ASSESSMENT 2 – GROUP REPORT DECATHLON VIETNAM SUPPLY CHAIN MGT

OMGT2085: INTRO TO LOGISTICS AND SUPPLY CHAINMGT LECTURER: Dr... Additionaly,Decathlonisoneofthelargestsportingproductsretailersintheglobalmarket,thus,the companyhasastrongcorecompetence

OMGT2085: INTRO TO LOGISTICS AND SUPPLY CHAIN

MGT LECTURER: Dr Irfan Ulhag

ASSESSMENT 2 – GROUP REPORT

DECATHLON VIETNAM SUPPLY CHAIN MGT

GROUP: SGS04-8

GROUP MEMBERS & STUDENT IDS:

Oach Trong Tri – s3817876 Pham Anh Thu – s3817956 Nguyen Hoai Uyen Phuong – s3817690

Le Kim Chi – s3817951

Vu Viet Hoang – s3821856

WORD COUNT: 4085

of contribution

occurswhentheoriginofthematerialusedisnot appropriatelycited.

EnablingPlagiarism istheactofassistingoralowinganotherpersontoplagiarizeortocopyone’swork;

thisisnotacceptableandisalsosubjecttopenalty

Furtherinformationrelatingtothepenaltiesforplagiarism,whichrangefrom anotationonyourstudentfiletoexpulsionfrom theUniversity,iscontainedinRMITStaute6.1StudentDiscipline(seeAppendixinStudentGuideorconsultTuring.)

aboutthet-Furthemore,thisreportalsoidentfiesthepotentialissuesorchalengesthataffectedthebusiness'ssupply chainduringoperationandintheCOVID-19pandemicthatDecathlonVietnam hastoface.Additionaly,

providesomerecommendationsforDecathlontosolvetheseproblemsinthissituation

Additionaly,Decathlonisoneofthelargestsportingproductsretailersintheglobalmarket,thus,the

companyhasastrongcorecompetencetoimprovethebusinessgrowth.Particularly,Decathlonappliedits ownR&D inordertoreducetimetomarketcomparedwithcompetitorsandalsocooperatewithDHLto

distributeproductsforothercountries.Besides,Decathlonappliedapushstrategyfort-shirtproductsin thesupplychaintoachievetherequirementofcustomers

Thecompanyisheadedtowardalong-term relationshipandcolaborationwithsuppliers.Moreover,

beforebuildingrelationships,suppliershavetosatisfythestandardofDecathlon’srequirements.Thus,it helpsthecolaborationbetweenDecathlonandsupplierstocreatethebestpossiblevalueforthesupply

EXECUTIVESUMMARY 4

INTRODUCTION 6

INDENTIFYSUPPLYCHAINPROCESSESSELECTED 6

I Supplychainchannelmap 6

1 Productflow 6

2 Informationflow 7

3 Financiaflow 7

II MajoractvitiesofLogistics 8

1 DemandManagement 8

2 ProcurementManagement 9

3 ProductionManagement 9

4 InventoryManagement 10

5 DistributionManagement 10

DISCUSSIONA 11

1 CoreCompetenceofTheSupplyChain 11

2 Pul& PushStrategies 12

3 ExistingRelationshipbetweenSupplierandBuyer 12

4 TechnologyChanges/Disruptions 13

DISCUSSIONB 14

1 COVID-19Pandemic: 14

2 Forecastaccuracyandeffectiveinventorymanagement 15

3 Thelackofqualfiedhumanresources: 16

CONCLUSION 17

REFERENCES 18

APPENDICES 22

DecathloncompanyisaFrenchsportingproductsretailerwith1543storesand90.000team membersin53countries.ThecompanyisknownforownmanycommonbrandsaboutsportgoodssuchasKenlenji,

QuechuaandDomyos(Decathlon,n.d.).ThepurposeofDecathlonistomakesportscanapproachtoas manypeopleaspossible.Toaccesscustomers,Decathlonhasmanyproductlinessuchasshoes,t-shirt, backpack,swimsuit,etc(Decathlon,n.d.).Additionaly,DecathlonexpandedtoVietnam in1995and rankedthesecondbiggestproductionwithmorethan100factoriesinVietnam.Apartfrom online launchesin2017,DecathlonwilopentwomajorstoresinHanoiandHCM citywithaimstobringmore benefitofsportforVietnameseconsumersandcreateapositiveimpressioninVietnam (PSNews,2019).Supplychainmanagement(SMC)includingmovementmanagement,logisticschannels,logisticssysteminsupplychain(Anca,2019)inordertoincreasethevalueofcustomersandcompetitiveadvantage (Robert,2020).Decathlonhasover40yearsofexperienceinproducingsportgoods.Nevertheless,the companyalsohassomemajorcompetitorssuchasNike,Adidaswhichalsoprovidesportsclothesin Vietnam thatleadingtocustomersdemandcaneasilychange.Hence,Decathlonneedstoanalysethe supplychainmanagementandimprovethebrandawarenesseffectively.Morethanthat,DecathlonalsohasaB2Bstrategywhichmeanscombinedwithe-commercesuchasShopeeandLazadatohelpcustomers

supplychainmanagementalsoconcernscustomers'return.InthecaseofDecathlon,afterbeingproduced bythemanufacturerinVietnam,theproductswilbedeliveredtotwokindsofwarehouses.Thefirstone isCACwarehousewhichisacontinentalwarehouselocatedinMalaysia,goodsfrom thiswarehousewil bedeliveredtoothercountriesintheSoutheastAsianregion.ThesecondoneisCARwarehousesin

Vietnam,thesewarehousesarenamedregionalwarehouses.DecathlonVietnam producesanddistributes productsdirectlytothesewarehouses,althedistributionstotheseCARsandCACaretheresponsibility ofDHLGlobalForwardingwhichisastrategicpartnerofDecathlon.Besides,DecathlonVietnam also hasaflexibilitypolicyofproduct’sdistributionthroughpartnered-clubsorcoffeeshops,enabling customerstohavemorewindowsofdistribution’smethod.Moreover,from theviewofe-commerce,the productscanbedistributedthroughtheofficialwebsiteorecommerceplatformslikeShopeeandLazada

workingcapital,whichsignficantlyconstitutesthefluctuationinDecathlon'sfinancialflowandthe declineinrevenue.Totacklethisadversesituationandrebuildaconsistentfinancialflow,Decathlonis nowminmizingitspurchasesbyabout€1bilionandcutingcapitalexpenditure(CAPEX)toabout€400

ApplyingtoDecathlonVietnam,thatcanmakecompanyidentifythemarket,predictthedemand-drivers ineachsectionandmanagethetrendofdemandinthefuture(Wiliam n.d.).Asmostclothingfrom

demandinordertoreducethedemandvacilation(SmartRecruitern.d.).Furthemore,chalengesfor

Decathlonareforecastingthedemandandinventorymanagement.TheCPFRmodelisacomplete

cooperationstrategyforbusinessesbypromotingdemandforecastingandplanningactivitiestoreducethe

inventoryandimprovetheforecastdemandingoods(David& Raj2014).Therefore,CPFRcansupport

Decathlontoovercomechalengesinforecastproductsbyseasonalandmanagetheinventorylevels

2 ProcurementManagement

Atitscore,procurementinlogisticsandsupplychaininvolvestheprocessesofsourcingandpurchasing therawmaterialstoproducegoodsandserviceswiththeaim ofdistributingthem tofinalcustomers (Christopher2016).Notonlysupportingdailybusinesstasksandcomplexdecision-makingprocesses, procurementalsosupportsthecompanyinefficiency,effectivenessandprofitabilitythroughtherolesof strategicsourcingandpurchasing(Bienhaus& Haddud2018)bymaintaininghealthyrelationshipswith theirsuppliers(Bastholm & Munksgaard2020)

workonthefield,directlyinordertocontrolpartners’qualityfrom

rawmaterialstofinalproducts (DecathlonVietnam n.d.).

Ontheotherhand,besidescommitmenttopurchasemassquantitiesfrom subcontractors,Decathlonhas welestablishedalong-term relationshipwitheachofitsstrategicpartners,withthemajorityofthem winning5to10yearslengthofservice(Decathlon2016).NotonlydidDecathlonenjoytheeconomyof

scalebutalsotheeconomyofscopeoncethecompanyhaslaunchedtheB2Cmodel.Withconsistencyin

qualitycontrolandloyalpartnership,DecathlonoveralandDecathlonVietnam particularly,couldindeed enjoythelowpricedbuthigh-qualityproducts

4 InventoryManagement

Inventorymanagementisapartofsupplychainmanagementthatisacontinuingprocessofplanning, organizingandcontrolinginventorylevelofrawmaterialsorWIPandfinishedgoodsinorderto

minimizetheinventoryinvestmentandmaximizecustomerservicewhilebalancingdemandandsupply (Singh& Verma2018).WiththeimpactofCovid-19leadingtotheuncertaintyindemandandsupply,itis

essentialtoholdacertaininventorylevelin-handinstoragefacilities,neithersurplusnorshortage,to adapttothequickchangingdemandandprovideadequateservicetothecustomers(Tsang2020).In

Decathlon,itisnowdeployingtwotypesofwarehouses,namelyCARandCAClogistics,whichisa

chalengeincontrolingandmaintainingtheflowandlevelofinventoryaccuratelythroughoutthesupply chain.AnineffectiveinventorymanagementwilcauseDecathlonhigherlogisticscosts(shippingcost, inventorycarryingcostandin-transitcost);andmostimportant,poorercustomerservice.Therefore,to manageinventory,DecathlonhasbeenacquiringtherobotusingRFIDtechnologytoinspectthestock

levelthroughoutitsstore,thensendthesedatatoeverydepartmentinthesupplychain(Berthiaume2020) ThisalowsDecathlontohaveconsistentprogrammaticreplenishmenttoensureitsshelvesalwayshave sufficientstocksforfulfilment

Furthermore,DecathlonalsoimplementsJust-In-Time(JIT)inventorysystem toreducetheproduction stagesandminmizetheinventorycost.Inparticular,JITstrategyistosynchronizeDecathlonproduction scheduleswithrawmaterialordersfrom itscontractsuppliers,sothatDecathloncanorderexactlywhatit needsforconductingtheproductionprocess(Carlson2019).However,JITleadstotheincreaseinthe relianceontheconsistencyofitssuppliers,thismayputDecathlonunderadversesituations,suchasstock-out,whensuppliersstrugglewithunexpectedrequirementsin-bulkorgoesbankrupt,especialyinthe contextofCovid-19pandemic(Barlow2015)

5 DistributionManagement

Distributionmanagementisdefinedasaprocessofmanagementofgoods'movementfrom thepointof

productiontotheendofconsumption,whichcomprisesadiversityofcomponentsinanintegratedsupply

chainsuchaspackaging,warehousing,inventory,andlogisticstomeetcustomersatisfaction(Alanetal., 2010).Effectivedistributionmanagementisafundamentalroleindeliveringtherightproductstotheright locationattherighttimewithanaffordablecost(Andra,2020).Hence,thefirmscanenhancecompetitive

operatesthemostefficientmultinationalsupplychainthatsupportsDecathlonintransportingsporting

productstovariouscountriesthroughtheair,seaandroadfreightservices.DuringCOVID-19,Decathlon

hasfacedsomechalengesinmeetingthechangeincustomerneeds.Hence,reducingtimetomarketisa

prioritysolutionforDecathlonandDHL.Door-to-moreserviceisthecriticaldistributionimplementation inDHL,whichsupportsDecathlonshortenstheshippingtimeonthemarketplaceandminmizesthe

alowingthefirm toperform effectivelyinfufilngcustomerordersaswelasenhancingthebrand

reputation(Dieteretal.,2009).BasedontheDecathlontalk,thefirm hasestablisheditsownR&Dcentre forgeneratingbrand-newproducts,whichisbeneficialtoshortenthetimeittakestomarketproducts, comparedtoothercompetitors.EspecialyintheR&Dcampus,thefirm alsohasalaboratoryfortesting

thesafetyandcomfortusageforcustomersininnovativeproductsunder"PassionBrands''.ForDecathlon Vietnam,thefirm takesadvantageofproductsmanufacturing,andproductionpartmadedirectlyby

DecathlonVietnam team;hencetheproductsareenabledtobedistributedtotheretailstoresinboth

HanoiandHoChiMinhfrom thecontractmanufacturers(BinhDuong).Intermsofdistributionstage,

Decathlonhaspartneredwiththe3PLcompany,DHLGlobalForwardingfordistributingtheproducts

acrossthediversitynations(DHLn.d).Inlong-term operation,DHLoffersvariousservicesandleverages itstechnologysystem tosuitDHL'sspecficrequirementstoassistDecathlon'sconcentrationinthecore activitywhilestilimprovingservicelevelandcustomersatisfactionaswelasminmizingtheoperation cost

2 Pul& PushStrategies

Inanopenmarketsituation,theintegratedsupplychainsarerequiredtomodernizewithefficient

approachestoquicklyandeffectivelyadapttochangingcustomerneedstomaintainfurtherlong-term

benefitsandmotivatecompetitiveadvantages(Américo& Paulo,2018).InthecaseofDecathlon,thefirm appliedbothPushandPulStrategytoachievegoodperformanceinacustomer-focusedorientation.The

'PulStrategy’referredtoasthe‘MaketoOrderproductionapproach’,whichmeansthecustomerscan

purchaseproductswithaspecficrequirement.Conversely,‘PushStrategy’representedby‘MaketoStock productionapproach’isusedinanunpredictablenumberofcustomerorderscircumstance(Lean-Manufacturing-Japan,n.d)

Decathlonisoneoftheleadingcorporationsinthesportswearsectorandhasinnovatedinexclusive

Decathlonbrandingproductscaled'PassionBrands.'ForT-shirtproducts,Decathlonhasbeguntofocus on'Pushingsystems'tohaveavailablestocktomeetcustomers'needsinitslong-term plan.Decathlon'sT-shirtproductsareputintoproductioninmassproduction,whichassiststhefirm inproducinglarge

volumesinlesstimeaswelasminmizingunnecessarycost.Decathloncanreducelaborcostswiththe

massproductionprocessandutilizeefficientresources(Lacconveyors,2018).Furthermore,automation technolgyisimplementedtomanufacturestandardizedproducts,leadingtohigherproductivitylevelsfor Decathlon(Caroline,2020).Althougha'Pushbasedsystem'playsacriticalelementinenhancingfirm

efficiency,italsoforcesDecathlontofocusoninnovatingS&OPfordemandforecasting.TheforecastingfailurewouldbethecriticalchalengeforDecathlontopushtheproductsfrom rawmaterialtotheend

customers.Furthermore,Decathlonmustpushitsnewproductsthroughpromotionstoputproductsin

consumers'minds,avodinghighlevelsofinventories.Decathlonalsohasapromotionontheofficialwebsitetoofferaffordablepricestothecustomers

3 ExistingRelationshipbetweenSupplierandBuyer

Therelationshipbetweenbuyerandsupplierisassociatedwithcommercialtransactionsbetweensupply

ofgoodsandorganizationsforthepurchase(Waiganjo& Waithaka2015).Intoday'scompetitivemarket, colaborativebuyer-supplierrelationshipscanpromotesupplychainplayerstoworkmoreeffectivelyto improvequality,corporatecompetencyandorganizationalperformance(Ramanathan2014).However,

thereisstilachalengetomaintainalong-term relationshipbetweenbuyerandsupplier,especialywhen Decathlonhasbeencolaboratingwithmorethan100contractsuppliersinVietnam (Nhi2019),because

eachone(supplierandbuyer)generalyhasadifferentbusinessstrategyandgoal(Fernandopule2015)

InDecathlon,itmainlyseeksforlong-term relationshipswithsuppliers;especialy,afirm hasa

productionteam thatisresponsibleforday-to-daysuppliercommunicationtoexchangecustomers'demand informationsothatbothsideshavebeterunderstandingaboutnextorders(appendix1).Also,Decathlon sharesitsdesireswithsupplierstogeneratethebestpossiblevalueforsupplychainsbasedonrespect, trustandcolaborativedevelopment(Decathlon2018b).Asasupplier,beforeenteringintoarelationship withDecathlon,theirproductionfacilitieshavetomeetDecathlon'sstrictrequirementsviaregular

rawmaterialtothefinishedproductsoldtotheendconsumer,whichthenleadstohighercompany's

transparency(Sharma2020).From 2020,textilefactoriesmustcomplywiththerequirementsoffreetrade agreements(FTAs)onproductorigin,sotheapplicationofBlockchaininthesupplychainwouldgive

Decathlonmorecompetitiveadvantages,namelyhighertransparencyandcyber-security,thanits

competitorsintheVietnam market(Vietnamnews2020).Besides,theseamlessflowofinformation

createdbyBlockchaincanhelpafirm increasecontrolofaloperationsinthesupplychain,strictly

manageintermediaries,3PLprovidersandotherrelatedentities.Therefore,Decathlonwouldeasilydetect andcorectproblemsrelatedtoeachsteporelementoftheproduct

BigData:

Intoday'sera,todevelopabusiness,apartfrom capitalandhumanresources,"data"isconsideredan indispensableconstituent.However,withthefastpacedevelopmentindigitaldevices,socialnetworksand theInternetofThings(IoT),today'sdatavolumebecomesmoreexcessiveandcomplicated,about59

zetabytesin2020andisestimatedtotripleby2024(Statista2021).Thiscausestraditionaldata

processingtoolsandapplicationscannotexploitthefulpotentialofBigData(Taylor-Sakyi2016)

Nevertheless,bigdataincludesreal-timeinformationinthemarketthatenablesretailerstoreducethecost ofdeadstockandmakebeterpricing-decisionthantheircompetitors(Coy& Berry2017).Regarding

Decathlon,duetotheapplicationofRFIDtechnology,whichusesradiowavestoreadandcapture

informationstoredonatagandtrackproductsatitem-levelthroughouttheentiresupplychain(Jiaetal 2012),Decathlon'sdailydatacolectionwilbecomemuchmoresignficant.Therefore,byanalyzing

enormoushistoricalonlineandofflinecustomertransactions,itwilbeapotentialopportunityfor

Decathlontostayaheadoftrendsincustomerbehaviorandinteractionstohavebeterdecision-making, especialyforthetextileindustrywhenclothingstandardsarechangingrapidly(Galea-Pace2020)

Moreover,integratingexistingcompanydataandnewinformationfrom BigDatawouldimprovethe

accuracyofdemand-drivenplanningandenhancethevisibilityfrom customerstosuppliers(Chase2013); especialy,thosearethegoalsthatDecathlonmentionedduringtheguestlecture.Overal,Bigdataisa potentialopportunitythatDecathlonshouldexploitinthefuturethankstoitsgreatapplicationsinthe logisticsandSCM.However,inordertodothis,Decathlonneedstohaveprofessionalanalystsand

moderntechnologiesinadvanced,whichcouldbechalengeforDecathlontoday