FACULTY OF BUSINESS AND MANAGEMENT

BACHELOR OF BUSINESS ADMINISTRATION (HONS) OPERATIONS

MANAGEMENT

THE DISRUPTION IN RETAIL INDUSTRY SUPPLY CHAIN

PREPARED BY:

NO. NAME MATRIC NO.

1. MUHAMMAD NUR HAZMI BIN AZIMI 2021861706

2. MUHAMMAD DANIAL FARHAN BIN MOHD HISHAM 2021459874

3. MOHAMAD ADAM SHAH BIN MOHD ZAID 2021864986

4. AMIR BIN ABDULLAH SHARIN 2020813018

PREPARED FOR:

PROFESOR TS. DR. VEERA PANDIYAN A/L KALIANI SUNDRAM

DUE DATE: 26th JANUARY 2023

1.0 INTRODUCTION 1
2.0 PROBLEM AND ISSUE TO THE RETAIL INDUSTRY 3
- Increasing level of complexity 3
- Less supply chain transparency 3
- Employee turnover 3
- Concern about Security of Data 4
- Rising costs 4
- Adopt Sustainable and ethical practices 4
3.0 RECOMMENDATION 5
- Implement blockchain technology 5
- Only store the customer data that you need 5
- Diversify supplier base 5
- Build up inventory 6
- Implement a task force of marketing and supply chain 6
- Acquire a Third Party Logistics company 6
- Ensure the order management is done in proper succession 7
- Emphasize a standard throughout the supply chain 7
- Garner customer loyalty 7
4.0 RETAIL INDUSTRY DISRUPTION 8
Executive summary

It comes to no surprise that the retail industry hit a low point when the covid pandemic
came to fruition. However, in such an ordeal, it becomes a blessing in disguise, supply
chain management, systems and company practices that are obsolete become
apparent. From employee loyalty, the hard to maneuver systems, discrepancies of
inefficient supply chain management, overall rising costs and so forth all add up to a
business that has too many liabilities to have a foothold in the market. The
recommended procedures to better combat these problems are by implementing
blockchain technology to ensure detailed coverage, enquire and acquire multiple
suppliers to ensure a reliable and fail safe source as well as build teams of varying
departments to strengthen and better equip your supply chain with accurate needs of
the market. Technology is the way of the future and any business that intends to stay
and strive through the years must adapt with the times. Technology will always be the
centerpiece of any business moving forward. Reliability and ease of use are often
pushed aside for lower cost systems, however, to run a successful supply chain, there
must be a reliable system to accumulate and distribute data along the supply chain so
that all key representatives are aware of what needs to go out and what needs to stop.
Retail industries are frail, they take a lot of time, effort, innovation and creativity to stay
relevant. Logistical discrepancies can lead to the downfall of said industry in a matter of
weeks. Distribution, logistical management, inventory holding, reducing costs all are
integral to keep any industry alive and thriving, invest in the extra effort and currency to
ensure that your supply chain is in tip top shape and enjoy the investment returns.
1.0 INTRODUCTION

Retail industry is one of the early types of business that existed alongside human
civilization throughout history. People may get the products they need due to the
presence of retail establishments. It is important to the activity of retail establishments
as they are closest to the end consumer . Given the significance of retail establishments
in the supply chain, it is crucial to maintain their presence. However, the retail industry
supply chain is very vulnerable and full of risk. Supply chain disruptions can arise in
many aspects. Any incident that disrupts the manufacture, marketing, or distribution of
goods is considered a supply chain disruption (Timotius & Sunardi, 2022, #). Factors
like pandemics, regional wars, and natural catastrophes can cause supply chain
interruptions. Moreover, supply chain disruptions may occur when the design decisions
involve unreliable supply sources (Timotius & Sunardi, 2022).

Over the years, Malaysia's retail landscape has seen a steady and noticeable
change. The conventional shophouses have suffered greatly as a result of the addition
of new facilities such as supermarkets, superstores, retail warehouses, and
convenience stores to the retail scene. After the COVID-19 pandemic first emerged at
the end of 2019 and was later recognised by WHO as a global pandemic on March 11,
2020, the retail industry has been in a state of distress. Even when they have the
product in stock, some shops are in a crisis because of the sharp decline in sales. It is
found that this condition is more prevalent in stores that provide non-daily necessities or
supplemental goods that are not consumers' top priorities during the epidemic.
Customers' trips to actual retail outlets are substantially decreasing as a result of the
restriction on out-of-home activities.

Lockdowns, quarantine rules, and other limitations have caused many firms to
close their doors or operate at a reduced capacity. The movement of raw materials and
other production-related components has been hampered as a result. For instance,
during the early months of the epidemic, several factories in China, a significant supplier
of commodities to the global market, were compelled to shut down or operate at
reduced capacity. This caused delays and shortages for merchants all around the world
by obstructing the flow of raw materials and other production-related components and
including our own country, some of the retail industry were struggling to keep up with
the demand and some of them could commit to the limitation of purchasing from the
customer.
2.0 PROBLEM AND ISSUE TO THE RETAIL INDUSTRY

- Increasing level of complexity

Due to the rapid development of the retail industry, the supply chain becomes more complex
because so many channels emerge at one time. One big company might have hundreds or
thousands of suppliers and customers. The issue that will occur is the communication barriers
between the company and other parties, less accurate data (Fernie & Spark, 2018).

- Less supply chain transparency

transparency is when companies know how and where their products are manufactured based
on real data, and then communicate that information both to internal and external parties,
including consumers. It is not possible for a company to manage all the supply chain processes
themselves. Moreover when it comes to big companies. It will take a lot of work and processes
to settle the job. The supplier also will have an issue to keep stock without knowing what their
customer needs in future. As a result, this will make the supply chain less efficient and may face
breakdown due to miss information and stock unavailability because of wrong estimation.

- Employee turnover
Employee turnover can be a significant problem for the retail industry. High turnover rates can
lead to a number of issues, including increased recruitment and training costs, reduced
productivity and customer service, and a lack of institutional knowledge and experience among
employees (Chen & Wang, 2017). One of the main issues caused by employee turnover in the
retail industry is the cost of recruiting and training new employees. Retail companies often have
to spend a significant amount of time and money recruiting and training new employees to
replace those who have left. This can be especially challenging for small businesses, which may
not have the same resources as larger companies (Turban D. B., 2018). Another issue caused
by employee turnover is the reduction in productivity and customer service. When employees
leave, their replacements may not be as experienced or skilled, which can lead to a decline in
productivity and customer service (Griffeth, Hom, & Gaertner, 2019). This can ultimately affect
the overall performance of the retail store and lead to dissatisfaction among customers.
- Concern about Security of Data
With the increasing amount of personal and financial information being collected and stored by
retailers, the risk of data breaches and cyber attacks has become a major concern for both
retailers and customers alike. A study published in the Journal of Retailing and Consumer
Services, titled "The Impact of Data Breaches on Retailers: An Empirical Analysis" (Kauffman, et
al., 2018) found that retailers who experience data breaches may incur significant financial
losses, as well as experience a decline in customer trust and brand reputation. One of the main
issues caused by concern about security of data in the retail industry is the potential for financial
losses. Retailers may incur significant financial losses as a result of data breaches, including the
cost of investigating and resolving the breach, as well as potential legal and regulatory fines
(IBM, 2019). Additionally, retailers may also face financial losses due to a loss of customer trust
and business following a data breach (PwC, 2018). Another issue caused by concern about
security of data is the potential for reputational damage. Retailers' reputation can be significantly
damaged if they are unable to protect customer data, leading to loss of customer trust and a
decline in brand reputation (Forbes, 2019). This can be especially damaging for retailers who
rely on customer trust to drive business.

- Rising costs
Retail margins may be under strain due to growing transportation and product costs. Retailers
may find it difficult to maintain their competitiveness in a price-sensitive market as a result. For
instance, it may be challenging for retailers to pass on higher prices to customers without losing
market share if raw material costs rise. The profitability of merchants who depend on lengthy
supply chains or who ship goods to clients in several locations can also be impacted by growing
transportation costs. The cost of goods and transportation may be rising, putting pressure on
retail margins. This can make it challenging for retailers to remain competitive in a cost-sensitive
market.

- Adopt Sustainable and ethical practices

Retailers are under increasing pressure to adopt sustainable and ethical practices throughout
the supply chain. Consumers are becoming more aware of the environmental and social
impacts of the products they buy and are demanding that retailers take action to address these
issues. According to a study by Accenture, 72% of consumers are willing to pay more for
sustainable goods (Accenture, 2018).
3.0 RECOMMENDATION

- Implement blockchain technology

Blockchain is where all data and information are shared in one digital shared ledger.
This technology is decentralized, transparent, open source etc. Blockchain technology
is more accurate because, once the data has been recorded, it cannot be edited without
the consent of all involved parties. As a result, more accurate data will be used and can
lower down the chance of uncorrect data usage (Dutta et al., 2020). It is also more
transparent because it uses a digital ledger through which every party can access the
information. The example of blockchain usage is Internet of Things (IoT). IoT is where
every manufacturer, components, embedded computer and raw material are linked to
the network. The company can monitor the production output, stock inventory and can
detect any faults occurring in the production. If the blockchain technology is applied to
the supply chains, every party can control their inventory and production, moreover, can
monitor their supplier and customer stocks. This will make the supply chain more
efficient due to information each party knows (Dutta et al., 2020).

- Only store the customer data that you need

The golden rule for data storage is to never keep more than you require to run your
organization effectively. But there are a lot of things to think about when determining
what it means specifically for you. It's crucial to carefully design a company's philosophy
to balance customer experience, business convenience, and security, in particular given
the proliferation of data privacy rules.

- Diversified supplier base

A retail firm might look into prospective new suppliers and evaluate their capacities,
dependability, and capabilities in order to diversify its supplier base. This might entail
negotiating contracts, performing due diligence, and visiting the suppliers' facilities.
Lead times, shipping expenses, and any possible hazards or difficulties posed by
dealing with the new supplier should all be taken into account by the business. A retail
firm that previously purchased all of its goods from a single Chinese supplier could seek
to broaden its supplier network by bringing on more international partners. This may
apply to vendors from India, Southeast Asia, or other places.

- Build up inventory
A retail organization may use demand forecasting to establish how much inventory of
important items it will require to fulfill demand during times of disruption. Afterwards, the
business may engage with its suppliers to create and deliver the required product
quantities. Striking a balance is crucial, though, since keeping too much inventory may
be expensive and result in waste if things do not sell as anticipated. For example, in
order to prepare for potential interruptions, a retailer that depends on just-in-time
inventory management may elect to stockpile essential items. To guarantee that it has
adequate stock to fulfill demand during the COVID-19 pandemic, a firm that sells
personal protective equipment (PPE) can opt to boost the amounts of face masks and
hand sanitizer in its inventory (Hodges, 2022).

- Implement a task force of marketing and supply chain

A seamless supply chain can only be obtained if both parties have a clear idea on what
their independent objectives are. It is not uncommon for supply chains to crumble under
the weight of unhinged marketing attempts to bring in traffic. However, this relationship
can erupt a symbiotic reliance which will not only produce symmetry and smooth
management, but it can also achieve a logistical excellence that can trump other
competitors. Supply chain is integral in any business and with the proper knowledge
and expertise, this harmonious relation can only strengthen the company’s goals.

- Acquire a Third Party Logistics company

A third party or even a fourth party logistics integration is essential to prevent any
unwanted future breakdowns in the supply chain flow. All the successful and well
established heads in the retail industry worldwide implement such an idea. Mishaps,
human errors, miscalculations, far -fetched forecasts are the norm of the industry. It only
makes reasonable sense to hire other parties to dampen such ordeals and ultimately
paint a good reputation of reliability to the masses.
- Ensure the order management is done in proper succession
When it comes to ordering, receiving, storing inventory and other miscellaneous items.
It is important to consider when and where such products will be held. A smooth and
reliable supply chain requires a standardized system where all the items are well kept
within a specified time. Proper timing is integral, customers rely upon consistency of
quality, therefore, a record needs to be brushed up upon on every product, time wise,
location wise, vehicle wise and so forth.

- Emphasize a standard throughout the supply chain

A standardized means to a supply chain management, is the defining point between a
successful supply chain and a debilitating one. Each component in the supply chain
must know what their respective obligations and goals are, without proper information
distribution and understanding of their own roles will result in a sloppy supply chain
rhythm which will be the downfall of any industry. Daily meetings must be held to keep
each party on their toes to ensure that a day to day management can be achieved
without any hitches.

- Garner customer loyalty

Provide an incentive that can garner and nurture customer loyalty. This helps improve
customer relations and promotes future traffic as well as maintaining the circulation of
regular customers. Customers are always on the look out for differentiations between
their intended choices, therefore, creating an incentive will help nudge them in the right
direction while influencing their future endeavours in the company. Loyalty programs
such as discounts, bulk deals and so forth help customers to gain traction in what their
ideal choice for their purchases will be.
4.0 RETAIL INDUSTRY DISRUPTION

The retail industry has undergone significant disruption in recent years, driven by the rise of
e-commerce and new technologies. One of the most notable examples of this disruption is the
rise of online marketplaces like Amazon, which have made it easier for consumers to purchase
goods from the comfort of their own homes. According to a report by eMarketer, Amazon
accounted for 39.1% of all e-commerce sales in the United States in 2020, demonstrating the
company's significant impact on the retail industry (eMarketer, 2020).

The convenience of online shopping has led to a decline in foot traffic and sales for physical
stores, forcing many to close or adapt their business models. According to a report by Coresight
Research, over 9,000 physical stores closed in the United States in 2019, with many retailers
filing for bankruptcy as a result (Coresight Research, 2019). This trend is likely to continue as
more consumers turn to e-commerce for their shopping needs.

Furthermore, E-commerce companies have also used data and technology to personalize the
shopping experience and offer more convenient delivery options. Personalized
recommendations and targeted advertising, for example, have allowed e-commerce companies
to better understand and meet customer needs. A study by Accenture found that personalized
recommendations can lead to a sales lift of up to 29% (Accenture, 2016). The use of
technologies like virtual and augmented reality in retail also help in giving an immersive
experience to the customers.

Moreover, social media and influencer marketing have also played a role in retail disruption by
giving consumers new ways to discover and learn about products. A report by Mediakix found
that the influencer marketing industry was valued at $6.5 billion in 2019 and is projected to
reach $15 billion by 2022 (Mediakix, 2019). Consumers are increasingly turning to social media
influencers for product recommendations and reviews, rather than traditional advertising
methods.

In addition, the increasing popularity of subscription services, such as Birchbox or Dollar Shave
Club, has also disrupted traditional retail models by creating a new way for consumers to
purchase and receive products on a regular basis. According to a report by McKinsey,
subscription e-commerce revenue in the United States is expected to reach $18 billion by 2022
(McKinsey, 2018), as more consumers opt for the convenience and predictability of recurring
deliveries.

On the other hand, the use of artificial intelligence and machine learning in the retail industry
has been on the rise. A recent study published in the Journal of Retailing and Consumer
Services, titled "Artificial intelligence in retail: Current status and future prospects" (Cheng,
2021) found that AI-driven technologies such as chatbots and virtual assistants have been
increasingly used in customer service and sales, and are expected to become even more
prevalent in the future.

In conclusion, the retail industry has undergone significant disruption in recent years, driven by
the rise of e-commerce and new technologies. Online marketplaces like Amazon have made it
easier for consumers to purchase goods, leading to a decline in foot traffic and sales for
physical stores. Personalized recommendations and targeted advertising, social media and
influencer marketing and the increasing popularity of subscription services have also played a
role in retail disruption. The advent of new technologies like AI, VR and the use of chatbots and
other AI-driven technologies in customer service and sales is also one of the disruptions in the
retail industry. As technology continues to evolve, it is likely that we will see even more
disruption in the retail industry in the future.
 REFERENCES

Timotius, E., Sunardi, O., Soenandi, I. A., Ginting, M., & Sabin, B. (2022). Supply chain
disruption in time of crisis: a case of the Indonesian retail sector. Journal of International
Logistics and Trade, 20(2), 78–101.

Pandiyan, V., Ya, S., Harun, S., Ali, N. M., & Muhamed, A. A. (2022). Supply Chain
Logistic Management. Selangor: MLSCA Asian Academy.

Fernie, J., & Sparks, L. (2009). Retail logistics: changes and challenges. In Logistics &
Retail Management: Emerging issues and new challenges in the retail supply chain (3rd ed., pp.
20–35). London: Kogan Page.

Dutta, P., Choi, T.-M., Somani, S., & Butala, R. (2020). Blockchain technology in supply
chain operations: Applications, challenges and research opportunities . Transportation Research
Part E, 142, 5–22.

Forslund, H. (2015), "Performance management process integration in retail supply

chains", International Journal of Retail & Distribution Management, Vol. 43 No. 7, pp. 652-670.

Alzaidi, M. S. (2022). The role of trust and privacy concerns in using social media for
e-retail services: The moderating role of COVID-19. Journal of Retailing and Consumer
Services, 68, 2.

Su, J., Hodges, N.N., Wu, H.(J). and Iqbal, M.A. (2022), "Coping with the COVID-19
pandemic: evidence from the apparel industry in Bangladesh and China", Journal of Fashion
Marketing and Management, Vol. 51 No.3.

Butt, A.S. (2022), "Building resilience in retail supply chains: Lessons learned from
COVID-19 and future pathways", Benchmarking: An International Journal, Vol. 29 No. 10, pp.
3057-3078.

Wright, O., & Blackburn, E. (2021). The consumer goods value shakeup. Accenture.
Retrieved January 14, 2023, from https://www.accenture.com/_acnmedia/
PDF-161/Accenture-New-Epicenters-Consumption-CPG-Wave-9-Survey.pdf
 Butt, A.S. (2022), "Understanding the implications of pandemic outbreaks on supply
chains: an exploratory study of the effects caused by the COVID-19 across four South Asian
countries and steps taken by firms to address the disruptions", International Journal of Physical
Distribution & Logistics Management, Vol. 52 No. 4, pp. 370-392.

Hassija, V. (2019). A Survey on IoT Security: Application Areas, Security Threats, and
Solution Architectures. Digital Object Identifier, 7, 24.

Carina, A. (2021). Applying Industry 4.0 Technologies in the COVID-19 Sustainable

Chains. International Journal of Productivity & Performance Management, Vol, 70, 5.

Gao, D. (2022). Value of Information Sharing in Online Retail Supply Chain Considering
Product Loss. Technology Management Council, 69, 5.

Hader, M. (2020). Blockchain Technology in Supply Chain Management and Loyalty

Programs : Toward Blockchain Implementation in Retail Market. International Colloquium of
Logistics and Supply Chain Management, 13, 2.

Chen, J., & Wang, D. (2017). Employee turnover in retailing: An examination of

antecedents and consequences. Journal of Retailing and Consumer Services, 34, 1-10.

Turban, D. B., & Greening, D. W. (2018). Corporate social performance and

organizational attractiveness to prospective employees. Academy of management journal,
40(3), 658-672.

Griffeth, R. W., Hom, P. W., & Gaertner, S. (2019). A meta-analysis of antecedents and
correlates of employee turnover: Update, moderator tests, and research implications for the next
millennium. Journal of management, 26(3), 463-488.

Verhoef, P. C., Noordhoff, C. S., & Sloot, L. (2022). Reflections and predictions on effects
of COVID-19 pandemic on retailing. Journal of Service Management, 2(4).
Alzaidi, M. S. (2022). The role of trust and privacy concerns in using social media for
e-retail services: The moderating role of COVID-19. Journal of Retailing and Consumer
Services, (68)4.
Youssef, M.A.E.A., Eid, R., Agag, G., 2022. Cross-national differences in big data
analytics adoption in the retail industry. Journal in Retailing Consumer Service 64(6).
 Liu, P., Li, M., Dai, D., Guo, L., 2021. The effects of social commerce environmental
characteristics on customers’ purchase intentions: the chain mediating effect of
customer-to-customer interaction and customer-perceived value. Electron. Commer. Res. Appl.
48 (7)

Beckers, J., Weekx, S., Beutels, P., Verhetsel, A., 2021. COVID-19 and retail: the
catalyst for e-commerce in Belgium? Journal in Retailing Consumer Service 62(4).

Rana, S.M.S., Haji-Othman, Y., Osman, A., Bahari, A.B., Safizal, A. and Solaiman, M.
(2015), “Supply chain strategies and retail supply chain efficiency”, Australian Journal of Basic
and Applied Sciences, Vol. 9 No. 4. 69(3).

Shen, Z.M. and Sun, Y. (2021), “Strengthening supply chain resilience during COVID-19:
a case study of JD.com”, Journal of Operations Management, (1)25.

Paul, S.K., Chowdhury, P., Moktadir, M.A. and Lau, K.H. (2021), “Supply chain recovery
challenges in the wake of COVID-19 pandemic”, Journal of Business Research, 136(320).

Liu, J., Hu, H., Tong, X. and Zhu, Q. (2020), “Behavioral and technical perspectives of
green supply chain management practices: empirical evidence from an emerging market”,
Transportation Research Part E: Logistics and Transportation Review, Vol. 140, p. 102.

Pujawan, I.N. and Bah, A.U. (2022), “Supply chains under COVID-19 disruptions:
literature review and research agenda”, Supply Chain Forum: An International Journal, 23(6).

Watanabe, N.M., Kim, J., Park, J., 2021. Social network analysis and domestic and
international retailers: an investigation of social media networks of cosmetic brands. Journal in
Retailing Consumer Service, 58(4).

Randall, W.S., Gibson, B.J., Defee, C.C. and Williams, B.D. (2018), “Retail supply chain
management: key priorities and practices”, The International Journal of Logistics Management,
Vol. 22 No. 3.

Swanson, D. and Santamaria, L. (2021), “Pandemic supply chain research: a structured

literature review and bibliometric network analysis”, Journal of International Supply Chain,
Logistics, Vol. 5 No. 7.