Woolworths' IT Strategy and Restructuring

This assignment delves into Woolworths' restructuring of its IT strategy. It examines the company's decision to slash previous IT projects and outlines the potential gains and losses associated with this move. The analysis covers key IT systems required for inventory management, vendor management, and customer relationship management. Additionally, it identifies stakeholders impacted by these systems and their functional requirements.

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A1. The big decision taken by Woolworths was restructuring of its operation model, which
included brand-wise splitting of its online Ezi-business which was previously integrated with
Big W.
A2. The major challenges Woolworths has been facing were lack of efficiency in its supplier
relationship management due to issues with its replenishment and inventory system.
A3. Such strategic decision was taken as a fire emergency drill in its Eastern Creek Centre
shut down the facility, due to which the data collection and replenishment system was
effected. This created problem of processing the orders to the suppliers when the Big W
platform was introduced to the customers, which resulted in losses of sales in millions.
A4. Porter’s five forces model:
The Porter Five force model can help an organisation the model of the industry and in
ascertaining its stakeout position in the market to become more profitable and less vulnerable
(Porter, 2008). The porter’s five forces model on Woolworths is as follows:
1. Bargaining Power of Buyers: The Supermarkets of Australia are more or less
homogenous, hence there is low switching cost between the store. In such a scenario,
the bargaining power of customers is very high, excepting those stores which are
offering customised services (Technaivo, 2017).
2. Bargaining power of suppliers: The bargaining power of the suppliers in the
supermarkets vary as per the brand name and size of the store. For example, coca cola
and British American Tobacco enjoy very high bargaining power. Hence the
bargaining power of the suppliers in the retail markets of Australia varies from high to
moderate.
3. Industry substitutes: In the industry of super market, the customers have a lot of
option for substitution, like grocery stores, pharmacist, fresh-food shops, local
retailers, online etc. The customers don’t mind even if they have to pay little higher
for securing the facilities like, accessibility, parking facilities, proximity, no queues,
etc. Hence, the industry substitutes in the supermarkets of Australia also varies from
high to moderate.
4. Threat of new entrants: The supermarkets of Australia don’t seem to be a lucrative
option for the new entrants, on grounds of low price offers. Moreover, the high prices
of market land, heavy investments and restrictions and regulations by the government
also act as barrier to the new entrants. Hence, the threat of new entrants’ n moderate.
5. Rivalry among competitors: There is aggressive and intense competition in the
super markets of Australia.
Hence, the main threat for Woolworths is from the existing supermarkets to which the
customers can switch on due to their high bargaining power. The balance of power can be
attained by offering quality products the lowest possible prices and closing down the
underperforming stores was a step in this direction (Woolworths, 2017). The impact on IT/IS
strategy is to use them for ensuring efficiency in the supply chain managements.
A5. The short-term pros of new IT/IS system are efficient supply chain management which
would help processing the data in less the time and would help in enhancing accountability
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and performance. The short-term cons are heavy expenditure and it may take lot of efforts
and time to implement it.
Long-term pros are that it would lay foundation for efficient supply chain management in
future. It would help in securing an enduring profitability in the coming years. The long-term
cons are that it would need continuous upgradation and maintenance to ensure efficiency.
Plus, there will be need to keep a check on it for ensuring its vitality in coming years.
A6. In my opinion, the IT is very important for Woolworths is very important as it can help in
keeping up the records for order taking, order processing and placing the orders with the
vendors. No. I don’t that the new management has underestimated this role as the redesigning
of its operation system, it has streamlined the procedure to ensure smooth flow and accuracy.
A7. Yes, it was a good decision to write down a heavy investment in IT sector. With the
upcoming online super market stores like Amazon, Ebay etc.; the growing popularity of
online stores can be seen.
A8. If I was CIO of Woolworths, I would also have suggested in implementing efficient
supply chain management SCM. For convincing my CEO I would have cited example of
Walgreens Boots Alliance Inc. which has become second largest Pharmaceutical chain of US
by transforming its supply chain in 2016 (Investopedia, 2017). In case of rejection of idea, I
will give explain the advantages of SCM, viz. speed, efficiency, cost reduction, etc.
A9. The information systems which Woolworths should have (Oz, 2009), are:
a. Inventory management system: To accurately map the flow of inventory and to be
able to forewarn about re-order levels and slow-moving items (Fishbowl, 2017).
b. Vendor management system: To ensure the vendors are well managed in terms of
giving them appropriate time to supply and ensure their payments are smooth (Beeline
, 2017).
c. Customer relationship management system (CRM): A robust CRM will keep the
management abreast of customer’s buying trends and need analysis.
A10. No, doubt slashing of the previous IT/IS project, Woolworths has impaired heavy costs.
However, in the light of forthcoming profits, the potential gains are several. The Woolworth
will be able to make up the losses in the long run.
A11. Stake holders for various IT system are (Heijden, 2009):
a. Inventory management system: Head of purchase, Head of Stores, Operations Head
b. Vendor management system: Head of contracts, Commercial head, Head of purchase
c. Customer relationship management system (CRM): Head of Customer Services, Head
of Operations, Head of Marketing
A12. Most important functional requirements (Lucey, 2005), for the following IT systems
will be:
a. Inventory management system:
i. Accuracy
ii. Practicability
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iii. Pre-warning
b. Vendor management system:
i. Ease of usage through single window interface
ii. Timeliness
iii. Should allow rating of vendors
c. Customer relationship management system (CRM):
i. Flexible to integrate with other systems
ii. Complaint & request management
iii. Insightful data on customer’s preferences
References:
Beeline . (2017). Retrieved from Beeline : https://www.beeline.com/resources/vendor-
management-system-vms/
Fishbowl. (2017). Retrieved from Fishbowl: https://www.fishbowlinventory.com/inventory-
management/
Heijden, J. G. (2009). Designing Management Information Systems. New York : Oxford Univeristy
Press.
Investopedia. (2017). Supply Chain Management. Retrieved August 28, 2017, from Investopedia:
w.investopedia.com/terms/s/scm.asp
Lucey, T. (2005). Management Information Systems (9th ed.). London : Thomson.
Oz, E. (2009). Management Information Systems. USA: Thomson .
Porter, M. E. (2008). The Five competitive Forces that Shapes Strategy . Harvad Business Review .
Technaivo. (2017). Autralian market. Retrieved from Technaivo:
ttps://www.technavio.com/report/australia-general-retail-goods-and-services-retail-market-
australia-2016-2020
Woolworths. (2017). Media. Retrieved August 25, 2017, from Woolworths:
https://www.woolworthsgroup.com.au/page/media/Latest_News/woolworths-limited-
update-on-operating-model-review
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