Supply Chain Management December 2026
Q.1: A leading global apparel retailer is facing frequent stockouts and excess inventory because its supply chain was designed mainly for cost efficiency, with centralised warehouses and long replenishment cycles. However, customers now expect high product availability and faster delivery. The company is therefore considering a shift towards a more agile and responsive supply chain.
Apply the Strategic Fit Framework to redesign the retailer’s supply chain so that it better supports its competitive strategy. In your answer, recommend suitable changes in supply chain configuration, technology adoption, and cross-functional collaboration to improve responsiveness, product availability and customer service.
Answer:
Introduction:
One of the largest retailers of apparel in the world is operating in the market environment involving constantly changing customer preferences, short product life-cycles and rising customer expectations in terms of availability of goods in the right time and place. The current supply chain of the retailer is designed according to the principles of cost-efficiency which are achieved through the means of centralized warehousing, production in large batches and long replenishment cycles. However, while such supply chain configuration enables the firm to limit its transportation and operational costs it leads to the stock-outs of the most popular items as well as overstocking of those products for which the demand unexpectedly decreases. The resulting pressure on the markdowns, storage costs and loss of sales can be substantial. According to the concept of Strategic Fit, the supply chain design should be consistent with the competitive strategy of the firm and the needs of its customers.
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Q.2 (A): An e-commerce company aims to provide same-day delivery in both urban and rural areas. It uses AI-based route optimisation, regional hubs and local delivery partners. However, the company faces challenges in balancing delivery speed, cost, environmental impact and access for underserved customers.
Evaluate the effectiveness of the company’s distribution strategy in balancing operational efficiency with social and environmental responsibility.
Answer:
Introduction:
More and more e-commerce companies are competing based on the speed of delivery, with same-day delivery becoming an expected norm for both urban and rural customers. But such a strategy may lead to higher transportation costs, increased fuel consumption, traffic congestion and carbon emissions, with hard-to-reach customers still being a challenge to satisfy. The company’s decision to employ AI-based route optimisation, regional hubs and local delivery partners seems to be a good attempt to address these issues. But how successful has the strategy been? An analysis of its performance will be based on the factors of operational efficiency, cost-effectiveness, environmental impact and the capacity to serve hard-to-reach customers reliably.
Q.2 (B): A large online grocery retailer operates warehouses across different regions in India. It currently keeps safety stock at each location, but rising costs have led management to consider centralising safety stock at regional distribution centres. While centralisation may reduce inventory costs, it could increase lead times and transportation costs for some customers.
Evaluate the multi-location and centralised approaches to safety stock management and recommend a suitable approach for the retailer.
Answer:
Introduction:
Safety stock refers to extra stock that a retailer keeps on hand to guard against uncertainties in demand, supplier lead times or transportation. This is of particular relevance to a large online grocery retailer that operates warehouses all over India. There is a lot of fluctuation in demand for groceries and most products have a short shelf life. The retailer can either keep safety stock in all warehouses or keep a larger amount centralized in regional distribution warehouses. Both strategies have their pros and cons pertaining to inventory cost, customer service, transportation and responsiveness.