Woolworths Supply Chain Management
Task: Please describe in detail, everything about Woolworths Supply Chain Management.
One of the most prominent retail companies in the Australian and New Zealand market is Woolworths Supermarkets, who also happen to stand at the number one spot, when it comes to liquor retail. All of these attributes put Woolworths at the forefront of Australia’s retail chain industry (Fernie and Sparks, 2014).The primary area of business for Woolworths is retail, which mainly focuses on groceries as well as CDs and DVDs along with magazines. Apart from groceries, Woolworths also has its hands in the Petroleum Industry, Hospitality as well as General Merchandise (Arley et al., 2013). The company boasts a gigantic distribution channel composed of more than 6000 suppliers along with over 3200 retail stores. The company is able to keep its stores stocked and supplied through its efficient system of managing the Supply Chain. The Woolworths Supply Chain Management system, which Woolworths puts to use, is a derivative of the“Tradestone’s Merchandise Lifestyle Management" which is used for Managing supply chains (Dos Metropolis, Svensson and Paddin, 2013).
The objective of this particular assignment is to analyze and ascertain the essentials of Woolworths Supply Chain Management system. In this specific assignment, the methodology which has been used for the collection of data as well as data analysis has also been disclosed along with a clear interpretation of the data accumulated. This proposal will facilitate the understanding of the chain management system as used by the company which has contributed to the growth of the Woolworths retail chain.
The primary objective of this analysis is to draw out the essentials of the Woolworths Supply Chain Management system.
When we talk about Supply Chain Management, we are referring to a process which facilitates the free flow of goods and services from the suppliers, who are the creator of goods, to the consumers, who are the end users of the product. The possibility of being able to integrate the varying processes central to Supply Chain as well the facilitation of reduced usage of inventory through the implementation of a System for managing a Supply Chain, is a widely accepted fact (Connelly, Ketchen and Hult, 2013). The System for Managing a supply chain essentially comprises of three distinct flows which are: Product, finance and data flows. Flow of products is the primary concern of Woolworths Supply Chain Management system. The movement of goods that transpires between the creators of the goods or the producers and the end users of the goods or the customers is referred to as the Flow of products (Flax, Sick, and Abrat, 2016).
Even though Woolworths stands atop the Australian Grocery chain industry in terms of size, what stands apart for Woolworths is the efficiency with which they have been able to manage their supply chain. The primary concern of Woolworths is to make fresh foods and vegetables available to its customers (Juan Ring et al., 2014). The primary suppliers of fresh foods and vegetables for Woolworths are the local suppliers of the Australian continent (Devin and Economist, 2016). The company has, for the purpose of efficient supply of goods to its customers, established warehouses all over the country, which was a strategic move under the Woolworths Supply Chain Management system. With the objective of achieving smooth mobility of the goods and services, distribution centers have been setup at various places. A great transport facility for its goods is also a factor that aids to the success of Woolworths.
At the moment, Woolworths follows something know as the “differentiation strategy”. In order for this strategy to work, the product that is the focus of the business needs to be a product which is highly differentiated from the competition, which aids in sales. Woolworths is a leading proponent of this strategy in the Australian and New Zealand markets (Ericsson and Svensson, 2016). Woolworths prioritizes on getting its customers the best and freshest foods at the most affordable prices. Though Woolworths is not alone in this market and has to face fierce competition from three major rival companies: Coles, Costco and Aldi. To counter this trend, Woolworths has restarted its campaign for “fresh foods” and consequently it holds the biggest market share in the supermarket industry (Singhry, 2015).
Woolworths has deep pockets and has a heavy influence on indigenous suppliers. As a result it is able to procure products at very cheap costs, and thereby emulating the principles of the Woolworths Supply Chain Management system of selling quality goods at lower prices. Another organization that follows a similar practice is Aldi, which utilizes and relies on domestic sources and channels for procuring its goods, unless there is an issue with availability. In this case the products have to be procured for foreign suppliers. Woolworths is in the practice of using a need based procurement system for obtaining its goods, which comprises of booth local suppliers alongside international suppliers (Varghese et al., 2013).
Another measure that the company took, to reduce the cost of products for the consumers, was the reduction of the wages being offered to the supply chain employees, which the company realized to be a mistake. Consequently the company has made as per its robust Woolworths Supply Chain Management system and has made amends and is back on track.
Another measure that Woolworths took to strengthen its supply chain is the forecasting of inventory in its stores. This however results in overstocking of stores with excess stock, which ultimately leads to wastage of goods. This issue has been identified and measures are being prepared to counteract this issue. Woolworths Supply Chain Management System comprises of nearly 7,000 employees, of which approximately 20% are associated with the transport and mobility of goods while the rest are more concerned with IT and other facets of supply chain (Jie, Parton and Chan, 2015).
As discussed previously, the forecasting mechanism of Woolworths was resulting in the excessive accumulation of stock in stores. Another side effect of inaccurate forecasting of demand at certain stores results in the shortage of goods for other outlets. This amounts to a lot of wastage and also hampers sales. A combination of Woolworths Supply Chain Management system as well as the team has facilitated the smooth functioning of Woolworths on a daily basis. "Woolworths’efficient transport system provides for smooth delivery and supply of goods to all its stores and partners, for which the trade partners are required to make payments each week (de Groot, 2013).
Problem Analysis Queries
Essential problems which are pertinent to this analysis are as follows:
- How does Woolworths manage the Woolworths Supply Chain Management system?
- What challenges does the Woolworths Supply Chain Management System offer to Woolworths?
- How are the gaps in the Woolworths Supply Chain Management being handled?
- What is the quantum of improvement, in terms of the company’s business, which has been brought upon, by incorporating these changes?
Variables and Hypotheses
There are essentially two variables that have the most impact and thus have to be taken into account, for the purpose of this research. These two variables include: 1) the current and previous year’s sales figures and 2) the variables that are central to the supply chain.
The Hypothesis for this research has been explained below
H01: The sales of Woolworths bears no connection to any new method applied in the Woolworths Supply Chain Management system.
H11: The Woolworths sales is directly linked to and have benefited substantially from the new methods applied in the Supply chain.
Operational Definitions and Measurements:
The currency to denominate the sales figures in this analysis is the Australian Dollar and rightly so, considering that the company is also Australian Market centric. As the figures are pertaining to the entire company, therefore a slight variation of 5 % is permissible. In order to ascertain the status of employment for Woolworths, taking into consideration, the number of employees, their salaries etc. is suggested.
Methods of Research
This section deals with the methodologies employed for the purpose of data collection and analysis. The process of information collection has been undertaken and both approaches: Quantitative as well as Qualitative have been considered. For the purpose of this research, secondary is collected which includes Information pertaining to sale of goods, the number of employees within the outlet, as well as number of supply chain employees. This information procurement may be done through a questionnaire sent to the store managers.
For the purpose of this analysis, cluster sampling technique was employed by the investigator, considering Woolworths has its presence spread across the continent of Australia uniformly, the groups formed however can be attributed to the geography. Each cluster in this analysis was state based and data was randomly selected from handpicked stores from a particular area.
Analysis of the information procured, will be calculated solely for the variables buy use of different descriptive statistics techniques, meanings, variance, and correlation values. It is also suggested to conduct a variance analysis of the values. For the purpose of this analysis, the variable falling into the dependent category are the sales figure while the independent variables include theemployees’ wagesas well as the number of people employed. It will be notable that the regression coefficient would bring to light the effect that the variables have on the data pertaining to sales.
Process of Research
The Process utilized for the research lays down the precise procedure and methodologies to be utilized for the purpose of this analysis. The analysis begins with an attempt to discern the problem, central to the analysis, followed by the next step, which is to review extensively of the literature. The subsequent step is the collection of data and consequently its analysis. Eventually, the analysis from the data helps in drawing out the conclusion.
Hopefully, analysis is a positive result, which is embodied in the second hypothesis. This hypothesis suggests a positive relationship between latest strategies that Woolworths has adopted for Supply Chain Management, and the company’s sales figures.
In this analysis work, the Supply Chain Management of Woolworths would be analyzed. The company’s sales can be positively affected by effective Supply Chain Management. The analysis also illustrates the data collection as well as analysis methodologies employed for this analysis as well as the possible outcomes that the analysis will bring to light. Through this analysis Woolworths Supply Chain Management system would be scrutinized and analyzed.
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