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All businesses today understand the value and importance of building an effective supply chain, as part of sustainable growth and profitability (Pal, 2019). Digital transformation – the connection of individuals, business, and countries to the World Wide Web – has emerged among the most transformative means to enhance living conditions of human inhabitant on the planet earth. Human well-being rests on the foundation of very basic-necessities (e.g. food, medical service, education, transportation, and leisure) of living conditions. Therefore, the uninterrupted supply of these basic-necessities is immensely important for the world. Consequently, to improve the human living experience relies heavily on well-organized SCM systems.
In a typical supply chain, raw materials are purchased from suppliers and products are manufactured at one or more production plants (Pal, 2017) (Pal, 2018a) (Pal, 2018b) (Pal, 2018c). Then they are transported to intermediate storage facilities (e.g. warehouse, distribution centers) for packing and shipping to retailers or customers. In this way, a supply chain consists of few business entities in the chain and these are the suppliers, manufacturers, distributors, retailers, and end-customers. The supplier supplies the raw material to manufacturer. The manufacturer produces goods in a factory using production facilities. The distributor buys goods from the manufacturer in a large scale. The retailer may buy goods from distributor and provide a service to a wholesaler and/or customer. At the end, the customer buys the products from a retailer by going to a store or using a retail channel (e.g. local-agent, e-business facility). In this way, a supply chain consists of all the activities associated with the flow and transformation of raw materials stage, through to the end-customers; and as well as the associated information flows. SCM is a set of synchronized decision and activities, utilized to effectively integrate all relevant business processes in order to deliver the right products, to the right locations, and at the right time, to optimize system wide expenditures while satisfying customer service level. Figure 1 shows a simple diagrammatic representation of a retail supply chain, which highlights some of the primary business activities.
Figure 1.
Diagrammatic representation of a simple retail supply chain
Geopolitical instability and the growing power of local and regional competition is forcing global retailers to rethink their strategies. There are many business operational issues (e.g. population growth, human poverty, inflation, and demographic changes) and market-specific-factors (e.g. market saturation, limited market growth, and competition), which are affecting the global retail sector. In such conditions, as response to market and operational challenges, the retail businesses focuses on consumer requirements and at the same time try to minimize operational costs in order to remain competitive. New types of retail business-models are emerging, which try to take consideration of business operational environment characteristics.