Supply Chain Management Assignment Analyzing Case of Woolworths
• This assessment of 2,500 (+/- 10%) words
• The aim of this supply chain management assignment is to allow students to review the concepts and theories of supply chain and investigate their application to real world settings
• You are required to choose an organisation as your case study. There are two options for this:
1. You choose the organisation where you work
2. You choose any other local (For ex. Australia Post, Woolworth) or multinational organisation (For ex. Amazon, Zara) as your case study, making sure that their details are available on web.
• You are required to describe and critically analyse the supply chain for your chosen organisation (or an appropriate element of it such as Purchasing, Distribution, Outsourcings, Reserve supply chain) and identify its current strengths and weaknesses.
Woolworths is one of the biggest supermarkets in Australia and has the largest number of stores in the country. This supermarket was found in the year 1924 and the initial tore was in the Sydney’s imperial Arcade. This supply chain management assignmenttalks about the how the company maintain its supply chain management and what other factors makes it one of the biggest supermarkets in Australia.
Background of the organization:
Woolworths was founded by Stanley Edward Chatterton. In the beginning the store was very small and from there it started growing to one of the biggest supermarkets in the country (Christopher, 2016). The company was initially incorporated with a number of 25000 shares in the beginning. The number of shares that was given to the normal public was 15000 but out of those only 11,707 shares got subscribed by the public which were friend of the promotor. Despite this downfall it began to go on to open stores as quickly as possible. The stores were a great success in the initial year it generated a dividend of 5% followed by 40% in the second year of operation and 505 in the third year which was remarkable in the supermarket industry. The company after the initial years began opening number of stores in each corner of the country.
Figure 1: Logo of Woolworths organization
Assessment of the current supply chain management of the organization:
Woolworths are giant super market that manages the supplies of the product through a diverse supply chain management. The company consists of more than 6000 supplier and these supplies to more than 3200 retail stores all over the region. The supply chain management of the company is very advanced and innovative as it predicts the need of the product in a store through a system of technology to make sure that no product is in shortage (Hugos, 2018). This is maintained by the collection of data, processing of data and evaluation of the data in a computerized form. This technology makes the smooth flow of products from the place of supplier to the ultimate store and the customer in the end. This efficient supply chain management has contributed inn the large growth in number of store and in the profitability of the company as well.
Figure 2: Supply chain management
Supply chain management is referred to as a process of smooth supply of goods and services. In other words, it is a process which also includes logistics management. We can define supply chain management as the process of making sure that right product is available to the right customer on right time through proper planning and execution of the product demand and supply. The flow of products starts from the manufacturer of the good to the seller of the goods to the user of good in a defined time as needed by the customer. Even though the size of wools worth is very huge it manages to keep smooth flow of goods all across the Australia in avery smooth and a well-defined manner. The company also supplies fresh fruits and vegetable to its customer. This is managed by using just in time approach by the company where the company makes a contract with the local dealer or supplier to supply fresh vegetable and fruit daily, so that they are fresh right from the farm and in many place the company has established their own warehouse and cold storage where vegetable and fruits are stored so that can be kept fresh to consume (Mangan&Lalwani, 2016). The company has worked very smartly by setting up different distribution center in many places. This distribution center act as an intermediary as they save time for transport to wide reach and also saves cost for the company. This is complemented by a very efficient transport system organized by the company.
Woolworthscompany use cost leadership in the initial stages but now a days the company is using cost differentiation strategy where it uses something that is still not available in other supermarket this makes it unique in the eyes of the customer and they make sure they continue to be unique by the way innovation and development. The company has its policies to makes sure that their customer gets the best product at most affordable price in market. This has led to higher revenue and higherprofitability in the recent years for the company. Woolworths has started the campaign of fresh food outlet in all oftheiroutlet where they provide fresh vegetable and fruits and that differentiates the company from its competitors (Stadtler, 2015). Woolworths has high revenue and large market capitalization from which it can influence the price that it negotiates from the supplier. This helps the company to procure goods a very low cost on which the company can further use gain higher profit margin. The benefit of good supply chain management makes the best product available of the customer at very affordable price which is the esteem goal of the organization. This easily availability builds a very long-term customer loyalty to the company. The supermarket contains a large variety of customer of all cast community and of all age and gender. There was an another tool that the company used in the reduction of the prices was the engagement of the local labor so that the wage payable becomes low and it had to incur lower expenditure on employee payroll expenses but this was not very successful for the company, so the management amendedthis and madearobust system for the employee recruitment and innovation (Seuring, 2013). One of the measures the company took to strengthen the supply chain management was forecasting the inventory required in the different warehouse using the technology and date science. Thus, however resulted in the overstocking some of the goods and products because the company was not able to correctly forecast the market demand and supply. The total number of employee ion the company comprise of around 7000 and out of these around 20% of the employee are engaged in the transport of goods and products and rest of them are either store staff or manager and some of them are in IT sector. As we discussed earlier in the presentation that the forecasting of the product went wrong and there was over forecasting of some of the products and in addition to these there were some of the miscalculations in the orders from specific stores which led to shortage of the products and services. This has led to large amount if wastage in the food department specially. Due to excess inventory the fruits and vegetable got ripen and outdated(Ahi& Searcy, 2013). These concernshave made the management more ready for any of the side effects of the supply chain and the management is trying to bring it down by the way of ensuring good IT team to looks after the forecasting of inventory in, many of the areas of supply chain management.
The efficient home delivery system is also taken into consideration by the company. Customer can come to store and buy the productswhich will be then delivered to their home address. This has benefitted the company to reach to wider customer base by making good amount to delivery to home. This convenient facility makes the best use time for both the company and the customer as it saves, time and cost for both. This has led to revenue generation and increase in the profitability of the company.
Identification of the strengths and weakness of the supply chain management:
Supply chain management is one of the pillars on which the company runs. The company profitability and revenue generation are based on the efficient supply chain management. Supply chain management is core competency of the retail supermarket. The company grows on this only when his supply chain management is into best run. The supply chain management can be evaluated so that the weakness can be turned into strength and the existing strength can be modifies into more of the benefits driving element (Pagell& Shevchenko, 2014).
Woolworth’s strength in the supply chain management is the delivery procedure. It makes sure that right product is available to right consumer through right deliverychannel in right time. This is one of the basic why the company has grown many folds in the current years. The strength of the supply chain management in the context supermarket is very thin. The suppliers have to be on his toes to supply the products and goods to the company also that the supply can be smooth and the company can earn revenue. This also makes sure that there is no shortage in the products, so that the company has not to face any kind of shortage from the customer and customer are also satisfied with the availability of the products. The strength of the supply chain management of the Woolworth is the negotiation ability of the company that makes the procurement easy for the company from the supplier (Fredendall& Hill, 2016).
Figure 3: Strengths and weaknesses of supply chain
(Source:Fredendall& Hill, 2016)
The supplier charges lower cost to the company due to its payment facility and thus the cost becomes low and there is higher profit margin of the products and goods. The distribution system of the company is also one of the strengths of the supply chain system. This makes fast delivery of the products to the neareststore; this saves time and cost to the company and thus this is best seen in time of immense demand then these delivery channel plays a very efficient roles in the delivery of products to the nearest store. The company makes sure that there are one delivery point intersection one or two stores such that the fact it can delivery in case of any shortage to other store as well. The innovative system to recognize the demand and need of a certain product also plays a very significant role in the success of the organization. The system recognizes the amount and location of the store which is in need of the product and thus it informs the nearest delivery station to make delivery in the prescribed stores.
This save time and cost for the organization and thus the company is able to meet the demand of the customer in no time. The other strength ofthe company is the warehouse and the cold chain facility that is setup by the company which makes the availability of fresh fruits and vegetable all around. This created the market of the company very wide. It reaches millions of customers every year satisfying their demand of the product in any store all over the country (Winter &Knemeyer, 2013).
The weakness in the supply chain management of the company is the fact that sometimes that data analysis fails in anticipating the demand of goods and service in a certain store which leads to shortage in the number of customer due to unavailability of the product and thus the company suffer due to bad IT services sometimes or so. Another weakness in the supply chain management is the management of the warehouse and cold chain facility,this led to increase cost of the company because it need working capital to maintain the workforce in the warehouse (Golicic& Smith, 2013). This is one of major drawback that has led to reduce profit for the company.
The home delivery facility also sometimes leads to wrong delivery or delivery of wrong products and this causes to make a bad impact for the company in the eyes of company. This leads to increase cost and also hamper the brand image as well. This makes it hard for the company to revive from the bad image due to lack of proper managing of the supply chain management. Sometimes in someof the warehouse excess inventory piles up due to wrong forecasting of different product in the warehouse. The company should try to maintain the data very well so that there is no lack as well as no piling up of the inventory in any of the stores or in any of the warehouses and cold chain facility (Kshetri, 2018).
Evaluation of the key factors included in the supply chain management:
The supply chain management works on the key factors that make the system continuous and smooth. The chain has key component that makes the organization to fulfill the demand of the customer. This in turn makes the company as a brand which is recognized by the customer and makes sure that they are identified (Lin, 2013). The key factors include the distribution house which make sure that goods are transferred to the main retail store on time. This is very crucial for the fulfillment of the goal of the supply chain management as products need to be on right place at the right time and to the right person from right supplier. Another key factor that makes the supply chain management successful is the warehouse and the cold chain facility. These acts a supplier which help in the easy distribution of the products all across the retail market in the country.
The warehouses and the cold chain facility make sure that the fresh fruits and vegetable are fresh and are delivered in time without any delay. The data science and IT services also play a key role in the success of the supply chain management as it forecast or manages the inventory in each and every store. It works as the planning tool which makes the orders coming for the different store and different markets. The IT services makes sure that all stores are running smoothly and none of them are facing any hindrance or difficulty in order placing or processing of them (Waters &Rinsler, 2014). This makes all the parts of the supply chain management efficient by keeping a track of the product, process and people. This works as control function as all data are monitored electronically. The machine is auto generated and it keeps the order and reorder level and makes an inventory list to match with the actual inventory.
Despite all of the key factors of the supply chain management is the most important are the employee and the work force. They are factors which keeps the management and the company moving all the time. They are present in all part of supply chain management. They are from the beginning right from the supplier level to the customer level. The employee are main pillars of the company and the supply chain management which make sure that right product is available to right person on right time (Swami & Shah, 2013).
Woolworths may be considered as retail market supergiant. It has a very well-functioning supply chain management which is the reason for his success as one of the biggest retail markets in Australia. It has spent a large amount on innovation and technology making it highly advanced in this industry. Its supply chain management is also highly responsive and active with technology control at all the division. Although it has some of the demerits in its supply chain management but with continuous improvement this can be easily solved. The company is very well maintained and controlled which is one of the main reasonsof the success of the organization in such a short time as compared to others in the industry.
Ahi, P., & Searcy, C. (2013).A comparative literature analysis of definitions for green and sustainable supply chain management. Journal of cleaner production, 52, 329-341.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Fredendall, L. D., & Hill, E. (2016). Basics of supply chain management. CRC Press.
Golicic, S. L., & Smith, C. D. (2013).A meta analysis of environmentally sustainable supplychain management practices and firm performance. Journal of supply chain management, 49(2), 78-95.
Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.
Kshetri, N. (2018). 1 Blockchain’s roles in meeting key supply chain management objectives. International Journal of Information Management, 39, 80-89.
Lin, R. J. (2013). Using fuzzy DEMATEL to evaluate the green supply chain management practices. Journal of Cleaner Production, 40, 32-39.
Mangan, J., &Lalwani, C. (2016). Global logistics and supply chain management. John Wiley & Sons.
Pagell, M., & Shevchenko, A. (2014). Why research in sustainable supply chain managementshould have no future. Supply chain management assignmentJournal of supply chain management, 50(1), 44-55.
Seuring, S. (2013). A review of modeling approaches for sustainable supply chain management. Decision support systems, 54(4), 1513-1520.
Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer, Berlin, Heidelberg.
Swami, S., & Shah, J. (2013). Channel coordination in green supply chain management. Journal of the operational research society, 64(3), 336-351.
Waters, D., &Rinsler, S. (2014). Global logistics: New directions in supply chain management. Kogan Page Publishers.
Winter, M., &Knemeyer, A. M. (2013). Exploring the integration of sustainability and supplychain management. International Journal of Physical Distribution & Logistics Management.