Introduction
Supply Chain refers to an overall systems of activities, people, information and organisation as well as resources which are included in moving an offering of a company from suppliers to customers (Christopher, 2016). On the other hand, negotiation refers to processes as well as actions to reach a certain agreement through avoidance of disputes or arguments. The following report is based on supply chain management of HF which is a beauty retail chains in the UK. It covers Market outlook, channels as well as trends in hair care products as well as procurement of hair care offering which is 30ml Argan oil from two countries. It also covers research of the best supplier, customs regulations as well as a detailed risk management plan.
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Task 1
Market Outlook
Beauty and Health industry in the UK is experiencing a rise due to better products, higher market demand and customer centric products. Within the industry, there are various factors such as customer awareness and enhancement in technologies have encouraged beauty organisation to develop products which are rich in skincare and environmental friendly (Monczka and et. al., 2015).
The United Kingdom is the sixth-largest market dealing in beauty as well as personal care products. Worth of this industry has been estimated more than £10bn in 2017. Moreover, in the same year, per capita expenditure on personal care and beauty products in the country was higher than £150, which is the fifth highest globally. This industry has four separate market categories, which are personal care and beauty products, each of which is commanding 20% share of the market, Salon and Spa services, commanding 30% share, barbershop and hairdressing services, commanding 30% share of this market within the country. Estimated expenditure of customers on salon, spa and beauty treatments have been more than £7.5bn in 2017 (What is the current state of the UK beauty market? Key findings,2018).
As per the above statistics, the market value of this industry has been forecasted to be continuously rising in coming years. This market is female dominated and its customers are a wide variety of women ranging from age of 16 to 54. Such a high range of customer demographics are a strong reason for development of new trends within this industry.
As for haircare, the most important trend has been the rise in gluten-free and vegan products. The development of vegan products has seen a significant rise from 6% to 20% within a period of 2014-2018. in addition, gluten-free products have risen from 3% to 9% within a span of two years in 2016-18 (Microbiome Skincare, Clean Makeup And Gluten-Free Haircare: The Trends Driving Growth In The UK Beauty Market,2019).
Another trend witnessed by this market is the rise of digital technology which has shaped up the industry effectively. From development to its application, technological advancements like Artificial Intelligence and Augmented Reality have shaped this industry in a better and constructive manner (Beauty, Skincare and Cosmetics Retail Trends and Statistics,2019).
However, currently, due to Brexit vote, the industry is facing a slower and steadier growth. This, has resulted in increase in competition where beauty manufacturers and retailers are working effectively to produce commodities which are according to the market needs and preferable by customers. Thus, competition rate within this industry is quite high (UK: Competition increases as growth slows in the natural cosmetics market,2019).
The future holds even more advancements in the industry and with various health and beauty products organisations, the industry is would be seeing a substantial and effective growth in the coming years.
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Task 2
Procurement of Argan Oil from two countries
The industry is experiencing effective growth and it is necessary for its players to appropriately develop effective business case weighing on developing a contributing supply chain management (Ghosh and Shah, 2015).
HF in order to consistently expand its business and enhance its scope of profitability must import hair care products for its customers. This would allow them to develop a wider market with an enhanced consumer base within the country.
Product:
One such product for HF is Argan Oil. It is a plant oil which is effectively produced through kernels of argan tree. It is a product which is recommended to be used for hair care.
Nature:
It is a bio organic product which is quite appropriate to be used for providing hair care
Benefits:
This product has various benefits. For instance, application of this oil helps in softening and hydrating hair. Moreover, due to presence of antioxidants in high quantity, along with Vitamin E and fatty acids, it assists in increasing elasticity of hair and effectively enhances quality of hair.
Size:
HF is planning to distribute this oil in containers having capacity of 30ml. This would be an adequate quantity to be sold to customers which effectively would help in developing an effective customer market.
Price:
It is very crucial for a company to effectively determine correct pricing as per the demand and supply. The firm is planning to import 15-20ft containers in the first year, which clearly implies that there is a consistent and effective demand of this product in the country. For its new product, the company would be applying psychological pricing techniques to effectively enhance the scope of its selling. With all these factors effectively analysed, the firm would be setting its price at £5.5 per bottle.
Packaging:
To develop its demand in the market, HF would be providing Argon Oil in polyethylene terephthalate containers which is used globally to store hair care oils effectively. Other than it being non-biodegradable, it has several benefits too. For instance, it is inexpensive, which would help the company in saving its cost. It is resistant of moisture as well as has high strength which would provide protection and safety to the oil (Everything you Need to Know About The World's Most Useful Plastic (PET and Polyester),2016).
Exporter locations:
Argan Oil is being exported and imported worldwide. However, it is an essential for HF to determine two locations which serves effectively in shipping this oil to the company in desired quantity. For this, the two nations through which HF would be importing Argan oil from are Morocco and US. The reason of choosing these locations is that both of these countries are recognised extractors and suppliers of Argon oil which is beneficial for HF in it business prospectives.
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Best Supplier, Port of Origin and Shipping Line
After determination of the product and quantity of Argan Oil which is essential to be imported, it is essential that HF performs extensive research for suppliers which would be shipping the product for acquisition by the company.
From various suppliers operating in the country, following is a supplier's file which seems utmost convenient and effective for HF:
Supplier's file in United States:
|
Brand Name |
The company which is being chosen by the HF is Organic Infusions Inc. which is one of the most recognised suppliers in the US |
|
Price |
The firm quotes US$ 28.75 for 120 ml of Argan Oil (Organic Infusions: Argan Oil, 2019). |
|
Quality |
Organic Infusions Inc. have certified organic essential oils which is prime demand of HF. |
|
Reason for Choosing the Firm |
HF would be choosing this company as its supplier in the US as this organisation has been certified for carrying out effective processes which ensures ecological products, oils with no chemical compounds, no animal testing, etc. Moreover, this firm supplies pure products overseas which makes it a prime choice for HF. |
Supplier's file in Morocco:
|
Brand Name |
From Morocco, the firm would be choosing ZineGlob as its supplier of Argan Oil. |
|
Price |
This company charges US$ 22- US$ 23 per litre of Argan Oil (Argan Oil Wholesale Bulk,2019). |
|
Quality |
ZineGlob has certified quality of Argan Oil has various certifications which includes USDA Organic, ECOCERT Organic as well as FDA (ZineGlob: Certification,2019). This company produces top quality Argan Oil and Supplies it all over the world. |
|
Reasons for Choosing the Firm |
The biggest reason for HF to choose this company as its supplier in Morocco as it provides the firm with utmost transparency in information required about the product. In addition to this, with such authenticated certifications and effective image, the firm ensures top quality and utmost safety of the product. |
After determination of suppliers for acquisition of Argan Oil, it is crucial and utmost imperative for HF to choose best logistics company to work with. For both the countries, i.e., the US and Morocco, this firm would be working with Fedex, which one of the biggest and prestigious logistics company globally. The reason for choosing this company as its services are recognised in almost all the world and it guarantees utmost product safety, convenient pricing and limited transit time for shipping the product.
For the US, the most convenient shipping route for HF would be Port of New York, United States to Port of Southampton, United Kingdom, having a distance of almost 3632 nautical miles (Port of Southampton , United Kingdom to Port of New York, United States,2019). However, as for Morocco, the company would be choosing a shipping line from Port of Casablanca, Morocco to Port of Southampton, United Kingdom having a distance of almost 1398 nautical miles (Port of Southampton , United Kingdom to Port of Casablanca, Morocco,2019). Both the shipping lines would be having Portugal as a connecting knot.
Task 4
Risk Management Plan
It is essential for each organisation to effectively develop a risk management plan which is essential for this firm to enhance the effectiveness of overall process of acquisition of Argan Oil and mitigate the risk factors completely (Hugos, 2018). Following is the Failure Mode and Effects Analysis table with potential risks and and corrective actions.
|
Item/Process |
Failure Mode |
Effect |
SEV |
Causes |
OCC |
Controls |
DET |
RPN |
|
Buying Argan Oil |
Wrong Interpretation of quantity by supplier |
With such a flaw, HF would be charged with mismatched pricing and chances are that quantity either does not meet or exceeds than required |
7 |
Causes of this risk would be transferring of misinformation from buyer or mishandling of information on the seller's side. |
1 |
The order must be checked via written confirmation letter to ensure that required and delivered quantity are the same |
3 |
21 |
|
Cargo Shipping |
Damage to the product. |
Chances are that complete loss of goods could occur which would have negative effect on HF for not meeting orders on time and unnecessarily add to cost. |
9 |
This might happen due to natural calamities or due to accidental fire or theft. |
2 |
To ensure safety, the company must use tracking methods available by Fedex to regularly check the status and must obtain insurance like fire and theft. |
1 |
18 |
|
Delivery |
Untimely acquisition of goods |
Would have a bad effect on the Customer Relationship which is essential for the company to enhance its market with Argan Oil. |
4 |
Might be natural causes for emergency stoppage or technological error in the cargo ship due to which it might turn faulty. |
3 |
Firm must set up an effective time schedule with considerable time gap giving possibilities to delay. |
5 |
60 |
The table above effectively shows the possibilities, likelihood, causes and how risks could be mitigated and managed within the company. These risks are ranked according to their preferences to be handled which might serve effectively for the firm to handle all the uncertainties associated with their acquisitions of Argan Oil.
Conclusion
Thus, it is concluded, that in order to effectively set up international trade and business, it is important for any business organisation to indulge into effective import of products and processes which would help it in appropriately carrying out its operations. Import would assist the organisation in acquiring products that would further aid in setting up a new product line of the company. It is however challenging to find appropriate suppliers and logistics to import the desired products, however, import is necessary to enhance the scope of profitability and international business. Lastly, supply chain must be determined to its utmost suitability and logistics exercise must be backed up with risk management plan to ensure smooth running of operations.
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References
Books and Journals
- Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
- Ghosh, D. and Shah, J., 2015. Supply chain analysis under green sensitive consumer demand and cost sharing contract. International Journal of Production Economics. 164.pp.319-329.
- Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons.
- Monczka, R.M., and et. al., 2015. Purchasing and supply chain management. Cengage Learning.
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