Supply Chain Management - Retail Market in China

Wastons Supply Chain Management

Global Operation: Coureswork

Wenjie Zhou

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Table of Contents

Introduction        

Retail Market in China        

Goal of the assignment        

Wastons        

Literature Review        

Relationship marketing theory        

Network theory        

Transaction cost theory        

Watsons case study        

Information system for supply chain management        

Operational issues        

Management of own brand product        

Conclusion        

Reference        

Introduction

This assignment outlines how operation management brings success in delivering good products and service effectively and efficiently in China's fast-changing economic growth. Operation management is a major part of maximisation of profit and value. It also focuses on the importance of supply network and sourcing arrangement use in the organisation to differentiate itself in the competitive market. I have chosen Watson to prepare the essay on competitive operation management.

Retail Market in China

China has the second largest retail market in the world, with the US taking first place (MOFCOM). This Chinese retail market is rapidly growing and significantly lucrative. China's retail sales reached 12.5 trillion RMB (1.8 trillion US dollar) in 2009, and this number was increasing by approximately 15% per year by 2011(Lu). The primary driving factor for this growth is the constant growth of household income, as the per capita income in urban areas has tripled from ten years ago (Lu). With higher affluence due to the economic growth, higher quality and more unique products and services are required to meet consumers' demands.

However, the rate of increase for retail sales declined in 2014 and 2015, and dropped below the target (7.5%) for the first time since 1999 (Kantar Retail, 2014). The difficulties of maintaining growth in sales and profits increased for both retailers and manufacturers in 2014, which means that the Chinese retail market is reaching a tipping point. Therefore, the economic, retail and also the new digital environment are causing the market to undergo an evolution. This has brought not only severe challenges but also tremendous opportunities for retailers and manufacturers. To take the greatest advantage of such a market condition, retailers have tried to implement a different kind of operational management process for their business models. These operational management decisions could lead to several problems.