Free Essay Example - Looking at Zalando

Zalando is another e-commerce firm based in Germany, Berlin. The company adopted a platform approach to offer its products to customers (Zalando, 2020e). Zalando specializes in fashion and lifestyle products across different targeted markets such as European countries and beyond. Based on the nature of the operational strategy characterizing the company, supply chain management and sustainability is central to its success (Zalando, 2020a). Analysis of the company’s supply chain using the SCUR Model reveals key success aspects as highlighted below.

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Upstream Supply Chain

The company recently introduced the do.MORE strategy as part of its campaign to enhance competitiveness and sustainability. The company has collaborated with Tier 1 producers and suppliers to avail key lifestyle and fashion products for their potential customers. A Ken analysis of this approach indicates that 20% of the supplies come from Tier 1 suppliers while about 80% come from Zalando’s private label sourcing (Zalando, 2020a). The incorporation of the do.MORE strategy was meant to increase the transparency of the outsourcing partnership and collaboration initiatives (Zalando, 2020d). The company considers Tier 1 suppliers as those who participate in the final stage of the manufacturing, packaging, and shipping processes. On the other hand, the company uses private label brands to consolidate the effectiveness of supply chain operations. One of the essential characteristics of the upstream intervention includes thee regular publishing of the underpinning measures regularly. Additionally, the company is looking forward to advancing its collaboration with competitive brands, consulting firms, NGOs, and the government to meet the ever-changing needs in the fashion industry (Zalando, 2020a). Merchants are required to adhere to the ethical, quality, and safety provisions as defined by the company’s sustainable and competitive advantage measures.

Downstream Supply Chain

The company has enhanced its downstream supply chain operations by paying attention to the needs of the customers as well as the expectations of suppliers and collaborating partners. The delivery stores and warehouses are strategically located. The company also requires collaborating partners to adhere to their supply chain strategy and considerations with the purpose of improving the level of transparency and effectiveness. The move has targeted key markets that form the baseline of the firm’s profitability. With a connecting transportation framework, Zalando has guaranteed customer deliveries and return of orders with limited loss and balanced cost. The move by the company to reveal the Tier 1 suppliers was to not only meant to enhance transparency but also to increase the level of trust among customers and partners. A strategic approach and compliance with the internal standards ensure effective warehouse management and tracking of orders from shipment to delivery. As seen with Amazon, Zalando has also provided immediate delivery of products and limited delivery to the company’s channels.

• Delivery to Customers150
• Return 150

Sustainability of Supply Chain

In 2015, Zalando started its sustainability transformation journey under the do.STRATEGY umbrella. Since its inception, the company has managed to achieve a 90% transformation by switching to renewable and environmentally friendly alternatives while undertaking supply chain operations. The strategy included the replacement of the previous shipping bags with 80% recycled ones. After reviewing the success of this initiative, the company decided to advance its measures by introducing 100% biodegradable alternatives (Zalando, 2020b). Moreover, the collaboration between the Fashion for Good innovative platform and the company was adopted to enhance the transparency of its supply chain (Zalando, 2020c). The incubator program established over 90 solutions to improve the sustainability of operations and meet customer expectations. With these initiatives, the company has enhanced the efficiency of its supply chain. It is important to note that under the do.STRATEGY the company subdivided different initiatives to focus on each key area of supply chain sustainability. For example, the do.GROW targeted employees and their role in the supply chain. The do.PROTECT for environment safety and the do.CONNECT is inclined towards society interventions (Zalando, 2020b). Therefore, the firm has a robust assessment framework for supply chain performance to determine the changes and progress of each targeted area.

Conclusion: Otto’s Supply Chain

In conclusion, the analysis of Otto’s supply chain based on the fundamental SCUR Model elements reveals key issues about the company. The firm has intensified its operations in Germany to enhance its competitiveness and sustain the current market share. Such a focus has limited its ability to address the global supply chain concerns. Otto has attracted customers from more than 30 countries, which implies that the management should start considering the advantages that stem from the internationalization of supply chain management and control. There is a high potential for the company globally by improving the quality of international supply chain practices. As noted in the analysis, over 50% of the orders are destined for a return. The fashion-related products such as clothing and other orders that fall under the ‘small’ category are greatly affected. The company has restricted its returns and order fulfillment to Hermes Fulfillment Limited and the global order delivery to the ColisExpat company. Although this move has protected the interests of the firm, it has subsequently limited its ability to explore alternative measures and available options that could improve its international competitiveness in line with the emerging market shifts in the global e-commerce fashion niche.

Furthermore, as seen in this competitive analysis of Otto’s case, the current sustainability intervention in e-commerce supply chain management has not been fully implemented. A comparison between the system adopted by Amazon and Zalando to that to Otto indicates significant loopholes. While the former competitors have intensified their transparency measures to improve the supply chain operations and cement their supplier base both locally and globally, Otto is seen focusing only on the Garman market. Such a move is not sustainable owing to the rate of growth that is characterizing firms that improve their international presence through sustainable supply chain practices and transparency. In this case, this paper concludes that there is a looming danger of potential market share decline both locally and abroad if Otto will stick to its current market approach. Moreover, Otto’s last-mile approach as completed by the collaborating partners has been associated with the high cost and customer dissatisfaction. By adopting comprehensive notification and feedback management that is integrated into the e-commerce architecture, the company will ensure that the delivery of orders is aligned to customer availability and combined with other deliveries within a specific location to limit cost escalation and high rate of returns.

References

Zalando. (2020a). Zalando increases transparency in private labels supply chain. Zalando Inc. Retrieved May 13, 2020, from https://corporate.zalando.com/en/newsroom/en/news-stories/zalando-increases-transparency-private-labels-supply-chain

Zalando. (2020b). Our journey so far: The do.STRATEGY. Zalando Inc. Retrieved May 13, 2020, from https://corporate.zalando.com/en/corporate-responsibility/our-journey-so-far-dostrategy

Zalando. (2020c). Digital solutions for supply chain transparency. Zalando Inc. Retrieved May 13, 2020, from https://corporate.zalando.com/en/corporate-responsibility/digital-solutions-supply-chain-transparency

Zalando. (2020d). Hacking supply chain transparency. Zalando Inc. Retrieved May 13, 2020, from https://corporate.zalando.com/en/newsroom/en/stories/hacking-supply-chain-transparency

Zalando. (2020b). Zalando: Company Profile. Zalando Inc. Retrieved May 13, 2020, from https://www.corporate.zalando.com/en/company/company-profile