Procurement Management in Coles: Sustainable Practices and Technology Impact
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This paper discusses the procurement management procedure in Coles, evaluating sustainable practices and the impact of technology on procurement. It also presents a project integration management plan for Coles.
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Running head: PROJECT MANAGEMENT Project Management Name of the student Name of the university Author note
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2PROJECT MANAGEMENT Executive Summary Intense competitive business environment is acting as the driving force behind the firms to improve their increase their degree of productivity. Strong economic performance of the competitors is also driving the firms to accelerate their financial performance which is the key of attaining competitive advantage. There lies the significance of procurement management which paves the ways for the firms to strengthen their strategic function and thus put significant effort on improving the rate of profitability. Present paper will put forth the discussion of Procurement management procedure in the context of Coles. Coles is the first full service supermarket retailer, operating their business in more than 700 supermarkets. This paper incorporates in-depth analysis of the retail trade market of Australia. The possible procurement practices of Coles will also be evaluated. This paper has shaded light on the impact of technology on the procurement practices. A project integration management plan for Coles has also been presented in the paper. 2
3PROJECT MANAGEMENT Table of Contents Background of the company:...........................................................................................................4 Analyzing the retail trade market of Australia:...............................................................................4 Evaluating the possible sustainable procurement practices for Coles:............................................5 Impact of technology on procurement, both for end customers and for producers in the supply chain:................................................................................................................................................6 Impact on Supply chain:..............................................................................................................7 Impact on customers:...................................................................................................................7 Project integration management plan that emphasizes the procurement aspects:...........................8 References:....................................................................................................................................13 3
4PROJECT MANAGEMENT Background of the company: Coles Group Limited is one of the famous and second largest retailers of Australia, operating more than 2000 retail outlets across the country. The company is operating their business for more than 100 years and is highly committed towards making the lives of Australians easier by offering them with high quality of products and services. As per the recent report, currently the company is providing value and services to more than 20 millions of customers (Colesgroup.com.au. (2019). Analyzing the retail trade market of Australia: The retail market of Australia is booming in a rapid manner. The retail industry of Australia is considered as the second largest employer of the country immediately after the healthcare. It is imperative to note in this context that retail sales can have a significant contributiononAustralianeconomy(Unit,2015).Thisisthethirdlargesthousehold consumption which contributes to the GDP over 50%.However, as per the report published by National Australia Bank (NAB) Business Confidence Survey, the economy of Australia is lowering in a rapid manner. In the context of personal and household goods and the car retailing, the retail industry of Australia is relatively weak (Business Insider Australia. 2019). The attitude of the customers is an important factor of determining the internal operation of the retail organizations. It is worthy to mention in this context that the nature of the industry is also an imperative factor of determining the condition of the retail organizations (Grayson & Hodges 2017). 4
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5PROJECT MANAGEMENT The Australian retailindustry comprisesof e-retailers, general stores, super marketsand departmentalstores.In-spiteoftheincreasingenvironmentalconcernbytheAustralian government, the improper ways of running business by the leading retailers is largely affecting the environment and thus hampering its sustainability.As opined byCrane, Matten & Spence (2019)the wastages such as non-biodegradable and toxic materials are not properly which are the key of rapid environmental degradation. Thus, in order to protect the environment, Australian government gas imposed certain rules and regulations which the retail organizations must follow for the sake of protect the environment from the negative aspect of the business.Schrempf- Stirling,Palazzo&Phillips(2016)observedthattheinclusionofcreasedstressonthe environment by the government is playing a major role in increasing the degree of awareness among the customers regarding the need of protecting the environment. Thus, it is imperative for the companies to eliminate the usage of plastic as it is the key of protecting the environment. In addition, the companies must also ensure the fact that they are following all the regulations, established by the regulatory bodies. Evaluating the possible sustainable procurement practices for Coles: As opined byLins, Servaes & Tamayo (2017)sustainable procurement is one of the major ways of maintaining corporate social responsibility without disrupting any kind of activities in the business. This is defined as the comprehensive set of activities in terms of improving the process of exchanging the goods or services along with general mode of operation. From the case study, it is evident that, being the second largest retailer of Australia, Coles is highly committed towards putting significant effort on sustainability by developing effective set of activities such as gaining corporate governance by engaging the stakeholders, 5
6PROJECT MANAGEMENT strengthening their public image in the consumers’ community and above all contributing to the need of environment. Hopkins (2016) showed thatprotecting the landfills from the wastage materials is one of the major commitments of Coles. It has been reported that the wastage materials by the retail industry are directly affecting the environment. Thus, Coles aims to strengthen their organization structure which can allow them to reduce more than 90% wastage material. Reducing the amount of food waste is another vital aim of Coles towards protecting the environment. Cutting down the amount of waste by 50% is the main intension of Coles. The company aims to use the renewable energy resources in the way of making the food products. This is the way, through which Coles can be able to put significant contribution on protecting the environment from the negative aspect of business (Coles.com.au. 2019). Donating the unsold food is another vital aim of Coles towards protecting the environment. It is the aim of the company to donate the unsold food to the NGOs in order to help the underprivileged communities. Recyclable packaging is the major steps of Coles towards protecting the environment.Wanget al., (2016) observed that the company is aiming to use that kind of materials in packaging their products which are recyclable. This can help them to have reduction of plastic accumulation. Impactoftechnologyonprocurement,bothforendcustomersandfor producers in the supply chain: Prompt advancement of technology is acting as the driving force behind the firms to strengthen their business process and promote growth in the business. With the assistance of technology, the companies irrespective of any industry are becoming able to attain significant innovation which is the key of attaining long term success from business (Panda, Modak & 6
7PROJECT MANAGEMENT Cárdenas-Barrón,2017). Effectiveusageoftechnologyisplayingapivotalrolefor the companies to maintain healthy relationship with the stakeholders and consumer community. The impact of technology on the supply chain and customers are discussed below: Impact on Supply chain: Technology is largely influencing the supply chain of Coles. Increasing the operational efficiency of supply chain is the largest impact of technology. Technology is helping to have maintaining transparency in the supply chain and thereby helping the companies to maintaining coordinationinbetweenthesupplychains(Saeidietal.,2015).Withtheassistanceof technology, transit can also be improved which is very much needed to improve the efficiency of apply chan. The problems related to lack of manual labor can also be solved through modern technology. As per the perception ofUtgård (2018)This will pave the way for the retailers like Coles to follow the activities of supply chain like assortment, assembling, dispatching in a timely and cost effective manner. Impact on customers: Technology will also help the companies like Coles to generate awareness among the customers regarding the environmental sustainability. Technology is helping the companies to carry out a range of sustainable activities consistently which will help in protecting the consumer community in future (Devin & Richards, 2018). At the same time, technology is also helping the companies to gain effectiveness in terms of using recyclable plastic, creation of recyclable material and generating biogas. 7
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8PROJECT MANAGEMENT Project integration management plan that emphasizes the procurement aspects: In order to have the sustainable procurement strategies, it is imperative for the retail giants like Coles to make a comprehensive plan (Devin & Richards, 2018). The plan can pave the way for Coles to change their traditional strategies in a systematic manner. The plan, which Coles can follow, is presented below: Introduction: The procurement plan is basically the framework of completing procurement in a timely and cost effective manner. Working with the suppliers in terms of reducing the food wastage is one of the key aims of Coles. As food wastage is the increasing concern, it is imperative for Coles to reduce the wastage within a certain dead line. Thus, it is imperative for Coles to follow an effective plan for the sake of resolving the wastage material by 2020. Procurement Management Approach: ï‚·Carrying out a Food Waste Campaign in the community in which Coles is operating their business. This is the way of generating awareness among the customers about food waste issue. ï‚·Upgrading the inventory system with the latest technology in order to amplify the store layout in order to deliver customizedshelving sequence which can go directly withthatofthedistributionwarehousetotheretailfloor.Making considerableinvestmentinthelatesttechnologywillalsohelpthe companies to reduce the amount of food wastage by producing the 8
9PROJECT MANAGEMENT food in accordance with the requirement byemploying effective food wastage practice (Chkanikova & Mont, 2015). ï‚·Strong partnership with the farmers in the supply chain is another vital way, which Coles should follow for reducing the rate of food wastage. Awareness must be increased among the farmers stop growing more food than needed. The suppliers must be encouraged to collaborate with farmers. Through this way, the agricultural food production can be reduced. ï‚·Coles can also be mores systematic in terms of sharing the data to that of the farmers. Productivity-enhancing knowledge and techniques must also be provided to the farmers to improve the firm production quality. Procurement Definition The procurement items which will be procured are to be presented in a systematic manner as it is the key factor of proper completion of the project. The items which will be procured are presented below: ItemJustificationTimeline Aligning the suppliers and organization in one frame Thisisthewayofachievingthewell-run agreement with that of the suppliers which is very much needed in order to improve the production procedure.Inaddition,thiswillalsohelpin keeping the suppliers informed. Need by 15th September 2019. 9
10PROJECT MANAGEMENT Segmenting the suppliersAs Coles is a largest retailer, it is imperative for them to segment the suppliers on the basis of products. This is the way of locating multiple suppliers in one system. Needby November 2019. Uploadingcontractsand other supplier information This is the way of attaining robust process of managing the contracts of the suppliers which is the key of building healthy relationship with them. Type of Contract to be used: The procurement contracts, which are to be used in dealing with the suppliers, are as follows: ï‚·Fixed-Price Contract ï‚·Firm Fixed-Price Contract (FFP) ï‚·Fixed-Price Incentive Fee Contract (FPIF) ï‚·Fixed-Price with Economic Price Adjustment Contracts (FP-EPA) ï‚·Cost Reimbursable Contract ï‚·Cost Plus Fixed Fee Contract (CPFF) ï‚·Cost Plus Incentive Fee Contract (CPIF) ï‚·Cost Plus Percentage of Cost (CPPC) ï‚·Time and Materials Contract Procurement Risks: The impending risks of managing the procured items are as follows: 10
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11PROJECT MANAGEMENT ï‚·Lack of improper schedule and cost expectation of the vendors ï‚·Lack of manufacturing capability of the suppliers ï‚·Financial failure or cash flow problems of the suppliers ï‚·Increased cost of raw material ï‚·Failure of technology ï‚·Increased environmental problem Procurement Risk Management: As risk is the impending factor in managing procurement, it is imperative for Coles to implement the techniques (Chkanikova & Mont, O2015). The suggested procurement risk management techniques are as follows: ï‚·Identifying and assessing the risk ï‚·Implementing effective risk management strategy ï‚·Transferring the risk of vendor party ï‚·Exploring the likelihood of risk Procurement Constraints: The constraints of procurement are as follows: ï‚·Time ï‚·Financial resources ï‚·Limited project team ï‚·Lack of engagement by the stakeholders ï‚·Procurement Risk Management 11
12PROJECT MANAGEMENT ï‚·Customer imposed completion dates Contract Approval Process: The processes of contract approval are as follows: ï‚·Reviewing the contract ï‚·Reviewing the approvers ï‚·Checking the validity ï‚·Analyzing the situation Vendor Management: The process which Coles should follow to manage the venders are presented below: ï‚·Sharing necessary information with them ï‚·Balancing the commitment and competition ï‚·Allowing the key vendors in the decision making process ï‚·Providing proper value to them ï‚·Making comprehensive agreement with the vendors Performance Metrics for Procurement Activities: The ways of measuring the procurement activities include: ï‚·Measuring the cost of the products ï‚·Assessing the quality of delivered product ï‚·Evaluating whether the product has been delivered within the dead line 12
13PROJECT MANAGEMENT ï‚·Assessing the quality of product documentation References: Business Insider Australia. (2019).The dire signals on the health of Australia's vast retail sector aregrowing.[online]Availableat:https://www.businessinsider.com.au/australia- economy-retail-sales-unemployment-business-confidence-2019-1[Accessed2Sep. 2019]. Chkanikova, O., & Mont, O. (2015). Corporate supply chain responsibility: drivers and barriers forsustainablefoodretailing.CorporateSocialResponsibilityandEnvironmental Management, 22(2), 65-82. Coles.com.au.(2019).Ourcommitments.[online]Availableat: https://www.coles.com.au/corporate-responsibility/sustainability/commitments [Accessed 2 Sep. 2019]. Colesgroup.com.au.(2019).Aboutus|ColesGroup.[online]Availableat: https://www.colesgroup.com.au/about-us/?page=about-us [Accessed 2 Sep. 2019]. Crane, A., Matten, D., & Spence, L. (Eds.). (2019).Corporate social responsibility: Readings and cases in a global context. Routledge. Devin, B., & Richards, C. (2018). Food waste, power, and corporate social responsibility in the Australian food supply chain.Journal of Business Ethics,150(1), 199-210. 13
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14PROJECT MANAGEMENT Grayson,D.,&Hodges,A.(2017).Corporatesocialopportunity!:Sevenstepstomake corporate social responsibility work for your business. Routledge. Hopkins, M. (2016).The planetary bargain: corporate social responsibility comes of age. Springer. Lins, K. V., Servaes, H., & Tamayo, A. (2017). Social capital, trust, and firm performance: The valueofcorporatesocialresponsibilityduringthefinancialcrisis.TheJournalof Finance,72(4), 1785-1824. Panda, S., Modak, N. M., & Cárdenas-Barrón, L. E. (2017). Coordinating a socially responsible closed-loop supply chain with product recycling.International Journal of Production Economics, 188, 11-21. Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate social responsibility contribute to firm financial performance? The mediating role of competitiveadvantage,reputation,andcustomersatisfaction.Journalofbusiness research,68(2), 341-350. Schramm-Klein, H., Zentes, J., Steinmann, S., Swoboda, B., & Morschett, D. (2016). Retailer corporatesocialresponsibilityisrelevanttoconsumerbehavior.Business& Society,55(4), 550-575. Schrempf-Stirling,J.,Palazzo,G.,&Phillips,R.A.(2016).Historiccorporatesocial responsibility.Academy of Management Review,41(4), 700-719. Unit, B. (2015).Corporate social responsibility. CRC Press. 14
15PROJECT MANAGEMENT Utgård, J. (2018). Retail chains’ corporate social responsibility communication.Journal of business Ethics,147(2), 385-400. Wang, H., Tong, L., Takeuchi, R., & George, G. (2016).Corporate social responsibility: An overview and new research directions: Thematic issue on corporate social responsibility. Routhledge. 15