Ineffective Supply Chain & Customer Loyalty in Woolworths

This report analyzes the impact of ineffective supply chain management on customer loyalty at Woolworths. It begins with an introduction to supply chain benefits and challenges, highlighting the importance of efficiency and cost reduction. The background section emphasizes the positive correlation between effective supply chains and revenue growth, as well as the risks associated with poor performance. The research objectives aim to identify factors enhancing supply chain effectiveness, investigate aspects triggering customer loyalty, and evaluate the overall impact. Research questions and hypotheses are presented, followed by a literature review summarizing key concepts like Porter’s Five Forces, factors of effective supply chain management (personnel contact quality, ordering procedure, order discrepancy handling, and information quality), and aspects of supply chain management that trigger customer loyalty (product quality, timely delivery, and customized service). The research methodology includes a positivism research philosophy, a deductive research design using Porter’s Five Forces, and a descriptive research purpose. Primary data collection is conducted through questionnaires, analyzed using quantitative methods (regression analysis), with a probability sampling technique. The sample size consists of 100 participants, comprising Woolworths employees and customers. The report concludes with ethical considerations and the correlation of variables through regression analysis.

Effect on Customer Loyalty due to
ineffective Supply Chain
Management in Woolworths
By

Introduction, background and
management problem
• The main benefits of the supply chain are to attain high efficiency rate, reduce the overall cost,
enhancing business output and business profit level (Christopher 2016).
• Myerson (2012) also stated that effective supply chain management also reduces the delay in the
business processes and increase the level of satisfaction among the employees.
• Tayur et al. (2012) on the other hand stated that some of the most advantageous aspects of the
supply chain management improved product and material flow, enhanced financial flow and
seamless information flow.
• However, Wisner et al. (2014) argued that the common problem of the supply chain management
are quantifying the functions by the amount they spend in supply chain which arise low
satisfaction among the stakeholders, who spend more order of lesser amount.
• Ptak and Schragenheim (2016) moreover stated that short signed risk management are also the
common factor that give rise to delayed days of delivery, sudden increase in demand that cannot
be fulfilled efficiently, supplier issues and shortage in supply.

Background of the Research
• 79% of companies are benefited with greater revenue growth than average on incorporating
high-performing supply chains. Stadtler (2015) also stated that if a company has poor supply
chain performance, the probability of facing corporate business failure gets high.
• Ross (2013) thus suggested companies not only to focus on the supply chain start but also
bring improvement in supply chain network design, supply chain service performance,
supply chain cost, relationship with supplier and ethical procurement and corporate
responsibility.
• The major problem arises when the impact of ineffective supply chain management put
negatively on the customer services.
• Govindan et al. (2014) highlight that some of the negative customer experience experienced
by the users are long delivery lead times, poor order fill, delays in response to customer
service and poor product or service quality.

Research Objectives
• To identify the factors that enhances effectiveness in the supply
chain management in Woolworths
• To investigate the aspects of supply chain management that
triggers customer’s loyalty in Woolworths
• To evaluate the impact of the supply chain management and
Woolworths’ customers loyalty
• To recommend strategies for improving Woolworths’ supply
chain management services

Research Questions and Hypothesis
Research Question
• What are the factors that enhance effectiveness in the supply chain management?
• What are the different aspects of supply chain management that triggers customer’s
loyalty?
• What is the impact of the supply chain management and customer’s loyalty?
Research Hypothesis
• H1: There is impact of the ineffective supply chain management on customer loyalty
• H0: There is no impact of the ineffective supply chain management on customer
loyalty

Summary of the Literature
review
This chapter aims for analyzing research papers based on the
supply chain management issue and its effect on the loyalty of
the customers for addressing the developed research
objectives. This chapter comprised details of factors that make
the supply chain management ineffective, different aspects of
supply chain management that triggers customer’s loyalty and
the impact of the supply chain management and customer’s
loyalty.

Summary of the Literature
review contd.
Porter’s Five Forces
• Competitive rivalry- Woolworths is an established organization hence implementing new supply chain
models or hiring a third party provider is relatively easy for the company.
• Bargaining power of suppliers- The supplier power are lower as other prodders for delivering an
efficient supply chain management system are always ready to collaborate with a successful organization.
• Bargaining power of customers- The customer’s power is medium to high as they have other options
like Coles and ALDI if they are not satisfied with the work of Woolworths.
• Threat of new entrants- The threat of new entrants low to medium as implementing effective supply
chain management is cost consuming and hard to implement as required in-depth knowledge for aligning
the existing business operation with the newly implemented system. However, new organizations like
online services already use effective supply chain networking system.
• Threat of substitute products or services- This risk is high as all companies plan for obtaining greater
effeteness in supply chain management system.

Summary of the Literature
review contd.
Significance of Porter’s Five Forces
• This assessment helps Woolworths to identify their company's competitive environment to
formulate effective supply chain management process.
• Woolworths will also able to assess the advantageous aspects of the rivalry organization and
make proper change in their existing process for overcoming the ineffective procedures in the
supply chain process.
• Woolworths can also segregate their target customer out of the entire people base in the
community.
• Woolworths can also evaluate the number of suppliers so that they can choose the one that
charges them with lesser cost.
• Woolworths can also identifying the aspects that can act as a barrier for making improvement
in the supply chain effective and can use the same for innovating new procedures for making
improvement in the supply chain

Summary of the Literature
review contd.
Relevance of Porter’s Five Forces
• The factors personnel contact quality, ordering procedure, order discrepancy
handling and information quality selected in the conceptual framework
illustrates effective supply chain management aspects. These factors should also
be able to highlight the necessary thing that a new company should incorporate
for making their supply chain management effective in retail industry.
• Moreover, products quality, timely delivery, customized service are the identified
aspects of supply chain management which triggers customer’s loyalty is
identified through the aspect of ‘competitive rivalry’, used in the Porter’s five
forces. This will allow Woolworths to assess their strong point with the rivalry
organization and enhance their performance for attracting more customer base.

Summary of the Literature
review contd.
Factors of effective supply chain management
• Personnel Contact Quality- Agus and Shukri Hajinoor (2012) stated that people like when they are addressed
personally and develop a sense of being valued. This can be achieved when IoT can be incorporated in the supply chain
management and all the messages related to the shipment of the placed order, estimated delivery of the objects send to
the customers through mobile message and e-mails with addressing their names.
• Ordering Procedure- Jacobs et al. (2014) highlighted that users liked when they easily search for the products and the
get the delivery on time. This can be handled by the organization by maintaining a database in which all the details of the
orders can be stored and the delivery are made based on prioritizing the order placements.
• Order Discrepancy Handling- Online services faces a disadvantage that it does not provide user a physical experience
to judge the quality of the projects; however, companies provide facility to return their order of they are not satisfied
(Aung and Chang 2014). Thus, on ineffective discrepancy handling for these orders, the sense of ineffective customer
loyalty occurs.
• Information Quality- Customer loyalty can also be obtained of all the information related to their order are genuine and
updated time to time. Stadtler (2015) furthermore portrays that if user receives not or wrong information and faces
problem in fetching the tracking details of their order this leads to higher customer dissatisfaction which furthermore
affects the loyalty (Hines 2012).

Summary of the Literature
review contd.
Aspects of supply chain management that triggers customer’s loyalty
• Products Quality- Tse and Tan (2012) stated that in order to gain more customer
satisfaction, organization need to enhance their products quality. Good and enhanced
products quality enhances the brand reputation and image in the market.
• Timely Delivery- The advantage of effective supply chain services is that all the
data are updated and according to the database all the users also receives their
products on time. (Zu and Kaynak 2012) thus highlight that this timely delivery
makes the users satisfied and allow them to remain associated with the organization.
• Customized Service- The post purchase customer’s services also allow the
customers to clear all their queries related to the orders and develop a sense of
being loyal towards the organization.

Summary of the Literature
review contd.
Impact of the supply chain management and customer loyalty
• Greater annual growth- The more customers become satisfied with
the process of placing order and get timely delivery of the
products, the greater the profitability the organization can achieve
(Cho et al. 2012).
• Larger customer base- Happy customers intends to remain with the
organization services and desire to use those facilities again
(Golicic and Smith 2013). These satisfied customers also promote
such organization through word of mouth activity.