RETAIL SUPPLY CHAIN MANAGEMENT
ASSIGNMENT#: 3
ID FULL NAME
L1F18BBAM0671 MUHAMMAD FAHAD
L1F21BBAM0892 MEHAK IMRAN
SUBMITTED TO: MS SAYDA UZMA TAHIRA
DATE OF SUBMISSION:29/05/2025
SESSION OF SUBMISSION: SPRING 2025
FOR GRADING:
COMMENTS: MARKS SECURED:
Question 1: Sourcing Strategy for Summer Clothing Line
Pros and Cons Analysis
International Suppliers
Criteria Local Suppliers
(Bangladesh, Turkey)
Average Lead Shorter (15 days) – Faster Longer (35 days) – Delays in adapting
Time replenishment and agility to market trends
Higher (PKR 950) – Impacts profit Lower (PKR 780) – Cost savings per
Unit Cost
margins unit
Minimum Order Lower (500 units) – More Higher (1,000 units) – Increases risk
Quantity manageable inventory levels of overstocking
Quality Rejection Lower (3%) – More consistency and Higher (6%) – Risk of returns and
Rate less rework customer dissatisfaction
Exchange Rate
Low – Stable pricing High – Uncertainty in final landed cost
Risk
Flexibility in High – Easier to collaborate and Medium – Time zone and distance
Design iterate with vendors constraints
Recommendation: Hybrid Approach
Main Strategy: Use local suppliers for the first wave of new styles to ensure speed-to-
market, trend responsiveness, and quality assurance.
Support Strategy: Use international suppliers for volume-based staple products to
benefit from cost savings.
This hybrid model balances cost, flexibility, quality ,speed and risk, while supporting
scalability.
Question 2: Inventory Shrinkage Analysis and Action Plan
Shrinkage Analysis
Shrinkage % Due to % Due to
Store Cluster Main Issue
Rate Theft Errors
Urban - High
3.8% 70% 30% Theft
Footfall
Administrative
Suburban 2.1% 40% 60%
Errors
Downtown Core 4.5% 80% 20% High Theft
Industry Avg. 1.7% — — —
Most Vulnerable Cluster: Downtown Core due to highest shrinkage (4.5%) and theft
(80%).
Urban Cluster also critical due to high theft levels.
Suburban needs process improvement for error reduction.
Action Plan to Reduce Shrinkage Below 2.0%
1. Technological Interventions
o Install CCTV with AI-based theft detection.
o Implement RFID (Radio Frequency Identification) based inventory tracking.
o Use POS data analytics to monitor discrepancies.
2. Process-Based Changes
o Standardize inventory counting and reconciliation procedures.
o Conduct weekly cycle counts for high-value items.
o Improve layout to limit blind spots and restrict backroom access.
3. Training and Awareness
o Regular loss prevention training for staff.
o Introduce employee reward system for shrinkage reduction.
o Educate employees on common fraud tactics and handling policies.
4. KPIs and Monitoring
o Create a store-wise shrinkage dashboard.
o Set a monthly shrinkage reduction target.
o Conduct quarterly audits and publish improvement reports.
Question 3: Logistics Strategy Comparison
Metric Central DC (Lahore) Decentralized (Multan, Islamabad + Lahore)
Avg. Delivery Time 36 hours 18 hours (↓50%)
Fuel Cost/Delivery PKR 4,500 PKR 2,800 (↓38%)
Product Spoilage 4% 2% (↓50%)
Monthly Operating Cost PKR 2 million PKR 3 million (↑50%)
Quantitative Analysis
Assumptions:
Monthly deliveries: 10,000
Monthly inventory handled: PKR 100 million
1. Fuel Cost Savings
Centralized: 10,000 × 4,500 = PKR 45 million/month
Decentralized: 10,000 × 2,800 = PKR 28 million/month
Savings = PKR 17 million/month
2. Spoilage Reduction Savings
Centralized spoilage: 4% of PKR 100 million = PKR 4 million/month
Decentralized spoilage: 2% of PKR 100 million = PKR 2 million/month
Savings = PKR 2 million/month
3. Total Monthly Cost Comparison
Centralized:
Fuel = PKR 45M
Spoilage = PKR 4M
Operating = PKR 2M
Total = PKR 51M
Decentralized:
Fuel = PKR 28M
Spoilage = PKR 2M
Operating = PKR 3M
Total = PKR 33M
Total Net Savings = PKR 18 million month
Qualitative Analysis
Service Level: Reduced delivery time from 36 to 18 hours improves customer satisfaction and supports
same/next-day delivery initiatives.
Cost Efficiency: While operating cost increases by PKR 1 million, it is outweighed by monthly savings
from fuel and spoilage.
Spoilage Reduction: Regional hubs ensure fresher goods, especially for perishable items, improving
brand trust.
Long-Term Scalability: Enables future growth by distributing load across regions, minimizing risks,
and preparing for geographic expansion.
Recommendation
The decentralized model, with a calculated monthly savings of PKR 18 million and several qualitative
advantages, is a more sustainable and efficient strategy. It enhances service level, reduces wastage, and
aligns with long-term strategic goals.
