Introduction
Current challenges faced by Myer Holdings Limited are mainly caused by restrictions imposed on businesses and changes in customer behavior due to the COVID-19 pandemic. The company experienced poor sales, which is why it closed all its stores from March 2020 to May 2020 and focused on transitioning to the online marketplace (IBISWorld, 2020). An increase in online orders has presented a challenge of order fulfillment. An establishment of an online presence has also urged the company to improve its outbound logistics to ensure that customers can receive their online orders. Further, during the pandemic, supply chains are inevitably disrupted, making it vital for businesses to help them recover as quickly as possible (Chowdhury et al., 2020). Thus, Myer has also faced the issue of improving its inbound logistics in response to disruptions. Finally, due to a decrease in revenue, Myer is presented with the challenge of reviewing its customer service and store footprint (IBISWorld, 2020). In other words, Myer focuses on re-evaluating its operations strategy.
Disadvantages of Current Practices
Involvement in e-business requires companies to adjust their operations in order to meet customers’ expectations. There are two main features of online commerce: a company’s website and order fulfillment, which are equally important (Stevenson, 2014). Myer created its new website in 2018, allowing customers to view and order company products (IBISWorld, 2020). As for order fulfillment, Myer’s approach seems to be in need of improvement. Order fulfillment comprises several procedures, including order processing, inventory management, billing, warehousing, packing, shipping, and delivery (Stevenson, 2014). In online business, companies have to deal with demand fluctuations, ensuring that customers will receive their purchases even when demand peaks. Myer coped with an increased demand on Easter in April 2020 by rehiring 2,000 of its 10,000 workers that were stood down (IBISWorld, 2020). As the company is embracing e-commerce, it should make sure that its order fulfillment strategy is fit for increased online demand.
The company has taken specific measures to improve its order fulfillment and outbound logistics. In 2020, it made a Third-Party Logistics (3PL) arrangement by partnering with Australia Post (Myer, 2020). According to this agreement, Australia Post will provide Myer with warehouse and fulfillment services. Involving third-party in the company’s operations has certain advantages, such as efficiency and access to advanced technologies (Stevenson, 2014). Furthermore, outsourcing logistics reduces retailers’ costs of equipment maintenance and labor (Buldeo Rai et al., 2019). However, it also has disadvantages that may undermine the firm’s image and performance. First, the company has weak control over its logistic operations outsourced to a third party (Khan and Yu, 2019). Second, the success of 3PL highly depends on relationships between a third party and the outsourcing company (Buldeo Rai et al., 2019). If the relationship is poor, it may result in the inefficiency of logistic services. Thus, by involving Australia Post in its outbound logistics, Myer risks receiving inefficient logistics services and losing control over order fulfillment.
Myer seems to have re-evaluated its operations strategy to make it fit the e-commerce context. Operations strategy may involve decisions related to product or service design, capacity, inventory, scheduling, supply chains, and others (Stevenson, 2014). Myer reviewed its service design by offering its customers the option of click-and-collect delivery (IBISWorld, 2020). This is a common and viable option, and it is more cost-effective than home delivery (Buldeo Rai et al., 2019). However, when ordering online, customers prefer home delivery rather than picking their orders in stores (Buldeo Rai et al., 2019). Therefore, Myer would benefit from developing an operations strategy that would include an option of home delivery.
Further, although e-commerce is an attractive direction for Myer’s business growth, the company should not allocate all its attention to the online marketplace. According to Davis-Sramek et al. (2020), retailers transferring to the Internet environment may be subject to channel cannibalization after experiencing online sales growth. Myer has demonstrated a strong growth in online sales, which increased by 105.7% in 2019-2020 (IBISWorld, 2020). However, this success should not distract the company’s attention from developing its physical stores.
Conclusion
Finally, inbound logistics also needs improvement due to disruptions caused by the pandemic. Chowdhury et al. (2020) argue that the best practices to maintain supply chain resilience include relying on more than one brand, cooperation between managers and personnel, ordering more volume, and communication with the delivery personnel. In this regard, Myer’s advantage is the dependence on multiple brands in each of its product categories (IBISWorld, 2020). However, the company has to ensure that the suppliers are able to provide the necessary quantity of goods in demand by adjusting payment terms and delivery appointment scheduling, among others.
Reference List
Buldeo Rai, H. et al. (2019) ‘Logistics outsourcing in omnichannel retail: state of practice and service recommendations’, International Journal of Physical Distribution & Logistics Management, 49(3), pp. 267-286.
Chowdhury, T. et al. (2020) ‘Enhancing supply resilience in the COVID-19 pandemic: a case study on beauty and personal care retailers’, Modern Supply Chain Research and Applications, 2(3), pp. 143-159.
Davis-Sramek, B. et al. (2020) ‘Examining retail business model transformation: a longitudinal study of the transition to omnichannel order fulfillment,’ International Journal of Physical Distribution & Logistics Management, 50(5), pp. 557-576.
IBISWorld (2020)Myer Holdings Limited.
Khan, S.A.R. and Yu, Z. (2019) Strategic supply chain management. Cham: Springer Nature.
Stevenson, W. J. (2014) Operations management. 12th edn. New York, NY: McGraw-Hill Education.