Risk Management in Retail Sector: Woolworth's

This paper discusses the need for quality and risk management in Woolworth's supply chain system. It outlines a system for managing quality and effectively managing risks, following the rule of Total Quality management (TQM) and other quality management methods and approaches.

RISK MANAGEMENT IN RETAIL SECTOR : WOOLWORTH'S 1
Risk Management In Retail Sector: Woolworth's
Name
Date

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Introduction
This paper is about Woolworth's and the need to maintain quality and manage risks in its supply
management processes. The development of the supply chain system and associated risk
management for the Woolworth's chain is budgeted to cost $ (AUD) 30 million, to be executed over
a one year period. After a evaluation, it has been realized that the main risks to undertaking the
project include a limited time-line, lack of sufficient information for managing the project, limited
number of dedicated team members, lack of knowledge, and communication processes that are
underdeveloped that have resulted in poor relationship with the project members. This paper
outlines a system for managing quality in undertaking the project as well as how the risks will be
effectively managed, following the rule of Total Quality management (TQM) and other quality
management methods and approaches. This paper undertakes a critical analysis of issues and and
their causes with respect to the development of the supply chain system and associated risks, in the
context of project total quality management. The paper then proposes the best practice models that
will guarantee quality
Discussion of Woolworth's Case in the Context of TQM
TQM refers to a technique in project management that is implemented so as to ensure that
quality awareness becomes embedded in all phases of a project, from its conception to successful
completion. TQM requires that there is a consistent and careful review of all the phases in a
project, and coordinated effort applied to ensure its realization and maintenance by all parties
involved in the project (Morfaw, 2009). The key to effective TQM in project is effective
communication: further, standards for quality must be developed and relevant procedures defined.
Further, all people involved in the project must adhere to the quality plan strictly to ensure project
success (Oakland, 2014). TQM has its first paradigm being ‘total’ and requires an integrated system
with dependent variables: in this phase, the most important aspect is effective planning. During the
planning phase for the Woolworth's project, all obstacles (risks) to the successful achievement of the
project must be identified, confronted, and overcome (Luburic, 2014).
Plan Quality
This is the process involved in identifying the quality standards and requirements for a project
and the project deliverables, as well as documenting how compliance with the relevant quality
requirements will be demonstrated. This process will give the necessary direction and guidance on
the management and validation of quality throughout the process of developing the Woolworth’s
system. The plan includes the necessary tools, inputs, outputs, and techniques. The quality plan will
use the scope baseline that entails the scope statement for the project, the Work Breakdown
Structure, and the Work Breakdown Structure Dictionary. The schedule baseline will also be

RISK MANAGEMENT IN RETAIL SECTOR : WOOLWORTH'S 3
incorporated in refining the project quality plan, as is the project cost line. One of the quality
metrics for the project will include delivering the final project within the defined scope, time-line,
and the budget (Heldman, 2015).
The plan will have inputs, tools and techniques, and outputs as depicted in the figure below
The quality plan will be developed parallel to other project planning processes
Inputs
Project Management Plan
The project management plan will be used in developing the quality plan and the information to
be used includes;
Project Scope Statement: This contains major project deliverables, the description of the
project, and the acceptance criteria (Perrin, 2015). The scope is to ensure groceries are delivered to
the chain (Woolworth’s) on time and fresh, as well as to ensure thee are always sufficient stocks.
The project plan is summarized in the table below;
Task
No
Task Duration in
days
Comments Deliverables Lead
1 Review the current
procurement policies
and plans
4 To understand
existing processes
and help identify
risks
Project
manager
2 Requirements
document
5 Develop the list of
requirements
Project
manager
3 Develop project
backlog
5 Define what the
system will require
Project
manager
4 Assemble project team 14 Get the right Project
Inputs
The project management plan
The stakeholder register
The user requirements
The Risk register
The requirements document
The organizational process
Assets
The environmental factors of
The enterprise
Tools and techniques
The cost benefit analysis
Cost quality
The seven basic quality tools
Benchmarking
Statistical sampling
Design of experiments/ tests
Additional quality planning tools
Meetings
Outputs
Quality management plan
Process improvement plan
Quality metrics
Project documents
Quality checklists

RISK MANAGEMENT IN RETAIL SECTOR : WOOLWORTH'S 4
personnel to work on
project
manager
5 Assign roles 4 Assign roles and
responsibilities
Project
team
6 Identify risks 5 Identify risks to
supply chain system
Risk
managemen
t team,
project
team
7 Develop risk
management plan
5 Risk management
document and plan
for monitoring risks
Risk
managemen
t team,
project
team
8 User requirements
document
5 Develop the user
requirements
document
Project
manager
9 Risk analysis 5 Develop risk profile Risk
managemen
t team,
project
team
10 Stakeholder analysis 5 Identify stakeholders
and develop
stakeholder
communications plan
Project
manager
11 Cost benefit analysis 5 Undertake a cost
benefit analysis of the
system and risk
management plan
Project
manager
12 Cost quality analysis 5 Determine cost of
quality
Project
manager
13 Use quality tools 12 Determine causes of
problems and risks
using 7 basic quality
tools and develop
plan to address issues
Project
manager
14 Benchmark 7 Compare processes
and approaches for
Woolworth’s against
industry standards
Project
manager
15 Statistical sampling 5 Sample acceptable
quality standards,
sample attributes, and
variables sampling
Project
manager

RISK MANAGEMENT IN RETAIL SECTOR : WOOLWORTH'S 5
16 Design tests 7 Test supply chain
performance against
set objectives
Project
manager
17 Develop quality
management plan
5 Develop an elaborate
plan and document
for managing supply
chain system quality
Project
manager
18 Process improvement 4 Define how the
system will be
continuously
improved
Project
manager
19 Define metrics and
checklists for quality
4 Define how quality
for groceries supply
chain will be
measured
Project
manager
20 Documentations 5 Define all documents
and their
management policies
Risk
managemen
t team,
project
manager
21 Review 4 Review plan and
make comments,
continuously monitor
risks
Project
manager
WBS: This identifies the work packages and the deliverables for the project to b used in
measuring the performance of the project (Perrin, 2015). For Woolworth’s, te WBS will follow the
project plan developed above
Schedule baseline: This documents the accepted measures for schedule performance including
the start and finish dates
Cost baseline: This documents the accepted interval to be used in measuring cost performance
Management plans: these are other plans that contribute to the overall quality of the project
Stakeholder register
This helps in identifying stakeholders that have a specific interest in, or have an impact on the
quality of the project (Perrin, 2015). register is shown below;
Stakeholder Role Influence Impact Communicat
ion
frequency Lead
CEO Executive
sponsor
Very High Very high E-mail,
reports (Pdf),
word
document,
Weekly Project
manager

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face to face
status
meetings
Supply chain
manager
Business
sponsor
High Very high E-mail,
reports (Pdf),
word
document,
face to face
status
meetings
Weekly Project
manager
Steering
committee
Advisory
and
approvals
High Very high E-mail,
reports (Pdf),
word
document,
face to face
status
meetings
Fortnight;y Project
manager
Project team Execute
project
High Very high Daily status
meetings
using
collaboration
tool, e-mail,
face to face,
pdf
documents
Daily
Weekly
Project
manager
Project
manager
Ensure
objectives
are met
Very high Very high Daily status
meetings
using
collaboration
tool, e-mail,
face to face,
pdf
documents
Daily
Weekly
Project
manager
Risk Management Plan and Register
This plan will have a responsible person, documentation, and a risk management team assigned
with monitoring and implementing proposed mitigation measures for identified risks (Marcelino-
Sádaba, Pérez-Ezcurdia, Echeverría Lazcano, & Villanueva, 2014).
Risk
Code
Risk Description Probabili
ty
Impact Effect Mitigation Plan Contingenc
y
1 Limited
time-line
Project can
go over
stipulated
time that
represents
Very high Very
high
Failure to
meet
deadlines,
increased
costs
Use project
management
planning
Continuous
monitoring
Compressi
on if
running out
of time-line
Work

RISK MANAGEMENT IN RETAIL SECTOR : WOOLWORTH'S 7
failure achievements
(executed tasks)
against plan
overtime
Add
resources
(more
manpower
0
2 Lack of
adequate
informatio
n
Insufficient
information
and
understandin
g of supply
chain
processes for
Woolworth’s
High Very
high
Developin
g wrong
approache
s to ensure
quality
and wrong
scope
Brainstorming
Understand
existing processes
of supply chain
system and develop
quality and key
performance
indicators
train team
members on
concept
Ask clients what
they need in terms
of quality, pricing,
availability
Invite
external
consultant
to help
achieve
objectives
3 Limited
dedication
by team
members
Team
members not
committed
to executing
tasks to
achieve set
objectives
High Very
high
Failure of
project
failure to
improve
systems
and
processes
Inability
to meet
organizati
on and
customer
needs
Use effective
change
management
strategies
identify suitably
qualified personnel
Motivation
tactics
project
manager to
inspire and
create
better
vision for
project
4 Undevelop
ed
communic
ations
process
Poor
communicati
ons
High Very
high
Inability
to meet
objectives
and
deadlines
Poor
understan
ding of
what is
required
Focus on
wrong
objectives
Develop
communications
plan
Evaluate
existing
communica
tions plan
Brainstorm
ing
meeting to
solve
communica
tions
barrier
5 Lack of Lack of the Medium Very Failure to Project manager Training

RISK MANAGEMENT IN RETAIL SECTOR : WOOLWORTH'S 8
knowledge right skills
(technical
and soft) in
understandin
g supply
chain system
and how to
improve it
high achieve
objectives
and risk manager
to train and educate
team on system
and what the team
is trying to achieve
sessions
Risk matrix
Requirements Documentation
This captures the requirements that the project must meet pertaining to the expectations of the
stakeholders. (Kerzner & Saladis, 2009). The scope of the project is to ensure an efficient groceries
supply chain system and to identify and manage risks to achieving this objective. The stakeholders
will be met and all requirements identified; customers will be interviewed to understand what they
need. Supply chain department will be interviewed and the existing process evaluated with new
needs identified and a requirements documentation developed. The requirements include an
efficient supply chain system for groceries that secures the highest quality, freshest groceries.
Having the delivered in time and quality maintained. Automatic entry of stocks into system, and
constant monitoring to ensure automated replenishment times. Projections made so that there is no
under or overstocks
Environmental Enterprise Factors
These influence the process of planning quality and include government regulations, standards,
rules, and guidelines relevant to the project and the operating conditions for the project as well as
any cultural perceptions. The supply chain will be managed with compliance to WHS policies,
regulations on pesticide use and levels, and labor relations from suppliers side
Organizational Process Assets
Historical databases as well as lessons learned from previous projects or project phases will
also be used in setting and managing quality (Whitaker, 2016). The process for socks management
and approvals for purchases, as well as tendering and sourcing supplies will be reviewed. The goal

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is to use competitive bidding and quality assessments with samples to award supply contracts,
effectively manage contracts and monitor supplier performance quality.
Tools and Techniques
Cost Benefit Analysis
The main benefits from meeting the quality requirements of the system development include
higher productivity from using the supply chain management system, less reworks when developing
the system, increased satisfaction by stakeholders, lower costs, and increased profitability. The cost
of quality is compared with expected of the quality
Cost of Quality
Costs of failure can either be internal or external and are associated with poor quality (Hughes,
2011). The table below shows costs that will need to be considered
Cost of Conformance Cost of Non Conformance
Prevention costs
Develop new supply chain management system
Train employees on its use
Implement partially, not problems and improve
Internal failure Costs
Delays in supplies
Over/ under stocks
Poor quality groceries
non competitive prices and low profits/ losses
Appraisal costs
Evaluate current system
Review contract and sourcing plan
Stock management system
Ensure supplier quality through testing
External Failure Costs
Poor supplier contract management
failure to test products for chemicals
Use money to develop better systems that assure
quality of produce, delivered on time, at
competitive prices and use principles such as
kanban for continuous improvement
Avoid having to redevelop system, use
incremental improvement and seven quality
tools
Seven basic Quality Tools
These are used within the project quality development cycle to identify and solve problems
related to quality. The tools include
 Flow chart

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 Scatter diagram
 Pareto chart
 Histogram
 Control chart
 Check sheet
 Cause and Effect Diagrams
Benchmarking
The groceries will procured through competitive bidding where suppliers bid and are evaluated
on various aspects including chemical use, conformity to government regulations on food and
groceries code of conduct. Samples will always be taken and tested before acceptance and contracts
awards will be well explained and contract management principles used. Aggregation centers will
be set up for collection and distribution to where demand is based on distance and forecasts.
Ordering to be done using a computerized system with just in time principles used. Cold chain will
be maintained throughout to meet quality and freshness regulations as set by the food and grocery
code of conduct. Woolworth’s to sign up to the food and grocery code of conduct and review
conformance every quarter
Design of Experiments
Analyzing test data will provide optimal conditions for the system and its functions and
processes, highlight factors influencing performance, and reveal interactions and synergy with other
systems (Perrin, 2008). The groceries must not have quality issues; minimum acceptable is 95%
quality based on assessment of freshness, chemical use, and food and grocery code of conduct

RISK MANAGEMENT IN RETAIL SECTOR : WOOLWORTH'S 11
compliance. Stocks cannot go beyond required minimums, based on forecasting, by more than 5%;
same applies for maximum allowed stocks.
Other Quality Planning Tools to Use
Meetings
Review meetings to evaluate compliance with food and grocery code of conduct and set quality
objectives, including freshness, stock levels, reordering, and stock management.
Outputs
Quality Management Plan
Only the freshest groceries to be procured; procurement plan entails inviting bids from possible
suppliers, reviewing their bids based on benchmarks, awarding contracts to many suppliers based
on product, managing contracts effectively. The project manager will solicit and document customer
expectations for groceries at Woolworth's and develop the user requirements. This will be updated
regularly. Project manager to work with stakeholders and communicate effectively with them in
ensuring quality supply chain management. Woolworth’s to sign up to the grocery and food code of
conduct and review every quarter. Project manager to train team on quality supply chain and why it
is important as well as keep team motivated through allowing member input. Evaluate the existing
process and improve it, using quality tools and implement lean practices including just in time and
kanban systems. Review supply chain system every quarter and evaluate against benchmark and set
criteria 9such as percentages). The project team will ensure delivery of objectives; progress to be
monitored based on the WBS and schedule and corrective actions taken. Outside consultants will be
used to test product quality and contract management practices used. Qualified staff to be hired for
supply chain. Cold chain to be maintained with supply stores located near outlets based on distance
and demand forecasts. WHS policies to be implemented and monitored.
Process Improvement Plan
Use of lean principles
Evaluation of progress against set objectives and benchmarks
Scope is on groceries only
Follow set process for managing groceries supply chain
Metrics will be used in monitoring performance against benchmarks
Quality Metrics
The grocery and food code of conduct
Grocery freshness
Supply levels (stock management)
Contract management

RISK MANAGEMENT IN RETAIL SECTOR : WOOLWORTH'S 12
Competitive pricing
Project Document Updates
A stakeholder management document, a communications plan document, a risk management
plan document, benchmark document for quality, quality management plan, project plan. All
documents to be managed according to company policy, with versions and responsible persons.
Revisions to be documented. Documents to be in electronic form and be stored for at least five
years before being archived.
Information Management
According to Lientz (2011), documents must be accordingly generated, in soft and hard copies,
with a designated person responsible: all documents must have versions, approvals, creation dates,
and revisions and be archived accordingly. Records must be kept, based on legal legislation and
organization requirements.
Control Quality
This requires that relevant quality criteria be defined for the system (Kerzner, 2013). Quality
metrics will be monitored constantly and performance reviews undertaken every quarter. Other
quality criteria should include the management framework, for instance Agile and/ or PRINCE 2
methodologies in executing and monitoring the project (Spundak, 2014).
Procedures for Reviewing Outputs
The role of the execute and business sponsor are defined and what tests will be undertaken to
ensure the supply chain system meets the set objectives and quality standards (Nanda, 2016). For
this phase, technical (output) quality consultants can be hired to handle this process (of reviewing
quality performance) (Miguale & Dias, 2009). Scope will be managed strictly and an approval
process used for any changes with stakeholders involved.
Procedures for Acceptance (of output)
A procedure must be put in place for the acceptance criteria in the context of product quality.
The sourcing, contract management, and testing for quality will be strictly adhered to, as is cold
chain management and stock management using lean principles of just in time. These steps form
part of the project QMP as part of the project management plan (Kahn, Kay, Slotegraaf, & Uban,
2013).
Plan Procurement Management
The procurement plan is then generated to determine if expectations are realistic, and allows all
stakeholders to meet and discuss procurement requirements (Kerzner, 2017). The procurement plan

RISK MANAGEMENT IN RETAIL SECTOR : WOOLWORTH'S 13
is also important for purposes of planing; the duration with which items and services will be
procured and forms part of the project plan and QMP (Papke-Shields & Boyer-Wright, 2017).
Procurement Management Plan
Steps Task Lead
1 Invite bidders through advertising Procurement project manager
2 Set out criteria for quality and performance by
bidders on quality, and conformance to regulations
Procurement project manager
3 Evaluate bids and shortlist Procurement project manager
4 Detailed evaluation of shortlisted suppliers Procurement project manager
5 Award supply contracts after detailed negotiations,
including testing samples
Procurement project manager
6 Create contracts and contract management plan Procurement project manager
7 Monitor contract performance Procurement project manager
8 Review quarterly Procurement project manager
The overall supply chain plan is represented as shown below

RISK MANAGEMENT IN RETAIL SECTOR : WOOLWORTH'S 14
Contract Types
Fixed price incentive fee contracts; The prices for products will be fixed based on contract
details; however, the supplier will be given an incentive (financial) based on their performance
checked on criteria including quality, conformance with food and grocery code of conduct, test
results for chemicals, general quality tests, and delivery.
Fixed price with economic adjustment contract; In this contract, longer contracts are given after
vetting suppliers and the supplier is give protection against issues such as inflation; as such prices
can be adjusted upwards or downwards depending on economic environment.
Cost plus incentive fee contract: Supplier is reimbursed all costs involved in supply and
delivery of groceries after being vetted and contract awarded, plus an incentive based on
performance; the performance criteria include timely delivery, freshness and quality tests,
compliance with food and grocery code of conduct, tests for chemical use (to be within stipulated
regulations)
Cost reimbursable contract; in this contract type, the suppliers will be paid a fee based on
deliveries (completed) and according to benchmark and a fee representing profit paid on meeting
objectives or expectations
Quality Plan Process Flow

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