Procurement and Supply Chain Management of Woolworths

This paper analyzes the procurement and supply chain management of Woolworths, including issues faced, improvement programs, and their impact on the company's vision and strategic goals.

Procurement and Supply Chain Management of Woolworths
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Table of Contents
Executive Summary.........................................................................................................................3
Vision, Mission and Strategic Goals of the Company.....................................................................4
Findings of Supply Analysis............................................................................................................4
Findings of Operations Analysis.....................................................................................................5
Findings of Information Analysis....................................................................................................6
Findings of Integration Analysis.....................................................................................................7
Findings of Sustainability Analysis.................................................................................................8
Discussion of the Company's Procurement and Supply Chain Analysis.........................................9
Discussion of Improvement Programs...........................................................................................10
How Improvement Programs Can Assist The Company To Achieve Its Vision, Mission, And
Strategic Goals...............................................................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
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Executive Summary
This paper has acknowledged the supply chain management of Woolworths wherein it has
evaluated the issues faced by the company in terms of supply chains, operations, information,
integration and also sustainability. Moreover, the assignment will also analyse the procurement
and supply chain analysis of the Woolworths and will review the improvement programs being
conducted by the company. Furthermore, the impact and assistance of the improvement
programs in the company’s vision, mission, and strategic goals are also analysed.
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Vision, Mission and Strategic Goals of the Company
Woolworth vision is to deliver quality products and services to its customers each of the time by
the means of pricing strategies, human resources strategies and also food strategy. Woolworth
mission is to deliver to customers the right shopping experience each and every time. The short
term strategic goal of the company is to continue providing higher quality and also delicious
food at the reasonable process for its customers whereas long term goal is to drive social
development and to give focus on the needs of environment (Woolworths group, 2019).
Findings of Supply Analysis
Supply chains make a link with the value chains wherein supply chains make an association with
each of the process which is incurred in an organization starting from the acquiring of the raw
materials to the supply and delivery of the end products to the customers. Since Woolworth is a
growing and popular supermarket in Australia so it possesses a larger number of suppliers to
make the supply of a number of goods. However, it is found that stores have faced major
challenges while managing supply chains which include delivery of the bulk order goods at the
receiving section and shortage of the storing space (Antras & Chor, 2013). Apart from that, it
was found that there is an inappropriate tracking system for the ordering and receiving of the
goods wherein they face issues related to Bullwhip effects. Woolworth is also found to face the
issues of management whereby the company was not able to deliver the goods and services to its
customers and couldn’t provide quality goods and services (Woolworths group, 2019). In
addition to that, the company is also not able to handle the stock of food items effective which
thus leads to the expiry of the products and thus have to be sent in dump (Gereffi and Sturgeon,
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2013). Thus, it can be stated from the findings achieved from the supply analysis that Woolworth
is facing difficulties in handling the supply chain.
Findings of Operations Analysis
Woolworths is having recording growth in sales in the past two years as the supermarket chains
and has got a net profit of $1.724 billion. The present target customers and market of the
company is the living standard measure group and higher income earners. However, the
company is also planning to target a lower living standard measure group and middle-class
people. It is seen that Woolworth was facing forecasting issues because of the lack of
performance of the managers. The manager of Woolworth is totally dependent on the
quantitative approaches which possess the historical data to forecast the demands (Gereffi and
Sturgeon, 2013). The forecasting of the product’s demands possesses qualitative approaches
which incorporate factors like personal experience and value system.
It was also analysed that because of the issues of management, the employees of Woolworths
were not able to give the quality goods and services to its customers because of the ineffective
inventory management systems (Woolworths group, 2019). The company has made the
application of the vendor-managed inventory so as to handle the retail-oriented operational
management on a number of issues (Kirchoff, Tate & Mollenkopf, 2016). The company has
made the usage of rapid prototyping techniques so as to bring newer concepts and achieve real-
time feedbacks.
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Findings of Information Analysis
The bullwhip effects are a major issue in the organizational supply chains which increases
swings in the inventory wherein it moves away from the customers. The minor variations in the
customers’ demands result in bringing larger differences in the demands which are termed as the
bullwhip effects. It is observed that Woolworth is suffering from Bullwhip effects and wants to
gain control in these effects. There are various causes of the Bullwhip Effect such as order
batching, fluctuation, hoarding as well as updating the forecast of demands (Antras & Chor,
2013). However, there is a possible solution to the effects which includes reducing Uncertainty,
reduction of lead time, reduction of variability as well as a strategic partnership and buying as
well as advance information technology.
The usage of E-commerce has helped the company to eliminate the retailers and provides point-
of-sales demands to each of the partners of supply chains. The intermediary’s elimination has
minimized the system variation and makes the information of the demands accessible to each of
the supply chain participants. The usage of the intranet has also helped the Woolworth to make
dynamic information flow which thus reduces the lead-time and the Bullwhip Effects
(Darmawan, Putra & Wiguna, 2014). This further increases the flexibility and speed and impacts
the supply chain capabilities of the company. It is seen that Woolworths generally makes the
usage of the collaborative planning forecasting and Replenishment (CPFR) practices across the
supply chain. It is seen that supply chain partners not only shares the forecasting information but
also makes the sharing of the data on the capacities, cost of production and on the lead times
(Darmawan, Putra & Wiguna, 2014). Sales and operational planning (SOP) is known to be the
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essential techniques so as to integrate and coordinate the organization which has the ability to
generate integration and coordination across the organization.
Findings of Integration Analysis
It is analysed that the company is facing larger issues while managing the supply chain and thus,
they are not able to deliver effective goods and services to its customers. The inappropriate
tracking system is also responsible for the issues whereby the company is not able to deliver
quality goods and services to its customers. Moreover, the ineffective inventory management
systems have also lead the company to face issues (Kirchoff, Tate & Mollenkopf, 2016). The
lack of a manager’s performance has also leaded the company to face issues.
9-step Analysis
The 9-step analysis possesses 1. Define the problem and plan 2. Creating a baseline model 3.
Validating the baseline model 4. Quantifying the key drivers 5. Identifying and creating
scenarios 6. Optimizing scenarios 7. Consolidate and iterate 8. Driving the changes 9. Creating a
repeatable process
Firstly, Woolworth determines the issues of supply chain and operation and decides the possible
approaches. Company then created a model by mapped the location of all the stakeholders and
looked at various variables like supply, inventory, transportation, etc. the problem is further
identified and gaps prevailing in the model are identified. This model has helped in improvement
by reviewing the current models. In the fifth step, the scenario is analysed by making an
interview with the executives to determine the issues. Further, the supply chain problem is
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determined and analysis is done on the problems. Later on, the true driver is determined and the
root cause of the issues is treated. This process is repeated in each of the ongoing processes.
Findings of Sustainability Analysis
The core value of the Woolworth group is “I care deeply”. This value is at the inner point of the
sustainability programs and is responsible for sourcing and managing the workers’ rights. The
company has launched the ethical sourcing policy in 2009 whereas it has also implemented green
supply chain management as one of the essential corporate environment strategies for the process
of the organization. The green purchasing process along with sustainable purchasing has helped
the company to achieve success and profitability. The implementation of Metric Stream’s
sustainability performance management solution by the Woolworth have captured and measured
the metric of sustainability and indicators in the management of energy, soil, water and also
waste. It is further analysed that Metric Stream’s solution has provided a framework for
Woolworth so as to register as well as on board the suppliers for the sustainability management
program and manage the certifications of suppliers.
It is seen that Woolworth has less knowledge on the effectiveness of the tool utilized in
upgrading the supply chain sustainability. This results in issues and hinders the implementation
of the sustainability strategy in the value chain of Woolworth. There is an essential role of
suppliers on collaborative supply chain and thus supplier management of such collaboration are
essential for the implementation of the business operation of the organization. It is found that the
implementation of sustainability as an organizational strategy helps the organization to achieve
the public image and competitive advantages. Seuring and Muller (2008) have showcased a
model in sustainability practice in the management of supply chains where this model gives
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emphasis on three major perspectives namely management of suppliers for performance and risk,
management of supply chain for sustainable products and stimulus for the management of
sustainable supply chain. Pressure and incentives are the factors which trigger the model
construction over the sustainable supply chain from external aspects (Hollensen, 2015). Strategic
direction and internal aspects have further acted as the factors to induce sustainability in the
supply chain of Woolworth.
Discussion of the Company's Procurement and Supply Chain Analysis
Woolworth’s aim is to earn the trust and respect from the customers and help them to make
health, ethical and environmental decisions. This is the reason that company have given focus on
producing of finest products and have also transformed their supply chain management through
poster’s values chain analysis. The company’s supply chain operation is efficient in delivering
fresh food to a larger number of customers. However, the company faces the issues related to the
cleanliness of their stores. Moreover, the organization is also not able to provide the product at
the time due to ineffective transportations system. However, the company have applied
Trandestone’s Merchandise Lifecycle Management platform in their procurement process
(Hollensen, 2015). The usage of procurement has helped the company to provide quality
products to its customers at reasonable rates.
However, the implication of the Dynamic alignment has helped the company in a greater extends
as it had helped in developing more than one of the supply chain solution taking in consideration
the needs and expectations of different customer’s segments. It offers a different set of supply
chain options which have helped the company in delivering different value propositions and also
cost trade-offs which improves satisfaction and reduce the total costs (Gattorna Alignment,
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2017). It is also seen that application of tailored supply chain of the Gattorna alignment concepts
has further helped the company to improve the effectiveness and efficiency of the process and
also enhance the clarity and visibility by the supply networks.
Discussion of Improvement Programs
Woolworths have invested a larger amount of money in supply chain redevelopment program by
the addition of the sophisticated Business Process Management capabilities. The company has
also made an investment in SOA registry and on the government platforms so as to achieve
service-oriented architectures (SOA). The usage of the business activity monitoring (BAM)
solution has also helped the company to have an insight into the performance of the supply
chain. The investment done in the improvement programs have helped the Woolworths to attain
strategic goals so as to enhance IT and agility of the business and reduce the costs by increasing
of the efficiency (Woolworths Online, 2016). Furthermore, the implementation of web Methods
has also helped the company in revolutionizing the logistics business and gain confidences.
Thus, the continuous investments done in business improvement have helped the company to
become technically advanced retain organization.
How Improvement Programs Can Assist the Company to Achieve Its Vision, Mission, and
Strategic Goals
Since, the company’s main motto behind the vision, mission, and strategic goals are to provide
quality products and services to its clients so any improvement programs for supply chain could
be helpful for the company to provide quality services and products. The usage of the Business
activity monitoring solution has helped the company to achieve real-time insights and review
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how the supply chain process is performing, its strengths and weakness along with the areas of
improvement (Woolworths Online, 2016). It can further help the company to make the creation
and figure the process strategies against the vision of the business by defining as well as tracking
the key performance Indicators for the process, people and system performance (Yoo & Seo,
2017). The improvement program further helps in alignment of the IT with the business and
makes a reduction in the cost and also enhances the efficiency.
Conclusion
It can be stated that Woolworths is a company which provides higher quality products and
services to its customers but have to tackle criticism due to ineffective supply chain
management. The company does not possess an effective supply chain and thus, have
implemented improvement programs so as to strengthen its supply chain management. The usage
of dynamic alignment model has also assisted the company to apply more than one supply chain
solution and achieve profitability.
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References
Antras, P. & Chor, D., 2013. Organizing the global value chain. Econometrica, Vol. No. 81, No.
6, pp.2127-2204.
Darmawan, M., Putra, M. & Wiguna, B., 2014. Value chain analysis for green productivity
improvement in the natural rubber supply chain: a case study. Journal of Cleaner Production,
Vol. No. 85, pp.201-211.
Gereffi, G. and Sturgeon, T., 2013. 14 Global value chain-oriented industrial policy: the role of
emerging economies. Global value chains in a changing world, Vol. No. 22, No. 2, pp.329.
Gattorna Alignment, 2017. Dynamic Alignment. [Online] Available at:
http://www.gattornaalignment.com/gattorna-alignment/signature-framework/ [Accessed on 27
May, 2019].
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Kirchoff, J. F., Tate, W. L., & Mollenkopf, D. A., 2016. The impact of strategic organizational
orientations on green supply chain management and firm performance. International Journal of
Physical Distribution & Logistics Management, Vol. No. 46, No. 3, pp. 269-292.
Woolworths group, 2019. Significant improvements to Woolworths Rewards. [Online] Available
at: https://www.woolworthsgroup.com.au/page/media/Latest_News/significant-improvements-
to-woolworths-rewards [Accessed on 27 May, 2019].
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Woolworths group, 2019. Sustainability. [Online] Available at:
https://www.woolworthsgroup.com.au/page/community-and-responsibility/group-responsibility/
[Accessed on 27 May, 2019].
Woolworths Online, 2016. Woolworths Supermarket - Buy Groceries Online. [online] Available
at: https://www.woolworths.com.au/ [Accessed on 27 May, 2019].
Woolworths groups, 2019. Australian Food. [Online] Available at:
https://www.woolworthsgroup.com.au/page/about-us/our-brands/supermarkets/ [Accessed on 27
May, 2019].
Yoo, S. H., & Seo, Y. W., 2017. Effect of supply chain structure and power dynamics on R&D
and market performances. Journal of Business Economics and Management, Vol. No. 18, No. 3,
pp. 487-504.
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