Operations Management Report: Coles Supermarket's Supply Network

This report provides an in-depth analysis of operations management at Coles Supermarket in Australia, a retail chain owned by Westfarmers. It examines the supermarket's supply network flows, including product, financial, and information flows, and identifies key performance objectives such as cost-effectiveness and product improvement. The report also explores supply network design concepts like the value chain and the role of supply chain management in meeting customer requirements and maintaining competitiveness. Recommendations are made to reduce costs and increase business efficiency, including fostering competition among suppliers, optimizing inventory management, and consolidating administrative activities through digital technologies. The impact of digital technologies on improving the business, such as data acquisition and new business models, is also discussed. The report concludes by emphasizing the importance of benchmarking, resource management, and the implementation of the recommendations to enhance Coles Supermarket's efficiency, effectiveness, and productivity.

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Organization description
Coles supermarkets in Australia is a consumer and retail services chain of supermarkets
owned by Westfarmers, their parent company, and their headquarters are in Melbourne. These
supermarkets provide Australian families with quality products at affordable prices. They sell
packaged food products which they source from Australian manufacturers, growers, and farmers.
And if they import products, they make sure that the products meet quality and safety standards
required before they sell them to their customers. The supermarket is also committed to form
lasting relationships with the farmers in Australia, and to make sure that the dream of a
sustainable future to Australian families is realized and to also support jobs in the food industry
boosting Australian economy in the process. They are also partnering with other companies to
provide food to the needy people in a program called the Coles Community Food Program.
Supply network flows
Product flow which is the movement products from the retailer, the supermarket, to the
customers, which also involves the supermarket dealing with customer needs. This flow is
generally downstream, from the point of origin to the point of consumption. Secondly, financial
flow where revenues flow from the customers who are the source of the funds in a chain of
supply, to the other party in the supply chain, the retailer. Integrated management of financial
flow is a crucial activity in the supply network flow of Coles Supermarket as it impacts the cash
flow and the profitability of the supermarket directly (Nagurney 2013, p. 668). Thirdly,
information flow: supply network flow involves a lot of diverse information like descriptions and
pricing, product data and current cash flow which requires a lot of coordination and

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communication from the parties involved. Better and faster flow of information enhances the
effectiveness of the supply network which transforms performance greatly.
Key performance objectives
One of the most important objectives of the supermarket is cost-effectiveness. Supply
chain design is a crucial factor in the supermarket’s outbound logistics and their superior
inbound capability. They control the distribution of their products via sophisticated logistics and
procurement networks. Management and ownership of the network of distribution enable,
optimum distribution efficiency, superior product quality and enhances the delivery of goods that
is cost effective. Also, through its use of advanced technology, economies of scale and efficient
capabilities of the supply network, Coles Supermarket offers high quality products at affordable
prices ensuring the perception of the customer value exceeds all cost activities and to also create
a margin of profit.
Improving their products is another objective where high quality products mean higher
accuracy meaning applicable standards must be complied with in order to meet higher consumer
satisfaction (Markgraf 2018 p. 27. The importance of these objectives is that they help the
supermarket improve their productivity and increase financial returns. They can also be used as a
benchmark to gauge the success of the business as the more objectives met, the more successful
the business is.
Supply network design concepts
Value chain concept is developed as a competitive strategy and analysis tool. It is
consists of primary activities like outbound logistics, inbound logistics, operations, and sales and
marketing and support activities like technology development, infrastructure, management of

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human resources and procurement which work together for the benefit of Coles Supermarket
customers and also to generate revenue for them (Network 2010 p. 23). Supply network and
value chain are extended enterprise’s complementary views, with supply network processes
enabling products and services flow in one direction. And value chain generates cash flows and
demand from the customers. Also in Coles Supermarket, management of supply chain plays a
crucial role in operations management. It involves managing information and materials from
retailers and suppliers of raw materials to the final customer. Aimed at reducing overall cost and
also improve delivery and quality of services. The operations design of Coles Supermarket
decides whether products should be tailored so as to meet customer needs, how to manage their
suppliers and also how to meet the standards set by the local government (Chain 2016 p. 69).
The supermarket has been compelled to reach higher excellence levels in the services and
products they offer. Hence supply chain management should be used better in supermarkets like
Coles for excellent operations management.
In order for Coles Supermarket to meet the requirements from customers, they must do
everything correctly in the supply chain. The Australian landscape in retail is very competitive,
with competitors sharing the market share aggressively. The consumers want to embrace the new
technology where Coles Supermarket reduces operating costs and the consumer satisfaction
levels are improved (Management 2010, p. 96). Both are key drivers in boosting the
supermarket’s profitability and turnover. Coles Supermarket also faces some problems due to the
vast size of the country in delivering supply chain systems of high quality while also ensuring
that cost fulfillments are maintained at a minimum level. Communication between data centers
and the stores is very critical (Hess 2012, p. 78). This provides greater efficiencies and also

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boosts productivity in the operation of the Supermarket. Also for Coles Supermarket to meet
strategic objectives which are long-term, they must design a supply network that is optimal.
Recommendations
There are several recommendations on how Coles Supermarket may reduce costs and
increase their business efficiency. One of them is to create competition between their suppliers,
where, if the Supermarket obtains new bids from the current suppliers who know that the bids
may be submitted by competitors, then they might extract lower pricing of products. This is
because some suppliers might be complacent when motivation from other competitors is not
there. Secondly, the Supermarket should change suppliers every now and then because changing
of suppliers is proven to reduce costs (Melanie 2017, p. 11). When Coles Supermarket is
choosing new suppliers, they should ensure that they are safety nets that are in place to ensure
that prices are not increased that means checking their new supplier’s background carefully until
they are satisfied that they will meet their needs. Thirdly, the Supermarket should ensure that
inventory management systems put in place are efficient as they affect cost directly. When the
amount of inventory is reduced by ordering in time or when they hold safety stocks in minimal
reserves saves cash flow. Inventory management reduces overstocking which reduces any
obsolete stock that can’t be sold easily.
Fourth, Coles Supermarket should eliminate the sources of suppliers that they may
have. This will reduce cost by ensuring that they choose single sources for products that are
absolutely necessary (Effect 2009, p. 78). This creates economies of scale as they are ordering
from a single supplier at a reduced cost generally. This also reduces administrative costs,
therefore, lowering overheads due to clearing multiple transactions from the financial statements.

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But they should always ensure that they have back up suppliers for cases where their supplier
fails. Fifth, the Supermarket should also make sure that they consolidate their administrative
activities. Internet use directly impacts the costs of the business as it unlocks greater
opportunities when they have systems in the cloud where they will be easily accessible anytime
(Sage, 2011 p. 67). By having a central processing hub and automated practices, the internet
consolidates administrative activities, therefore, reducing transaction costs, impacting overheads
directly. All these contribute to direct reduction of cost and greater efficiency.
How digital technologies are improving the business
Leading organizations has a comprehensive strategy of data acquisition and usually
distinguish themselves from their competitors on the basis of the data platform (Marco & Brenda
2014, p. 67). The difference in this strategy shows that business people are likely to access
consistent metrics for making decisions giving the organization the ability to generate their
business predictions from the collected data.
Digitization is changing the nature, speed, and locus of operating decisions made by
managers, also the services, technology, and systems that are enabling efficient and effective
operating performance. Digital technologies are changing, fundamentally, the way organizations
capture and create value for its customers by unlocking new value through new services and
efficiencies (Lankani 2017, p. 5). Secondly, capturing opportunities of the values created by the
organization expands greatly with business instrumentation, ubiquitous sensors and pricing
technology offering new ways of driving efficiency, accuracy and price differentiation. Also, this
technology may be used by automobile insurance companies to collect key metrics such as

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unsafe driving behaviors like rapid acceleration and hard braking which will enable them to
understand their customers better and to also price the policies taken accordingly.
Delivering new models of business isn’t easy and it requires new operating models
being adopted (Petra 2010, p. 35). Therefore, if a digital approach to operations is adopted, the
foundations of the organization changes. Both locus and timescale of the organization are
changed by digitization, the way it delivers products to customers, experiments new concept and
explores new ground. Also, digital transformation provides opportunities to leverage assets that
are old so as to capture and create value in new ways.
Conclusion
Effective, impartial and consistent way to benchmark Coles Supermarket’s services
levels should be in place as the business environment today is very competitive, operations
management’s role has been the focal point to increase competitiveness through improving
efficiency and value added. The only way this is possible is by employing new technology,
training employees and also new methods. By strategically behaving, Coles Supermarket can
achieve efficiency, prosperity, effectiveness, and productivity. Also, resource management is
important as the efficient management of resources will lead to the success of the supermarket.
The recommendations made on how to improve cost-effectiveness of the Coles Supermarket
requires attention and adequate action so as to deal with any issues arising. Their implementation
will definitely improve their efficiency and also cut on cost. Also, the supermarket is notably
growing with the supply chain management method put in place which will highly facilitate the
sector.

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