Supply Chain Management

This report discusses the supply chain management process of Harvey Norman Company. It provides an overview of the company and discusses the distribution channel, supply chain contract, sourcing materials and services, and transportation and warehousing system. The report also suggests improvements in the existing system and transportation system.

Running head: SUPPLY CHAIN MANAGEMENT
Supply chain management
Name of the student
Name of the university
Author Note:

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Table of Contents
Introduction......................................................................................................................................3
Overview of the company............................................................................................................3
Supply Chain Structure....................................................................................................................4
Distribution Channel....................................................................................................................4
Figure No 1: Distribution System of Harvey Norman Company................................................4
Supply Chain Contract.................................................................................................................5
Sourcing Materials and Services.....................................................................................................5
Existing System...........................................................................................................................5
Improvement in the existing system............................................................................................7
Discussion of the Distribution System of the identified Major Customer.......................................8
Existing Transportation and Warehousing System......................................................................8
Improvement of the Transportation System................................................................................9
Demand Management and Inventory System Involved.................................................................11
Existing System.........................................................................................................................11
Improvement in the Existing System.........................................................................................12
Conclusion.....................................................................................................................................13
References......................................................................................................................................15

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Introduction
Supply Chain management is one of the most integral parts in any kind of business
organization. Supply Chain Management is the broad range of activities that are required to plan,
control as well as execute the flow of a product from acquiring the raw materials and the
production by means of distribution to the final customer (Genovese et al. 2017). The
process is carried out by means of a cot effective and streamlined manner. The following report
has discussed the supply chain management process of Harvey Norman Company of Australia.
The report starts with a proper overview of the company and then continues with the discussion
of the different kinds of the perspectives involving the supply chain management.
Overview of the company
Harvey Norman is one of the largest Australian based multinational retailers of furniture,
bedding, consumer goods, computers and many things as such. Headquartered in New South
Wales of Australia, the company employs more than 10,000 people and has an annual turnover
of around A$5.3 billion (harveynorman.com.au, 2019). As of now, the management of
the company has been able to open around 194 different stores of the organization in Australia
whereas it has established around 86 stores overseas. In total there are around 280 company
owned stores as well as franchisee stores in Australia, New Zealand, Europe as well as South
East Asia (harveynorman.com.au, 2019). The operating structure of the organization is
quite different from that of the other organizations (harveynorman.com.au, 2019). This
includes the likes of separate entity of the management as three or four business holdings are
separated and combined with each other to form the company. The management of the company
has started an online store for video games in Ireland which is quite unique and a new innovation

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for the company (harveynorman.com.au, 2019). Apart from this the company has also
opened stores in Croatia, Slovenia, Singapore, Malaysia and Northern Ireland.
Supply Chain Structure
Distribution Channel
A supply chain network can be defined as the link in between a company and the
suppliers of the company to produce and distribute a specific product to the final buyers of the
organization. According to, Wang et al. (2016) the distribution channel on the other hand,
can be said to be as the chain of the businesses or intermediaries through which the goods and
services pass until it reaches the final buyer or the end customer. The total distribution channel is
part of the downstream process of the business organization. Harvey Norman Company mainly
acts as a franchisee. Thus the goods sold by the organization mainly come from the different
other manufacturers. The manufactured goods are first brought into the warehouses from where
the goods are collected, packed and brought into the franchisee stores of the business
organization. The distribution system involves the presence of the manufacturers, suppliers, the
sellers and ultimately the end customers to whom the products are sold.
Figure No 1: Distribution System of Harvey Norman Company
Source: (Carter, Rogers & Choi, 2015)
PRODUCER SUPPLLIERS LOGISTICS RETAILERS

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Supply Chain Contract
A supply chain contract is the coordination mechanism that helps to provide the
incentives to all the members involved in the chain process. The supply chain contract model of
the company is based on the integrated model of the supply chain and is one of the best in the
Australian market (annualreports.com, 2019). The management of the of the organization
has created a proper and integrated supply chain contract system wherein the organization
provides a smooth distribution system and the stakeholders involved in each step of the
distribution system is rewarded with a healthy incentive (Touboulic & Walker, 2015). The
incentive system of the organization thus turns out to be the beneficiaries for the suppliers,
producers, logistics department and the other parties who are indirectly involved in the
distribution system.
Sourcing Materials and Services
Existing System
The existing system in Harvey Norman takes procurement further, focuses more on the
supply chain impacts and the procurement and purchasing decisions and works cross functionally
in the organization. The management of Norman Harvey considers all types if the aspects related
to strategic sourcing. This includes the likes of;
a. Consolidation and leveraging of purchasing- The management of the business must
consider leveraging the purchase process. The management of the business organization
tries to negotiate in a systematic manner with the producers and the suppliers to ensure
the reduction of the cost (Stadtler, 2015). The management of Harvey Norman has a
special team to negotiate the terms and conditions if the purchase of the goods and

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materials. This team ensures a stable price of the goods and services in the Australian
retail market.
b. Meaningful relationship among the suppliers- The presence of a proper relationship
with the suppliers of the business can be essential for the organization in order to ensure
the success of the business. A better relationship with the business suppliers can be
helpful for the business to ensure the success of the business organization in the market
(Carter, Rogers & Choi, 2015). The HR team of Harvey Norman is tasked with
ensuring a better relationship with the customers.
c. Enhanced teamwork and presence of efficient and capable professionals- The
presence of teamwork is utmost essential for the business to ensure proper coordination
and communication which in turn helps the business organization to gain success in the
business market. According to, Ross (2015) the recruitment of the best professionals
from the market can also help the business organization to ensure a successful flow of
goods and services.
d. Emphasis on value- The management of Harvey Norman is totally dedicated towards the
value of the product and the services that are sold by them. The company has a separate
department to analyze the quality of the different products and services.
e. Improvement in the supply chain processes- The change in the transportation and the
warehousing system is one of the major reforms undertaken by the management of
Harvey Norman. The construction of new warehouses and the reduction of dependency
on 3rd party warehouse is one of the best practices of the management. Whereas, the
improvement of the transportation process by organizing a safe and secured transport is
helpful for the success of Harvey Norman. The improvement in the supply chain

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processes is one of the major changes that are being practiced by the management of the
business organization in the last couple of years (Meyr, Wagner & Rohde, 2015).
Improvement in the existing system.
Besides following a proper and efficient, standard sourcing procedure, there are different
actions that the management of Harvey Norman must take to ensure the presence of an effective
procurement strategy. The management of the business organization in this regards must conduct
the below mentioned activities to strengthen the procurement system. This includes;
a. Setting up special manufacturing facility for the manufacturers rather than
outsourcing the manufacturing process
b. Total acquisition cost analysis
c. Primary and secondary sourcing
d. E-procurement services
e. Supply base realization and consolidation
1. Make or Buy Analysis- The management of the company must research on whether to
make the products or buy them from a third party. It is important to analyze the needs of
the organization as because the proper analysis of the needs can ensure the success of the
organization in the market.
2. Total Acquisition Cost- The analysis of the acquisition cost is essential for the success if
the supply chain distribution in the future as because the analysis of the acquisition cost
can help the management of the business organization to negotiate the price of the
products and also helps to develop the negotiation skills of the management with the
suppliers and the producers.

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3. Rationalization of Supply Base-The aim of the management of Harvey Norman will be
to ensure lowering the number of the suppliers and the supply. This will help to
implement quality-management systems, such as those of the International Organization
for Standardization (ISO), and raise quality standards.
4. Primary and Secondary Sourcing- The management if the business must be open to use
both the primary as well as the secondary source of supply to maintain a proper and
effective form of supply system, delivery system and also ensure quality services.
5. E-Procurement- The e-procurement services of the organization can be established by
the management of Harvey Norman which will surely help the business to ensure its
success in the modern business market.
Discussion of the Distribution System of the identified Major Customer
Existing Transportation and Warehousing System
The warehouse and Transportation system are two of the most integrated and important
systems in the supply chain system of the business organization. The presence of own
warehouses and the presence of a strong transportation network can help the business to ensure
the success of the organization in the supply chain management systems (Meyr, Wagner &
Rohde, 2015). The supply chain management system of the business organizations is
important to ensure the presence of quality goods and services and also provide great value to the
customers. The transportation system of Harvey Norman is utmost essential to transport the
different products from the warehouses to the stores. Being the largest retailer of furniture,
electronics, white goods and home wares, Harvey Norman uses the process of warehouse racking
they can rely on. The presence of multiple warehouses in Brisbane alone including two other

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locations in Macgregor and Zillmere, the management of Harvey Norman constantly requires
new creative storage solutions tailored to suit their products (Mangan, Lalwani & Lalwani,
2016). This is why they choose MACRACK for their warehouse storage solutions. The
company trusts MACRACK to supply the warehouse racking services and support the 280+
stores of the company with the most effective warehousing services (macrack.com.au,
2019). The warehouses if the company is usually made up of narrow aisle racking to store the
furnitures that is to be sold by the company. The following racking helps to decrease the risk of
damage to the racking system. The guide rail provided alongside the ground prevents the stock
picker from moving left or right and interfering with the racking (macrack.com.au, 2019).
There are times when the stock pocker can easily have a proper wire guided system with the wire
fixed on the ground. This is one of the existing tools used by Harvey Norman company to ensure
success (macrack.com.au, 2019).
On the other hand, the management of the company has a selected range of transportation
options that helps them to take care of the logistical services. The company also uses the logistics
services of other service providers in order to transport goods and services to other locations
outside Australia. The company has its own fleet of trucks and transport vehicles that are
specially designed with latest technologies in order to adhere to the safe and secure transport of
the goods to the stores of the business organization. Apart from this the management of the
company opts for third party logistics service providers for the transportation of the goods and
the services to the stores outside Australia.
Improvement of the Transportation System
The transportation system forms the basic of the supply chain management system of the
business enterprise. The modern supply chain management system must be integrated with a

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modern and quality transportation system in order to ensure the success of the business supply
chain management. Some of the recommendations to improve the quality of the transportation
are as follows;
a. Responsiveness- The biggest way to improve the existing transportation framework is the
improvement of the responsiveness of the transportation system. An overall strategy
needs to be implemented which is a two pronged process. The fist one being the
reduction of the costs and the second one being the improvement of the customer service.
Technology must be implemented in a systematic and organized manner to ensure the
easy and smooth transportation of the goods.
b. Outsourcing the transport system- The outsourcing of the transportation system is
essential for the business organization to ensure the success of the supply chain
management of Norman Harvey (Mangan, Lalwani & Lalwani, 2016).
Outsourcing, contrary to what you may initially think, actually helps the organization to
ensure the success of the organization. The change in the system will help the
organization to transport the goods in a safe and timely manner.
c. Improvement of time- Time is one of the most important factors in modern business
organization. The maintenance of time can help to ensure the presence of a successful
supply chain management. The different factors that can lead to the distraction of time
must be avoided and highest priority must be given to the organization to ensure the
success of the organization. The maintenance of time and the organizational efficiency
can help improve the transport logistics which in turn will be essential to gain business
success. The better the maintenance of time, the better will be the chances of a successful

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and integrated supply chain management which in turn will ensure the growth of the
organizational business.
Demand Management and Inventory System Involved
Existing System
The management of the customer and the relationships with the vendors and suppliers is
one of the most important processes in the management of the supply chain. The presence of a
collaborative relationship concept is considered to be the essence of the supply chain
management. According to, Mangan, Lalwani & Lalwani, (2016) a closer look at the
supply chain management involves the flow of the products, inventory movement and the storage
of the business in a proper and organized manner. Inventory plays an important aspect in the
supply chain management. The management of Norman Harvey has implemented the sales and
the organizational planning process to address the different modes of inventory and demand
management. The fundamental purpose of the S&OP is to bring together the demand
management functions of the business organization (Hugos, 2018). Such kind of discussions
allows the business organization to hold extensive discussions about the inventory o the
company and also allows the sales and management group of the business enterprise to plan the
forthcoming time horizon by gaining a realistic picture of the inventory levels available for sale.
On addition to this, the operations groups are able to get updated and direct sales
forecasting information, which can assist in planning for future inventory needs. The
management also maintains the POS system of the point of sales for perpetual management of
the business inventory. The information is not only tracked by the retailer but is also shared with
the different vendors, suppliers and the third party logistics providers if the business

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organization. The balancing act of the supply and demand is tracked by the management of the
organization to determine on the best tome to provide the necessary inventory for the
organization.
Improvement in the Existing System
Inventory Management is considered to be the most important among the supply chain
management of the business organization. The management of Harvey Norman can establish
some serious steps to change the current inventory management process and make it more
precise and accountable. Some of the major recommendations of the business are as follows;
1. A continuous monitoring of the supply chain is important for the success of the business
organization. It will ensure that the company is always striving to make the systems that
they use in a better way, rather than looking at specific areas of inventory management,
bringing in ‘improvements’ and then assuming everything is fine (Hugos, 2018).
2. Reducing the storage cost of the inventory is another main option that needs to be
considered by the business organization. The management has to ensure the just in time
supply of the different products which will be helpful for the success of the organization
3. The use of the modern technologies is another major improvement that can be used by
the business organization on order to ensure the success of the business organization
(Heizer et al. 2017). The use of the modern technologies can ensure the success of
the business by means of innovative practices that will be helpful for the management of
the business organization to ensure success of the business.
4. Use of vendor management inventory systems helps the vendor to manage the stocks and
make the management of the stock much easier for the management of the business.

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Conclusion
The following report has been able to provide a clear and transparent view of the supply
chain management. The selection of Harvey Norman has helped to make the report more
practical and purposeful. The discussion on the different business perspectives related to supply
chain management and the description and depiction of the distribution channel of the business
organization has been a livewire for the analysis of the supply chain management. The report has
separately identified the likes of the warehousing and transportation system practiced by the
business organization and has identified the different kinds of the organizational systems of the
business. The management of Harvey Norman has started the use of the automated purchase
system and has also made a difference with the change in the warehousing system. The
management of the business organization has started constructing their own warehouses. The
construction of the following warehouses has been a key decision to the success of the business
organization.
The analysis of the following report will help the readers to gain a proper and efficient
understanding of the different kinds of the perspectives related to the supply chain management
process for Harvey Norman Company. The report has also identified the use of the MACRACK
system for the storage if goods. This new and innovative system has been the key to the success
of the business organization in the market. The emphasis on the different process and methods
practiced by the business organization in the supply chain management is the key theme of the
following report.

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