Supply Chain Management Report for Wesfarmers Limited Company

This report provides an overview of the supply chain management activities of Wesfarmers Limited Company, including its sourcing materials and services, producing goods/services, distribution system, demand management, and inventory systems.

Running Head: SUPPLY CHAIN MANAGEMENT REPORT FOR WESFARMERS LIMITED 1.
Supply Chain Management Report for Wesfarmers Limited Company
Name
Institution

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Introduction
Supply chain management refers to the coordination of various business activities such as
production, customer service, purchasing, warehousing activities, transport as well as product
planning among others to achieve the best mix through increased responsiveness and
effectiveness in the market been served. Over the past decade’s most companies operated under
different departments where each department operated independently and was a headed by a
particular head of the department to whom all the operations were reported to (Mangan, Lalwani
& Lalwani, 2016). However the modern corporate world, through integrative logistic activities
most business now operate under one department and also report to an overall company director.
The change in company logistics and supply chain activities has contributed to improved
business efficiency where the business operates guided by one objective. A logistic organization
activity refers to those functions which occur within the boundaries of a single company or
organization while supply chain activities related to the network of organization or business
activities which are integrated and coordinated together to deliver a particular product or service
to the market.
Understanding of the supply chain management operations of a company helps in
optimization of business operations through maximizing its speed and efficiency (Christopher,
2016). Active development of business or organization supply chain management activities helps
in optimizing customer value in the industry as well as to achieve a sustainable competitive
advantage. This paper aims to develop a business report about the supply chain management
activities of Wesfarmers Company Limited. The report will contribute to an increased
understanding of business or organization logistics and supply chain activities.

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Background Information about Wesfarmers Limited Company
Wesfarmers Limited is one of the largest Public listed companies in Australia and has
been ranked to be number one out of the two thousand most significant companies in the
country. The company has been in operation since its formation in the year 1914 when it began
its operations as a cooperative and provided services and merchandise to farmers in Western
Australia. Therefore her primary customers were the farmers. The company was listed under the
Australian Securities Exchange in the year 1984 and has grown to become an Australian
Conglomerate. The company generates most of its revenue from retailing and grocery activities
in Australia where in 2018 financial year the company recorded revenue of $ 67.17 billion of
sales and other revenues (Wesfarmers Annual Reports, 2018). It is the largest company by
revenue and hence the most profitable company. It is also the largest private employer in the
country providing employment opportunities to 217 000 employees as of June 2018 in Australia
as well as in other subsidiaries managed by the company.
The primary objective of the company is to deliver satisfactory returns to the company
shareholders as well as satisfy the needs of their customers through the provision of goods and
services on a professional and competitive basis. It serves a diverse range of business operations
which are divided into three main categories of retail businesses or activities, industrial activities
or business and other businesses. The retail business operations include supermarkets, home
improvement operations, office supplies as well as departmental stores. The main industrial
operations and business include chemical processes, energy, and fertilizers, coal mining as well
as industrial and safety products. The principal company subsidiaries include Bunning

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Warehouse, Kmart Australia, Target Australia, and Coles Supermarket as well as Office workers.
It operates in a competitive industry with both public and private companies competing with the
company. The main competitors in various operations include; the Kroger Company which is a
public company in Australia specializing in food and beverage, the Menard and Builders,
Hardware & specialty company which are private companies under the real estate and
construction industry as well as Little Wood which operates as a retail company. The company is
managed through an organizational and management structure consisting of an overall managing
Director and chief executive officers of various divisions. Each division is headed by a director
but all report to the overall company managing Director Rob Scott. In its efforts to create value
over time in the long term, the company has committed itself in engaging with the communities
it serves in sustainability practices to minimize its environmental impact.
Supply Chain Structure of Wesfarmers Limited Company
Building an effective and sustainable supply chain has become essential in any business.
It helps in improving efficiency in industry and meeting customer needs effectively. Wesfarmers
has therefore committed itself in the building of stable and respectful relationships with its
supplies globally who are estimated to be approximately 18000. Its efforts to improve their
efficiency in consumer supply chains ensure continued competitiveness in the industry. The
company has been able to develop a global supply and logistics team that offers comprehensive
global sourcing services to provide their customers with an opportunity to access to quality,
innovative and reliable products, services as well as solutions. Since the business operations of
the company are dived into different divisions or departments, the supply chain activities
developed through the use of the departments and integrated to form a global supply chain for
the company (Wang, Gunasekaran, Ngai & Papadopoulos, 2016). The company businesses

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therefore source there products directly from suppliers from different countries including;
Australia, Bangladesh, China, India as well as Thailand among other countries. The figure below
shows the major global suppliers of Wesfarmers Limited.
To promote transparency of their supply chain activities, the company has developed its
own Group-wide ethical sourcing policy. The policy sets the minimum standards expected for all
their divisions which resale their products. However, the company subsidiaries such as the
Target, Coles, and Kmart have their ethical sourcing policies which govern their engagement
with their supplies based on what is appropriate to their businesses. In their efforts for instance to
promote transparency, these companies have shown their commitment by continuously
publishing all the factories that directly provide their brand products. These policies must,
however, agree with the Group-wide ethical sourcing policy for Wesfarmers Company since that
is the only to ensure successful integration of supply chain activities (Rushton, Croucher &
Baker, 2014). The suppliers for the business divisions were therefore contractually bound
through the Group-wide sourcing policy. According to the contract or policy document, all the
Australia
Bangladesh
China
Wesfarmers Limited
India Thailand

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supplies to the company with all the available local as well as national and other applicable laws
and regulations in the region they operate.
The ability of the company to develop a global supply chain and commit itself in building
strong relationships with its suppliers provides the company with a competitive advantage and
grants their customers access to the best products and services these suppliers or the world could
offer (Jayaram, Zailani, Tan, & Mohan, 2016). There regions or areas are specialists in various
business lines, and therefore the company believes that they will be able to source the best
products or solutions to their needs. Once the goods have been supplied to the various business
divisions for the companies or even materials, they are then manufactured into what the company
customer’s demand. The company is therefore committed to ensuring that the sourcing of its
products through the established supply chain is done responsibly while on the other hand
working with the suppliers to help them improve their environment (Fernie & Sparks, 2014). To
achieve this, the company supports the Australia new slavery Act and believes that the Act will
be able to play a vital role in the transformation of the corporate and public sectors supply chain
activities.

SUPPLY CHAIN MANAGEMENT REPORT FOR WESFARMERS LIMITED 7.
Wesfarmers Sourcing materials and services; Producing Goods/services
The company sourcing strategy for materials and services is through the promotion and
development of partnerships with relevant suppliers globally. The company is therefore
committed to the building of strong and respectful relationships with its suppliers. The supply of
the materials and services sourced is through a global supply and logistics team that has been
developed by the company to facilitate and ensure there is effective supply chain management.
The sourcing of the materials is based on the value they add to the customers and the ability of
the materials or services to promote sustainability through effective environmental regulations
(Grant, Wong & Trautrims, 2017). Hence the existing system for sourcing materials and services
by the company is through partnership development. The second souring system used by the
company is through supplier tail consolidation. The company has a long supply chain tail of
estimated 18000 suppliers globally.
In most cases, these suppliers do not achieve the maximum Pareto efficiency and hence
become an increased cost to the business or organizations. Supplier consolidation refers to the
process in which a company or business reduces its suppliers within a particular supply market
and instead shift focus on the most successful suppliers within the same supply market
(Swanson, Goel, Francisco & Stock, 2017). Supplier tail consolidation refers to reducing the
long tail of suppliers to remain with the most effective suppliers in a specific market. This
strategy has been deployed by the company successfully in subsidiaries such as Coles
Supermarket and the Target business subsidiary. This has helped the company in reducing the
number of unproductive supply chains to a number that is most reliable and effective in the
market.

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The company has also developed a process standardization strategy for sourcing its
materials as well as for production of their goods and services. Process Standardization, in this
case, refers to the integration of the supply chain activities to improve efficiency as well as play a
critical role in reducing supply chains costs (Jabbour et al., 2017). The company has been able to
achieve this through integrated logistics for activities such as customer services, purchasing
activities, warehousing, transport as well as product planning. The souring of materials and
production of goods and services by the company has also been enhanced by the company
strategy for supply chain network optimization. This refers to the art of designing a holistic,
quantitative and strategic view of a business end to end supply chain (Dessouky, Ordóñez, Shen
& Jia, 2017). Application of this strategy by the company has empowered the company to
evaluate the current company state of their supply chain to different scenarios. This has helped
the company to develop a short supply chain strategy that is based on sound and available
metrics. The end goal of a supply chain network optimization model is to provide results that
enable companies to move forward securely.
Distribution System (Transport and Warehousing system) for Wesfarmers Limited
Development of an effective and efficient supply chain distribution system has become
inevitable in the modern corporate world. A distribution system involves the process of
overseeing the movement of goods from supplier to consumers at the point of sale (Yao &
Minner, 2017). Wesfarmers limited company has developed a transport and warehousing system
to enhance its distribution activities. The company had established subsidiary companies which
offered transport and warehousing services. Bunning warehouse provides the storage services to
the goods produced by the company to the different consumer needs. Such a subsidiary company
offers exclusive services and enhances the distribution of products and services (Tunca & Zhu,

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2017). The Wesfarmers transport limited has played a critical role in improving the company
distribution system as it provides oversight of the transportation of the products from the
manufactures to the market (Bazan & Jaber, 2018). However, the company has a digital
distribution system which is not fully developed as compared to the digital operations of
companies such as Amazon.com. There is a significant need to establish the company digital
distribution channels as this will provide an active channel and platform to engage with their
customers.
Development of a digital distribution system has become one of the most successful
competitive marketing and distribution strategies in the modern world. It provides an opportunity
for customers to make their orders and purchases and delivery made to them through digital
interactions. This improves the overall supply chain process and efficiency of the business and
will contribute to improving business performance. De Kok, (2018) argues that the development
of digital distribution system and shift from the traditional distribution system will help the
company achieve its optimal efficiency in their service delivery. The current distribution
employs the conventional approach where goods produced by manufacturers or suppliers are
transported to the various company warehouse for storage. The materials sources or the products
will then be used for production services through the inventory systems according to the existing
demand (Diabat, Dehghani & Jabbarzadeh, 2017). The products once manufactured or made into
the right conditions, are then again delivered to where consumers can access them such as the
departmental company stores, supermarkets, and other distribution and selling points. Due to
increased competition in the retail industry in Australia and the growth of other small companies
which have been able to occupy any emerging markets, it is necessary for the Wesfarmers
Company limited to develop digital distribution systems to supplement the existing system.

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Demand Management and Inventory Systems
The demand for company products has continued to increase over the past years due to
the quality and reliability of the products. As demand increase, the company has to develop an
effective strategy to manage the growth and avoid losing clients due to a delayed response. The
demand for the company products and services is accomplished through a forecast planning tool
from each department or division of the business (Harris et al., 2017). When each department
makes the projections, they are then compared with the previous demand of the past to estimate
whether the demand will increase or is likely to reduce. The forecast is then used to project the
expected growth in market demand and make preparations through appropriate supply
strategies.The Company has also successfully used the sales and operations planning model or
process. This model helps a company to match a manufactures supply chain with the demand
through collaborative efforts of different operations departments to create a single production
plan (Chung, Liao, Ting, Lin & Srivastava, 2018). The application of this model by Wesfarmers
Company has enabled it to ensure that customer’s demands have been met effectively and
efficiently through the integration of the production activities, distribution activities as well as
purchasing and customer service activities. Lastly, the company has also employed the use of
warehousing management and inventory control model to improve its material sourcing and
productions of goods and services (Chofreh, Goni & Klemeš, 2017). The company has
developed within itself an effective inventory control system through Economic Production
Quantity Model (EPQ). This model ensures that production of goods or services by the company
is only done once an order has been made at a constant number of units to inventory each day
until the production run process is completed. As a result, the company has been able to reduce

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the costs of producing more goods without any demand projection as well as reduction of
warehouse costs associated with storage.
However, based on the operations of the company and the need to improve their
efficiency and returns management, I would recommend that the company should consider
utilization of the Enterprise Resource Planning (ERP) Software. This software may be beneficial
for the company in increasing the overall performance and profitability of the company and
efficiency as well as reducing the costs and wastes resulting from production activities (Caguiat,
Rowena & Suarez, 2017). The software can offer some integrated supply chain activities such as
automated purchase, increased transparency, standardization of the supply chain network
process, monitoring of the supplier's performance, growing costs awareness at every production
and supply chain step, offering real-time inventory management as well as improving the
expected returns management for the company. It will also align the company strategic goals
with the technological advancement hence giving the company a competitive advantage in the
market.
Conclusion
From the above report, development of an effective logistic and supply chain
management strategy helps in coordinating various company activities and aligning them to a
common strategic goal or objectives of the company. Wesfarmers Company has been able to
integrate its logistics in building a sustainable supply chain management strategy. However there
is room for improvement in some of the critical aspects of the business such as improvement of
the company distribution system by developing or adopting the utilization of enterprise resource
planning software that integrates most of the supply chain activities and helps in improving the

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efficiency of the company operations and performance. Both the outbound and inbound logistics
should, however, be aligned to customer value creation. The supply chain management strategies
should be reviewed frequently to help in identification of the aspects which are not helping the
company improve its efficiency or increase its performance and competitiveness in the industry.
Appendices
Appendix A; Financial History of Wesfarmers in Five year period

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