Procurement and Supply Chain Management Issues and Challenges Faced by Woolworths

This paper discusses the procurement and supply chain management issues and challenges faced by Woolworths, the largest retail company in Australia. It analyzes the various issues, including supply chain, operation, information, integration, and sustainability issues, and how the company is dealing with them. The paper also provides an overview of the company's procurement and supply chain management and improvement programs.

Running head: Procurement and supply chain management
Procurement and supply chain management

Procurement and supply chain management
Executive summary
The paper provides a brief overview about the supply chain management of the
Woolworths. Woolworths is one the largest companies in the Australia that delivers retail
products and services to the customers. It explains that how the firm uses unique supply chain
management within the organization. Here is the discussion about the various issues of the firm
including integration issues, supply chain issues, inventory issues and information. Along with
these issues, sustainability issues are also being faced by the organization in today’s competitive
world. It explains that how the firm making effective strategies to overcome and handle these
issues and challenges. Further detail of the tasks has been detailed below.
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Procurement and supply chain management
Table of Contents
Executive summary.....................................................................................................................................2
Introduction.................................................................................................................................................4
Supply issues...............................................................................................................................................4
Operation issues..........................................................................................................................................5
Information issues.......................................................................................................................................5
Integration issues........................................................................................................................................6
Sustainability issues.....................................................................................................................................7
Company’s procurement and supply chain analysis....................................................................................7
Improvement programs............................................................................................................................10
How improvement programs can assist the company to achieve its vision, mission and strategic goals..10
Conclusion.................................................................................................................................................11
References.................................................................................................................................................11
Appendices................................................................................................................................................14
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Procurement and supply chain management
Introduction
The main aim of this paper is to explain and analyze the issues and challenges of
Woolworths that are being faced by the company while conducting business operations at
international level. The supply chain and inventory management are biggest challenges for the
firm. The paper explains that how the firm is dealing and overcoming these issues and
challenges. Furthermore, here is the discussion about the supply chain management of
Woolworth’s group.
Woolworth’s group is a major Australian retail company which is incorporated in 1924. It
is the biggest company in Australia measured by revenue. There are approx 202,000 employees
employed in the organization. The mission of the company is to deliver the best quality of
products and services to the customers in the international market (Woolworths, 2018).
Mission: The main mission of the company is to achieve and gain financial security and well
being by providing wide range of products and services at appropriate prices in the international
market.
Vision: The main vision of the Woolworths group is to maximize profitability by rendering
unique and best quality of products and services.
Strategic goals: Strategic goals play a vital role to attain long term mission and vision of the
firm effectively and successfully. The goal of the company is attain long term vision and mission
of the corporation.
Supply issues
There are various issues being faced by the corporation in today’s competitive world
which may influence the long term success and growth of the firm. The company is unable to
fulfill the demand of the customers due to lack of stocks and goods. The organization is failed to
maintain sufficient stock in the warehouses which could influence the financial position of the
firm in the global market. In addition, the company is not provided adequate wages and salary to
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the workers at the workplace (Edwards, McKinnon & Cullinane, 2011). Therefore, it also affects
the profitability of the company. Due to globalization, the corporation is unable to maintain
quality and safety of the products and services. Risk mitigation is also involved in the supply
chain management issue. Along with this, changing marketing trends also influence the
purchasing power of customers. Due to high demand of the retail products and services, the firm
is unable to maintain adequate inventory within the organization. The success and growth of the
firm depends on the sales and revenue. Due to changing in the tastes and preferences of the
customers, Woolworths is unable to store the inventory within the organization. Furthermore, the
firm is unable to buy raw material at lower prices it may influence the long term success of the
company. Woolworths is not focusing on the quality of retail products and services. As a result,
the customers buy the competitors products and services. In this way, it is the biggest and
significant issue for the organization (Fernie & Sparks, 2014).
Operation issues
Operation management is an area of management concerned with designing and
controlling the process of production and redesigning business operations in the production of
goods and services. Forecasting is one of the biggest issues in the operation management which
could influence the function of Woolworths Company. Due to forecasting issues, the company is
unable to determine and analyze the tastes, preferences and choices of the customers in the
marketplace. In addition, planning is another factor that affects the productivity of the firm. Due
to poor planning, the firm is failed to produce and design the products and services according to
the choices and preferences of the customers (David, 2011). Moreover, the firm is not able to
maintain to effective and proper communication due to poor and ineffective workforce. They are
not giving full contribution for improving the productivity and performance of the firm.
Unethical behavior and activities also influence the production of Woolworth’s group. The
company faces competition in the marketplace due to globalization and climate change. It also
affects the prices of the products and services. The managers and top management are not able to
find and identify the tastes, preferences and requirements of the customers due to change in
marketing trends. Along with this, effective and sustainable human resource management is not
maintained by the company which affects the policies and strategies of the firm. Moreover, the
firm is not provided sufficient room to store the goods in the warehouses. Due to poor HRM, the
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organization is unable to appoint skills and potential employees within the organization
(Drucker, 2012).
Information issues
There are various information issues in Woolworths group that affect the sustainability
and image of the company. Information technology is one of critical issues for the firm. The firm
is unable to use unique and effective technologies while producing new and innovative products.
It influences the buying behavior of the customers. Due to poor technology and software, the
firm is unable to provide right and appropriate information to the customers in the international
market. There is a discrepancy between what consumers want and what retailers can render is the
biggest than ever, which leads to issues with inventory. Due to information issue, most of the
customers buy the products online and pick them in store in order to avert shipping cost. Along
with this, the company does not use sales techniques to increase and enhance the sales and
revenue. The changing economic environment also influences the new technologies and
software’s within the organization. Along with this, RFID technology is not used by the firm
while producing the products and services. Sometimes, the employees do not provide all the
information related to the product quality and features. It may influence goodwill and financial
position of the firm adversely in the marketplace. Collaboration between the leaders in an
organization is also changing rapidly in the competitive world. The firm is unable to protect the
customers data are especially vulnerable to legal risk. Furthermore, the firm is unable to provide
knowledge related to the E-Learning and E-commerce. Therefore, the customers are failed to get
all the information related to the quality and features of the products (Reinartz, Dellaert, Krafft,
Kumar & Varadarajan, 2011).
Integration issues
Woolworths Company is dependent on the manual processes to produce the products and
services. These manual processes are time consuming and require more resources. In this way, it
is the major challenge for the organization. These manual processes are unable to find the
requirements and orders of the customers effectively. Hence, the company is not monitored on
these potential scenarios and interactions. As a result, it affects the financial performance of the
firm. In addition, the firm is unable to maintain coordination and cooperation among the
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employees due to integrated business system. Moreover, if the company integrates the
technology then various challenges are faced by the organization such as rising cost issues and
training issues. Technology and supply chain integration is not possible without training and
development coaching. Training and development coaching must to provide knowledge to the
employees related to the technology advancement. It also increases the cost of the company
because the firm has to invest huge amount on training and development that could affect the
outcomes and revenue of the firm. Inventory system is also affected by the integration in
technology. Apart from this, the organization is unable to fulfill the demand of the customers and
it also affects the order management of the corporation. All these issues are faced by
Woolworth’s group while integrating the new technology and supply chain management within
the organization. Integration also increases absenteeism issues in the firm because workers do
not accept new technology and process.
Sustainability issues
Various sustainability issues are faced by the firm including energy use, wastes, land
contamination, waste water and water quality and hazardous material use. These are significant
issues in Woolworth’s group that affect the sustainability of the company. Deforestation also
affects the activities and operations of the company. Deforestation not only affects the growth of
the firm but also it is a biggest threat for the earth. In addition, the firm is wasting the water and
energy that could affect the sustainability of the firm (Benn, Edwards & Williams, 2014). Each
and every factor of earth is contributing in global warming that influence the growth of the retail
company (Brown, Harris & Russell, 2010). Due to global warming, the temperature of earth is
increasing day by day which has become major challenge for Woolworth’s group. Sustainability
issues direct affects the supply chain management of the company. In addition, pollution is one
of the biggest sustainability issues which have a direct impact on the progress of the
organization. Due to pollution, various gases and toxins released by the company in the
environment as it affects the health of people adversely. Global warming can also trigger a
higher demand for energy. Climate change has negative effects on retail industry because it
increases temperature of the earth. It also affects the performance and efficiency of the workers
adversely. Due to these issues, the company is unable to follow corporate social responsibilities
within the organization (Zokaei, Lovins, Wood & Hines, 2016).
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Company’s procurement and supply chain analysis
Woolworths uses effective and unique procurement and supply chain management to
save the resources and capital. Procurement is a process and method by which items and stocks
are bought from outside vendors. Managing the ordering, review, receipt and approval of items
from suppliers are included in the procurement and supply chain management process. The
procurement and supply chain management helps to beat the rivalries in the global market
(Wahyuni, 2010). The firm uses tradestone’s merchandise lifecycle management platform to deal
with its supply chain within the organization. It is one of the optimized value chain processes for
Woolworth’s group. Under tradestone’s merchandise lifecycle management, the company uses
RFID technology. RFID (radio frequency technology) renders an inclusive control over the
entire flow of products and services (Sarac, Absi & Dauzère-Pérès, 2010). It is significant to
track and recognize every single item while allocating the products from the warehouses and
stores to retail store. By using RFID technology, the company does not require to contract for
operations and activities. The firm can trace their supplier’s products in a real time. This system
also helps in internal material management system by improving the distribution center
operations and activities (Hugos, 2018).
The tradestone offers a platform for the business activities and operations to handle
orders, B2B sales, suppliers and financing. It interconnects with enormous suppliers in the world.
This management also helps to handle all the problems and issues related to the food and
beverages. Therefore, the company uses tradestone platform to manage and control the
procurement and supply chain management. The key strategies which are involved in
merchandise life cycle management have been detailed below.
Strategic planning: In this stage, the company focuses on the planning process to attain goals
and objectives. SAP solutions help streamline merchandise life cycle processes so retailers can
make effective and unique merchandise decisions.
Merchandise and assortment planning: SAP solutions are unable to define the networks,
channel, plans and merchandise with including place holders for new styles. Actions and events
can be distributed for sales, and maintaining margin at all level of the management.
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Promotion planning: Promotion planning plays a significant role in Woolworths Company to
maximize buyers in the global marketplace. In addition, performance detail can receive easily
provide to support for implementation of vendor rebates.
Life cycle pricing: SAP (system application and product) helps the company to handle and
control the trade-offs between profit, returns and price image and keep the prices that provide
support a retailer’s brand strategy. Along with this, life cycle pricing helps in setting the suitable
prices of the products and services in the competitive market.
In this way, it assumed that the company uses tradestone’s merchandise lifecycle
management platform in the supply chain management to analyze and evaluate the demand,
choices, needs and requirements of the customer’s widely. By using this platform, the firm is
unable to destroy the competitors in the marketplace (Aaker & McLoughlin, 2010). In addition,
Woolworths uses effective and unique business strategies to gain rivalries benefits globally.
Apart from this, unique inventory management is used by the firm to provide satisfaction to the
customers. In addition, the firm initiates the vendor managed inventory (VMI) for managing the
products and services in the stores. It will to beat and hit the competitive in the international
market. In this way, it can be said that the firm uses unique and strong supply chain management
within the organization to increase the number of customers globally (Blanchard, 2010).
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Procurement and supply chain management
Supply chain management system in Woolworths
(Source: Woolworth, 2018)
Improvement programs
It is seen that enormous challenges are faced by Woolworth’s group in Australia. Now
the company focuses on its operations and activities to issues related to the supply chain,
inventor, integration and sustainability. The firm needs to focus on the distribution and
transportation system to avert and eliminate the sustainability issues within the organization.
Green supply chain management shall be used by the organization. Green supply chain
management helps to reduce negative impact of energy and it also reduces the wastage of water.
Effective packaging strategies shall be used by the organization to attract the products and
services in the global market (Farahani, Rezapour & Kardar, 2011). Along with this, the
corporation should focus on the reorder products and services to fulfill the demand of the
customers. In addition, volume of the product shall be checked by the company to reduce
operation and supply chain issues. In addition, the firm needs to adopt the business operating
model to forecast the demand of the customers. Along with this, integration planning must be
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done to integrate the new technologies. Woolworth’s group should focus on the supply chain
network to explore and flourish the business globally (Mangan, Lalwani & Lalwani, 2016).
Employees is considered the main assets for the firm therefore, the company should measure the
performance of the workers. For this purpose, performance management system shall be adopted
by the organization. The organization should also motivate and encourage the workers for
performing tasks and job effectively and successfully. Proper training and development session
must be held by the corporation to increase potential and efficiency of the workers (Bourne &
Bourne, 2012).
How improvement programs can assist the company to achieve its vision, mission and
strategic goals
All these improvement programs help to attain long term goals and objectives of the firm.
The employees are essential key source for the firm, if they do not work effective and efficiently
then it influences the success and productivity of Woolworths group. No company can attain its
long term goals and objectives without an effective workforce. In this way, training and
development coaching helps to improve and develop the efficiency of the workers for attaining
these desired goals and objectives. In this way, employees play a critical role for bettering the
results and outcomes of the firm. Supply chain management also helps to reduce the cost of the
products and services (Rushton, Croucher & Baker, 2014). Effective and strong supply chain and
procurement management helps to increase the sale of the organization. Rising in the sales helps
in maximizing the profitability of Woolworth’s group. Inventory management ensures the
sufficient level of inventory in the warehouse, as it helps to make a brand image in the minds of
the customers. The corporate social responsibilities can be carried effectively by implementing
the sustainability strategies within the organization. If the company provides right and adequate
information to the customers then it will increase and enhance the loyalty and trust of the
customers in favor of the organization. It will also increase the satisfaction level of the
customers.
Conclusion
On the above discussion, it can be concluded that Woolworths is one of the biggest
brands in the world. The firm is dealing in retail products and services across the world. In
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today’s era, various issues and challenges are faced by the organization in Australia. Supply
chain and procurement management, inventory management and lean system are main issues
which affect the sustainability of the organization. Apart from these issues, integration and
information issues also exist in the organization that has direct impact on the productivity of the
firm. To overcome these issues and challenges, the organization uses effective supply chain and
inventory management. Along with this, unique and dynamic strategies are being used by the
company avert and eliminate these issues in the marketplace.
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References
Aaker, D. A., & McLoughlin, D. (2010). Strategic market management: global perspectives.
John Wiley & Sons.
Benn, S., Edwards, M., & Williams, T. (2014). Organizational change for corporate
sustainability. Routledge.
Blanchard, D. (2010). Supply chain management best practices. John Wiley & Sons.
Bourne, M., & Bourne, P. (2012). Handbook of corporate performance management. John Wiley
& Sons.
Brown, V. A., Harris, J. A., & Russell, J. Y. (Eds.). (2010). Tackling wicked problems through
the transdisciplinary imagination. Earthscan.
Burt, S., & Davies, K. (2010). From the retail brand to the retail-er as a brand: themes and issues
in retail branding research. International Journal of Retail & Distribution
Management, 38(11/12), ( pp.865-878).
David, F. R. (2011). Strategic management: Concepts and cases. Peaeson/Prentice Hall.
Drucker, P. (2012). Management challenges for the 21st century. Routledge.
Edwards, J., McKinnon, A., & Cullinane, S. (2011). Comparative carbon auditing of
conventional and online retail supply chains: a review of methodological issues. Supply
Chain Management: An International Journal, 16(1), (pp.57-63).
Farahani, R., Rezapour, S., & Kardar, L. (Eds.). (2011). Logistics operations and management:
concepts and models. Elsevier.
Fernie, J., & Sparks, L. (2014). Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
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Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.
Mangan, J., Lalwani, C., & Lalwani, C. L. (2016). Global logistics and supply chain
management. John Wiley & Sons.
Reinartz, W., Dellaert, B., Krafft, M., Kumar, V., & Varadarajan, R. (2011). Retailing
innovations in a globalizing retail market environment. Journal of Retailing, 87, S53-
S66.
Rushton, A., Croucher, P., & Baker, P. (2014). The handbook of logistics and distribution
management: Understanding the supply chain. Kogan Page Publishers.
Sarac, A., Absi, N., & Dauzère-Pérès, S. (2010). A literature review on the impact of RFID
technologies on supply chain management. International Journal of Production
Economics, 128(1), (pp.77-95).
Wahyuni, D. (2010). The importance of supply chain management in competitive business: A
case study on Woolworths.
Woolworths.(2018). About us. Retrieved as on 15th April 2018 from:
https://www.woolworthsgroup.com.au/page/about-us/
Woolworths.,(2018). Our story. Retrieved as on 15th April 2018 from : https://www.wecu.com.au/about-
us/our-history/
Zokaei, K., Lovins, H., Wood, A., & Hines, P. (2016). Creating a lean and green business
system: techniques for improving profits and sustainability. Productivity Press.
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Appendices
Strategy and objective of Woolworths
Woolworth’s sales growth
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Macro environment factors
Woolworth’s brands
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Woolworth’s strengths and weaknesses
17