Management Accounting for Costs and Control

This article discusses the value chains of Woolworths Group Limited and how it uses management accounting for costs and control. It explores the functions of inbound logistics, operations, and marketing and sales in creating value for the organization.

Running head: MANAGEMENT ACCOUNTING FOR COSTS AND CONTROL
Management Accounting for Costs and Control
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1MANAGEMENT ACCOUNTING FOR COSTS AND CONTROL
Table of Contents
Question 1: Value Chains................................................................................................................2
References:......................................................................................................................................4

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Question 1: Value Chains
The organisation that has been selected for this part is Woolworths Group Limited, which
is involved in selling retail products mainly in Australia and New Zealand. The mission of the
firm is to ensure the delivery of improved quality products to its customers
(Woolworthsgroup.com.au, 2019). In the recent time, it has faced a number of issues related to
transport solutions, supplier collaboration, visibility of operations, outbound and inbound
integration and reporting capabilities. Therefore, Woolworths has to improve its store service
levels along with assuring competitive advantage to accomplish sustainability in supply chain.
Hence, the firm has converted its supply chain management system by using the value chain
analysis of Porter. Woolworths conducts three functions that create value, which assist in
fulfilling its promises. These functions mainly include inbound logistics, operations and
marketing and sales.
As mentioned by Crane et al., (2014), inbound logistics takes into consideration direct
associations with the suppliers and the activities to be obtained in stores and dissemination
inputs. For Woolworths, the firm is primarily a retailer. It is involved mainly in distribution and
control rather than producing the products sold on diversified platforms. In accordance with the
function of building distribution network, Woolworths provides contribution into logistics and
procurement.
For the procurement process, Woolworths uses the platform of “Trandestone’s
Merchandise Lifecycle Management”. By using this platform, it becomes easy for the firms to
manage their suppliers and orders, financing and relationships with more suppliers and business
to business sales (Mudambi & Puck, 2016).Woolworths has adopted “Stringent Certification

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Process” for selecting its supplier base. For ensuring better product quality, regular audits are
conducted before delivering the products to the customers. Moreover, it has followed purchasing
activity nationalisation so that it could control its expenses. As a result, it becomes possible for
Woolworths to offer improved quality products to its customers at reasonable prices, as the
procurement system has helped Woolworths in controlling costs amounting to $2.5 billion in
2016 (Woolworthsgroup.com.au, 2019). Finally, it has combined its delivery network system by
involving in effective distribution centres and transport systems.
Marketing and sales:
For short-term sales, the firm arranges weekly specials for different products by
minimising the prices of the items to the customers. The primary reason behind adopting this
strategy is to encourage the customers in buying products in bulk amounts (Sharma, Moon &
Strohbehn, 2014). Moreover, the fresh brand of the organisation jointly with guide for monthly
online initiative for fresh recipe offers recipe recommendations as well as advice with respect to
nutritional food habits so that the consumers could be encouraged to live healthy.
Operations:
Standardised processes are maintained by Woolworths to detect and eradicate the
products from lots received from the suppliers. When the stocks visit the retail stores, the
personnel involved in quality assurance carry out frequent checks to find and remove defective
goods until display. Moreover, the organisation uses space planning so that it could present the
assortment in different striking methods by utilising “plan-o-grams” to explain the minimum
presentation quantity. Finally, Woolworths has enforced the technology of ‘Sophisticated Point
of Sale” for maintain stock by keeping track of the units sold for a specific item.

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References:
Crane, A., Palazzo, G., Spence, L. J., & Matten, D. (2014). Contesting the value of “creating
shared value”. California management review, 56(2), 130-153.
Mudambi, R., & Puck, J. (2016). A global value chain analysis of the ‘regional
strategy’perspective. Journal of Management Studies, 53(6), 1076-1093.
Sharma, A., Moon, J., & Strohbehn, C. (2014). Restaurant's decision to purchase local foods:
Influence of value chain activities. International Journal of Hospitality Management, 39,
130-143.
Woolworthsgroup.com.au. (2019). Woolworths Group: Quality Brands and Trusted Retailing.
Retrieved 18 April 2019, from https://www.woolworthsgroup.com.au/