Wesfarmers: Inventory Management and Supply Chain Analysis Report

This report examines Wesfarmers' operation management, focusing on inventory systems and supply chain processes. It analyzes the functions, roles, and types of inventory within the inventory mix, posing key questions to assess their efficiency. The report applies relevant theories and concepts to evaluate Wesfarmers' inventory management, providing findings and justifications. It also explores supply chain management, identifies stakeholders, and assesses their influence on the organization. The report concludes with recommendations for improvements, aiming to optimize Wesfarmers' operational strategies and enhance its overall performance. The report covers various aspects of inventory management, including raw materials, work in progress, finished goods, and different inventory types, along with the implications for operation management strategies. It also discusses the OM process and provides recommendations for improvements.

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Operation management
System04116
5/4/2019

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Contents
Introduction......................................................................................................................................2
Background of the organization.......................................................................................................2
Functions, roles and types of inventory in the inventory the inventory mix...................................2
Functions......................................................................................................................................3
Roles.............................................................................................................................................3
Types............................................................................................................................................3
Questions asked to explore these.....................................................................................................4
Implications for OM strategy...........................................................................................................5
Theories and concept apply to assess the efficiency of the organizations inventory management
and findings.....................................................................................................................................5
Findings........................................................................................................................................6
What is supply chain management? Who are stakeholders? What influence do they have on the
organization?....................................................................................................................................6
Supply chain.................................................................................................................................6
Stakeholders.................................................................................................................................6
OM process..................................................................................................................................7
Influence.......................................................................................................................................7
Recommendations for improvement................................................................................................7
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

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Introduction
This report discusses about operation management which basically includes management
process of supply chain and system of inventory in an organization. To analysis the supply chain
management and the inventory system, Wesframers is chosen for this report. Operation
management is a management of the business practices to generate higher level of effectiveness
within the company. In this report, the ways are provided to improve the inventory systems and
supply chain management processes. Along with this the functions, roles and kinds of inventory
in inventory mix will be analyzed. Few questions will be asked to analyze these. The suggestions
for operation management strategies will be provided. The appropriate theories and concept will
be applied to assess the competence of the Wesfarmers inventory management. Furthermore the
concept of supply chain system will be explained. The list of stakeholders and their influence on
Wesfarmers will be identified. The process of operation management will be discussed and
recommendations will be given if necessary for any improvements.
Background of the organization
Wesfarmers is an Australian company headquarters in Perth Australia and it served
various areas such as India, New Zealand, United Kingdom Australia, and Ireland. Its operations
covers supermarkets, home improvement, department stores, chemicals, coal mining, office
supplies, industrial and safety products and energy and fertilizers. Wesfarmers is the biggest
private organization in Australia with 23000 and more employees and has shareholders base of 5,
15,000 (Wesfarmers, 2019).
Functions, roles and types of inventory in the inventory the inventory mix
Inventory: inventory is complete list of things such as goods in stock, property or the contents of
the building.
Inventory management: it is a systematic way to storing, locating and profiting from raw
materials and final products. The correct stock, at the right levels, in the right place, at the correct
time, and at the right cost.

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Functions
1. To smooth production requirement: the production requirements can be smoothen by
putting the demand constant. If an organization understands that each day or everyday
how much they require to produce then it is simple to produce what they require.
2. To meet anticipated demand: a customer is a person who walks in off the market to buy
or purchase new products so the company maintain inventory to meet their anticipated
demand (Pike, Et al, 2018).
3. To decouple operations: companies keep buffer stock to handle any interruption in the
operations. The buffer allows other operations to continue for the time being while the
problem is tackled.
4. To protect against stock-outs: the increase of risk of shortages increases due to the
unexpected increase in the demand. Delays occur because of conditions of weather, delay
in deliveries, problem of quality etc. By holding the safety stock, the risk of deficiencies
can be decreased (Heizer, Et al, 2017).
Roles
1. To supervise the flow of products from producer to warehouses: the role of inventory in
Wesfarmers is to supervise a flow of the product from producer to warehouses and from
these services to the point of sale.
2. To preserve comprehensive record of each original or returned goods: The key role of
management of inventory in Wesfarmers is to retain detailed records of the fresh or old
products as it arrives or leave the storage store to point of sale (Natter, 2019).
Types
1. Raw materials: these are the inventory product which is used by the Wesfarmers for
process of conversion to make apparatuses, finished goods or subassemblies. These
products might be extracted materials or commodities which the Wesfarmers or its
subsidiaries has extracted or produced. They also have elements or objects which the
Wesfarmers has bought from external businesses.
2. Work in progress: work in progress is prepared by using all components, materials,
subassemblies which are being managed or are ready to be managed within the inventory
system. It is basically comprises all the raw materials which have been unrestricted for

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starting processing the materials which have been wholly managed and is waiting for the
final review and taking prior to addition to finished products.
3. Finished goods: the finished product is the finalized portion which is set for the order of
client. Therefore, inventory of finished products is the stock of finished goods. This
product has been reviewed and has transferred the final necessities of inspection so these
can be transferred of work in progress into inventory of final products. From this stage,
final product can be directly vended to its customers, vended to their retailers, vended to
wholesalers, transferred to delivery centers or held in expectation of the instruction of the
customers.
4. Transport inventory: this inventory fallouts from the requirement to transits the
components or materials from single place to other place. Merchandise shipped materials
can take times from a local warehouse to the retailers. Wesfarmers pay shipping
consolidators to pool its transit inventory which comes from many areas into single
shipping (Halldórsson, Et al, 2015).
5. Buffer inventory: it is stated to as safety stock. The buffer inventory is any quantity that
held on point which is above the presently requirements to encounter the demand. The
greater level of buffer inventory, the well services of Wesfarmer’s customers.
6. Anticipation inventory: the Wesfarmers bought and keep inventory which is in additional
of their current requirement in anticipation of a likely future occurrence. These
occurrences include rise in price, rise in demand, or future labor strikes.
7. Decoupling inventory: it is the safety stock of categories. it establishes a buffer between
demand of the product and supply of the product and is used in the inventories of work in
progress. In this, the product is linked to a specific order of the customer. The different
situations are related to the manufacturing operations ability to accommodate
customization of product or a broad range of product (Windham, 2019).
Questions asked to explore these
Q.1. Are they capable to break down their working inventory into the three main categories when
reportage leves- safety, excess and replenishment?
Q.2. Who regulates the optimal occurrence for making or ordering finished goods?

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Q.3. Do they calculate level of safety stock on a fixed basis to confirm they are up to date?
Q.4. do they apply the above practices to all portions of their inventory (finished products, works
in progress, raw material, and components) and in entire organization? (Wild, 2017).
Implications for OM strategy
 Operation management strategy is to provide a plan for the operations functions within an
organization so that it can make the better use of their resources.
 It is need to remember that the operations management is responsible for management
the resources that required to produce the products and services if the Wesfarmers.
 The aim of the operation management strategies is to minimize costs so that the profits
can be maximized within an organization (Silberschatz, Et al, 2018).
 Operation manager strategies needs being acquainted with a wide range of disciplines.
The managers of operations must have to understand about the general strategic policies,
basic development of material, manufacturing and production systems and its evaluation
or study.
 The principles of cost and production control are needed to be understood as these are
also important in the operation management (Mountz, Et al, 2018).
Theories and concept apply to assess the efficiency of the organizations inventory
management and findings
To measure the efficiency of the company inventory management, the Orthodox theory is
turns around the buyers and balancing the ordering cost against the duties for carrying products
in stock. Though the Wesfarmers having thousands of items which are the orders for
constructing the better inventory system are unclear and the reason behind it seems varying. This
theory is applied to provide robust guidelines for managing such inventories. The practical
implication of this theory is that another “top down” approach is planned. The essential drive is
the efficient placement of a chosen transport taskforce. This makes available a new viewpoint on
stock control which gets theory into line with contemporary supply chain management theories
(Buxey, 2009).

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Findings
The models abandoned the impact of several ordering guidelines at the end of provider
where a promotion of cost effectiveness and approachable warehouse and transport processes in
top. As a rule, both parts benefits from unchanging resources planning built on cyclic orders and
delivery timetables along with permanent vehicle routes.
What is supply chain management? Who are stakeholders? What influence do they have
on the organization?
Supply chain
Supply chain management is a wide series of activities needed to proposed, perform and
control the flow of items from production and raw material by delivering to the ultimate user in
the best efficient and cost effective way potential (Fredendall, Et al, 2016). It includes the
combined planning and implementation of processes that essentially optimizing a materials flow,
data flow and financial resources in the areas which widely comprise planning of demand,
production sourcing, management of inventory and storage, logistics or transportation (Stadtler,
2015). And return for additional or defective goods. Supply chain management is an costly,
multifaceted task which depend on on each partner from providers to manufacturer and further
than to run well. Supply chain management generates efficiencies, increases profits, lessen costs,
and boosts teamwork (Christopher, 2016).
Stakeholders
Stakeholders are the individuals who are affected by their work such as clients,
community partners, group members who assisted by the organization.
Stakeholders in Wesfarmers are:
1. Top management
2. project team
3. Sales Manager
4. Resource manager
5. Inventory manager
6. Internal customers

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7. External customers
8. Government
9. Peers
OM process
The process of operation management involved following steps:
Input: it contains the methods, equipment, infrastructure, labor, technology and other needed
resources in order to accomplish the planned goals and values of the Wesfarmers. It is essential
to focus on the inputs required.
Processes: it defines planning, organizing and controlling. This step deals with several strategies,
complexities, individual expertise, monitoring, implementation and other factors to achieve the
definite goals and proper management of supply chain and inventory system within the
Wesfarmers (Hugos, 2018).
Output: by following a successfully execution or implementation of the planning, organizing and
controlling processes, the estimated outcomes are achieved towards the deliverance of quality
value added output and efficiency of cost (Teeboom, 2019).
Influence
The Stakeholders have influence on the Wesfarmers and operation management process
by influencing their decision making process. They ensures that the Wesfarmers work
environment remains working stimulating, dynamic and rewarding (Silver, 2016). There are
good working environment available in the Wesfarmers so that they can perform better.
However it is known that stakeholders have their self-interest that is needed to be satisfied by the
Wesfarmers. For these reasons the Wesfarmers management is needed to assess the setting of
organization and its self-role. Management also need to identify essential relationship, develop
working relationships with many important individuals and involved groups and work for
maintaining these relationship (Ingram, 2019).

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Recommendations for improvement
1. They must standardize their process which is essential for the success of the supply chain
approach. They must have uniform ERP system to raise the effectiveness while saving
money and time.
2. They must develop automatic purchasing which means ERP software that can be
functioned to automatically put order with Wesfarmers when inventory stages falls
underneath a definite level.
3. The performance of vendors must be monitor for smoothly running of the supply chain
and inventory system.
4. Cost awareness must be raised by controlling various factors and changes in the
inventory system and supply chain system.
Conclusion
From the above analysis it is concluded that operation management is necessary in every
company to improve an effectiveness and efficiency of its inventory systems and supply chain
management processes. The inventory in the inventory mix plays an important function and role
in an organization. The various operation management strategies are made to develop the quality
value of supply chain and inventory system. The findings from the application of theory suggest
that neglect of order policies at the end of the suppliers will results in cost effectiveness. The
concept of supply chain is discussed to know how stakeholders of the Wesfarmers influence
them and its operation management process. The various recommendations are given for the
improvement within the Wesfarmers related to the operation management.

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References
Buxey, G. (2009). Reconstructing inventory management theory. International Journal of
Operations & Production Management, 26(9), 996-1012.
Christopher, M. (2016). Logistics & supply chain management. UK: Pearson.
Fredendall, L. D., & Hill, E. (2016). Basics of supply chain management. CRC Press.
Halldórsson, Á., Hsuan, J., & Kotzab, H. (2015). Complementary theories to supply chain
management revisited–from borrowing theories to theorizing. Supply Chain
Management: An International Journal, 20(6), 574-586.
Heizer, J., Render, B., Munson, C., & Sachan, A. (2017). Operations management: sustainability
and supply chain management, 12/e. USA: Pearson Education.
Hugos, M. H. (2018). Essentials of supply chain management. UK: John Wiley & Sons.
Ingram, D. (2019). About supply chain management systems. Retrieved from:
https://smallbusiness.chron.com/supply-chain-management-systems-43344.html
Mountz, M. C., Enright, J. J., Durham, J. W., Decker, M. H., Schechter, J. H., Wurman, P. R., &
Nice, E. B. (2018). U.S. Patent Application No. 15/791,332.
Natter, E. (2019). The role of an operations managers. Retrieved from:
https://smallbusiness.chron.com/role-operations-manager-14234.html
Pike, J., Pike, L., Mellott, M., Sanchez, V. C., Karabin, G. J., Bender, B., & Volz, J. (2018). U.S.
Patent Application No. 15/860,755.
Silberschatz, A., Gagne, G., & Galvin, P. (2018). Operating system concepts. London: Wiley.
Silver, E., Pyke, D., & Thomas, D. (2016). Inventory and production management in supply
chains. UK: CRC Press.

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Stadtler, H. (2015). Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28). Berlin: Springer.
Teeboom, L. (2019). Explain the term “ supply chain” and its importance to cost management.
Retrieved from: https://smallbusiness.chron.com/explain-term-supply-chain-its-
importance-cost-management-69721.html
Wild, T. (2017). Best practice in inventory management. UK: Routledge.
Windham, C. (2019). How does operations management improve the efficiency of a business
operations. Retrieved from: https://smallbusiness.chron.com/operations-management-
improve-efficiency-business-operation-80747.html
Wesfarmers. (2019). About us. Retrieved from: https://sustainability.wesfarmers.com.au/our-
report/about-wesfarmers/