forefront of the on-demand grocery industry, we are always looking for ways  to innovate, and this co-location partnership will bring unprecedented value to our customers in the UK who  will now have the possibility to be delivered the best of Tesco within minutes thanks to Gorillas.”
• Since the start of the trial Gorillas riders have “already clocked up nearly 50,000 emissions-free miles” on  their e-bikes. The trial with Tesco has since been extended to Manchester and further locations are planned.
• Tesco launched its own fast-track service, Whoosh, last year, which offers delivery in an hour, and has hinted  that its automated micro-fulfilment solution could be used for other products, not just groceries.
• Gorillas also works with Casino in France and Jumbo in the Netherlands. CFO of Jumbo, Ton van Veen,  highlights how by selling through these apps, the grocer can reach new customers. “The market for the instant  delivery of groceries ordered online is growing rapidly,” he says. “We are already noticing that we are  strengthening each other on various fronts – Gorillas can provide its customers with virtually all groceries in  the Jumbo range, and at Jumbo, we are tapping into new, interesting customer groups.” Jumbo plans to extend  Gorilla’s fast delivery option to its own grocery platform, giving customers in major cities in the Netherlands  and Belgium the option of standard delivery options or ultrafast. “In this way, we continue to meet the  changing wishes and needs of our customers,” adds van Veen. 

An industry in flux 

• The ultrafast industry is in a state of flux – and not just in Europe – with entrants still joining the fields,  partnership deals being signed and competitors acquired. In July, Turkish ultrafast grocery delivery company  Getir acquired Blok, a grocery delivery startup in Southern Europe. The acquisition gave the Turkish company  access into Spain and Italy through Blok’s existing operations in several cities including Madrid, Barcelona  and Milan.
• The additions mean Getir is now working in seven markets across Europe, with Portugal next in  its sights. Such acquisitions are reducing competition. Gorillas bought its rival Frichti after being in  competition with the French company in a number of cities in France and Belgium.
• In other areas, new partnerships are being sealed. Just Eat and Gorillas are working together in Madrid, Spain,  to deliver fresh produce from five of the city’s main municipal markets as well as Just Eat listing Gorillas’  groceries on its app.
• The future is uncertain but by watching how the challengers are changing markets, the ways in which retailers are reacting and how, when and where consumers are using the services gives us clues. As Spanish delivery  company Glovo (which enables “anything” to be collected from “anywhere”) reports, in Georgia, one of its  couriers carried dried insects for an anaconda, while divorce papers travelled somewhere in Montenegro.  Glovo’s biggest fan made purchases worth almost €130,000 from Spain, while in Poland, a tea lover ordered  732 tea cups to be delivered. 

Answer the two questions below:  

1. What operational challenges do quick commerce companies like Gorillas, Deliveroo and Getir  face?
2.  What are your recommendations with regards to eliminating those challenges so that these companies can grow profitably? 

You can refer to external sources but no need to cite them in your responses  

Case study 2

Fast Fashion's Curious Comeback --- Online apparel retailer Shein is getting buzz, but how  sustainable is its business model? Lee, Jinjoo.  Wall Street Journal, Eastern edition; New  York, N.Y.. 31 May 2023 

• Fast fashion is back in vogue, thanks to online apparel retailer Shein. Will it be a trend setter or a one-hit  wonder?
• Shein, which has grown at a monster pace in recent years, is an online-only fast-fashion player with few  peers of similar scale. Last year, the online seller accounted for 1.7% of apparel-industry sales in North  America, making it the fourth-largest clothing seller behind Nike, Old Navy and Lululemon, according  to Euromonitor. When asked where their first-choice shopping destination is for "going-out" clothes, Gen
• Z respondents marked Shein as their No. 1 pick, and it was the second pick (behind Amazon.com) for  millennials, according to a survey conducted by Cowen last year.
• Though Boohoo Group, ASOS and Fashion Nova occupy a similar space as online-only sellers, their  revenues are only a fraction of Shein's, which brought in $23 billion of revenue last year, The Wall Street  Journal reported. Its sales are comparable with multinational apparel giant H&M, which reported net sales  of 223.6 billion Swedish kronor, equal to about $21 billion, in its fiscal year ended November 2022, and  Inditex-owned Zara, which reported 23.8 billion euros, or $25.5 billion, of sales in its fiscal year ended  January 2023.
• The company, with its supply base in China, has a well-oiled test-and-scale model: It produces 100 to 200  pieces of any given product at launch and then increases production only if demand is strong, a company  spokesperson said in an email. That results in little excess inventory, which in turn helps its bottom line.
• On the supply side, it milks efficiencies by using a digital manufacturing system. The system asks Shein's  extensive supplier base to share real-time capacity and tags each of them based on category strengths and  weaknesses, according to a March report from Boston Consulting Group. To minimize costs, Shein selects  master fabrics and requires designers to choose from the pool, the report noted.
• Fast fashion was invented by retailers such as Zara, and to a lesser extent H&M, in the late 1990s, when  the companies took the latest styles seen on the catwalk and brought similar products to market, according  to a report written by Simon Irwin, equity analyst at Credit Suisse. For companies such as Zara, it took  about three to four weeks to bring something like a simple T-shirt from design to the stores and six to  eight weeks for something like a jacket or a dress, though the fast-fashion element was a relatively small  part of those companies' sales, according to Irwin.
• But the category fell out of favor in recent years as consumers and investors became more critical of the  apparel industry's impact on the environment. To some extent, off-price retailers such as T.J. Maxx started  to fill consumers' demand for runway designs at bargain price points, said Simeon Siegel, equity analyst  at BMO Capital Markets. "Off-price effectively did the same thing [as fast fashion] but without sacrificing quality," he said.
• If what Zara did in the '90s was fast fashion, Shein's version is "ultrafast fashion," Irwin said in an  interview. Shein's inventory on average takes around 40 days to turn over, according to Boston Consulting  Group. That is about half of what it takes for Zara owner Inditex. The quick-turn strategy goes against  industry trends. In general, apparel companies' inventory turnover has lengthened over the past two  decades. In 2000, for example, inventory turnover at H&M used to take a little over three months. Last  year, it took more than four months.
• Shein's meteoric rise shows that trendy and cheap have enduring appeal. While Gen Z cares about  sustainability, it also values self-expression. Timing probably helped, too. Fast-fashion retailers Charlotte  Russe and Forever 21 left a vacuum when they filed for bankruptcy in 2019, closing hundreds of stores.  And Shein's low prices probably shined even brighter in the past three years as shoppers experienced an  unusual rise in clothing price tags. Apparel prices had been on a downward trend through most of the past  decade before rising steeply following the initial shock of the pandemic in 2020.
• Did Shein invent an online fast-fashion business model that works? Online fast fashion doesn't have a  great track record. ASOS and Boohoo Group, both of which are U.K.-based online-only fast-fashion  players, have thin operating margins and, after some heady profit growth during the pandemic, swung to  a net loss in their most recent fiscal years as top-line growth slowed.
• While Shein doesn't disclose financials, the Journal reported the company made $800 million of net profit  on its $23 billion of revenue last year, implying a net margin of 3.5%. That is far behind Inditex's 12.3%  net margin and Uniqlo owner Fast Retailing's 11.9%. Shein's very noticeable presence on social media  implies that its marketing budget isn't small. Its free-return policy can't be much help to its bottom line,  either.
• Shein has probably found itself a comfortable niche between larger Western apparel giants who don't  want to be associated with fast fashion and very small online-only competitors.
• Its advantages are difficult for most competitors to replicate, including its extensive supplier network and  the tax advantages that come with operating with little physical footprint in the countries where it sells  clothes.
• While Shein'stech-enabled test-and-scale model is compelling, it probably doesn't work for higher-quality  apparel that takes longer to make. But its biggest advantage so far might be its nonpublic status, which  means less scrutiny on both its profitability and business practices.
• This could soon change if Shein wants to raise money in the public markets, which will want a line of  sight to attractive margins (in other words, its marketing budget and free-return policy might face more  scrutiny) and proof that its business practices are ESG-friendly. Notably, a bipartisan letter signed by  more than 20 U.S. lawmakers asked the Securities and Exchange Commission to order a supply-chain  audit before Shein is allowed to pursue an initial public offering on a U.S. stock exchange.
• Even though the company has said it has no suppliers in Xinjiang, where there are allegations of forced  labor, the company seems to be hedging its bets to allay concerns: It plans to source more fabric from  India, as the Journal reported this month.
• The IPO will be an interesting test for investors who seek sustainability but also want a compelling growth  story. Environmentally friendly resale platforms such as ThredUp and The RealReal made their debuts  on the public markets to great fanfare, but their appeal among shoppers and investors has proven  transitory: Growth has slowed on their platforms, and their market valuations are only a shadow of what  they were at the time of their IPOs. Allbirds, a footwear brand that boasts environmentally friendly  practices, has seen its popularity fizzle, too.
• Shoppers and investors like to see green credentials, but if Shein's popularity has shown anything, it is  that cash always looks greener.

Answer the two questions below:  

1. Supply chain’s compete on cost, quality, speed, flexibility, sustainability and risk management.  Compare and contrast Shein’s and Zara’s supply chains on these attributes.
2. What changes should Zara make in its supply chain strategy to better compete with Shein? 

You can refer to external sources but no need to cite them in your responses  

Case study 3 

Please watch the below video on quality problems and recalls at Ford Motor company.  https://www.youtube.com/watch?v=l7mxouSPXa8 

Answer the two questions below:  

1. What organizational factors could be responsible for these quality problems and recalls in  Ford?
2. As a quality consultant to Ford what strategies and actions covering each of designing,  sourcing, manufacturing, distribution, retailing, after sales, and end-of-life would you suggest to  improve quality? 

Case study 4 

Jadoom  

• Jadoom is an Internet service provider (ISP) that caters to individual consumers and small businesses who  require a high level of service and are willing to pay a premium for it. Specifically, Jadoom offers state-of the-art e-mail applications and Web-building software, as well as plenty of storage space and fast access  via its high-speed servers.
• The marketing vice president, Jerry Hunter, puts it this way: "There are a lot of  companies out there promising the cheapest Internet access. But what do you get for your money? Slow or no-access, a mailbox full of spam, and an endless stream of system crashes. And I won't even mention  the lack of support if you have a technical question!
• For a few dollars more a month, we give our customers  the environment they need to be productive without having to think about whether or not they can retrieve  their e-mail, or whether their Web site has crashed. It's no surprise, then, that we have the highest cus- tomer  satisfaction and retention rates in the industry." 

The Online Help Desk 

• One of Jadoom’s services is its online help desk. The online help desk works as follows: Customers who  are experiencing technical problems, or who simply have questions about their account, enter a one-on-one  chat room, where they can interact directly with an expert. Problems are usually resolved within 10 minutes,  and customers have listed it as one of the top three reasons they stick with Jadoom. Presently, Jadoom has  enough capacity to handle up to 900,000 requests per year, although management doesn't expect the number  of requests to change much from the current level of 800,000 per year.
• A firm located in New Delhi, India, has approached Jadoom about outsourcing the online help desk. The  offer is attractive. The New Delhi firm's own personnel would handle the help desk function. These  personnel all speak English fluently and have college degrees or appropriate technical backgrounds. And  because they are located in India, labor costs would be a fraction of what they are in the United States. The savings would be passed on, in part, to Jadoom. And sinFce the help desk chat room exists on the Internet,  Jadoom’s customers should be unaware of the switch.
• Jadoom’s management has put together the following figures, outlining the yearly costs associated with the  current system and the Indian proposal: 

Current Online Help Desk 

Personnel costs:  

40 full-time-equivalent (FTE) technical experts@ $40,000 per year (salary and benefits) 3  supervisors@ $70,000 each per year (salary and benefits)  

Equipment costs:  

4 servers@ $2,000 per year  

20 PCs@ $1,000 per year 

Variable costs: 

$1.50 per request (office supplies, fax paper, etc.) 

New Delhi Proposal  

 Fixed cost: 

 $1,500,000 per contract year (to cover administrative and IT costs) 

Charge: 

$0.50 per request 

1. Calculate the total cost of outsourcing the online help desk versus staying with the current solution and  highlight which is cheaper? Please show detailed workings. 
2. Besides costs, what other factors should Jadoom consider in its outsourcing decision-making?  
3.  Based on 1) and 2) above, should Jadoom outsource its online help desk or not?