Supply Chain Analysis and Design: A Case Study of Kmart Australia

This report provides a comprehensive analysis of Kmart Australia's supply chain, focusing on the challenges the company faces in maintaining product quality and managing costs. The report begins with an executive summary outlining the core issues and the chosen methodology. It then delves into an introduction to Kmart Australia, its operations, and its supply chain structure, highlighting key attributes and the company's evolution in response to market pressures. The problem identification section pinpoints issues related to product quality, customer satisfaction, and ethical sourcing. The report then explores project management as a quantitative methodology for addressing these challenges, comparing it to other methods like linear programming and emphasizing its advantages. The analysis section examines the application of project management principles to Kmart's specific problems, outlining objectives, constraints, and the project lifecycle. The results and discussion section analyzes the potential benefits of this approach, focusing on improvements in quality, customer satisfaction, and cost management. Finally, the report offers recommendations for implementing project management strategies within Kmart's supply chain to enhance efficiency and profitability. References are provided for further research.

Running head: SUPPLY CHAIN ANALYSIS AND DESIGN 1
Supply chain analysis and design
Name of the student:
Name of the University:
Authors Note:

1SUPPLY CHAIN ANALYSIS AND DESIGN
Executive Summary
The paper presents the designs and analysis of supply chain of a company. The case
study company is Kmart Australia. Kmart Australia is a retail store in Australia which
operates over 288 stores across New Zealand and Australia. It’s part of the Wes Farmers and
it has over 31,000 employees. The organization contributed over Australian $6 billion within
2018. Analyzing the supply chain of the company, the problem of the company was analyzed
to be high costs on offering good quality products. Kmart is known for offering sub-standard
products to the customers. This affects their revenue since a number of individuals will resort
to the competitors. Project management quantitative methodology is used in finding the
solution to the increasing costs of offering high quality products. The paper compares project
management methodology to other quantitative methodologies for example linear
programming where it elaborates the advantages of project management methodology.

2SUPPLY CHAIN ANALYSIS AND DESIGN
Table of contents
Introductio……………………………………………………………………………………………………………………….4
Problem identification within Kmart Australia……………………………………………………………………4
Chosen topic…………………………………………………………………………………5
Analysis………………………………………………………………………………………6
Results and Discussions………………………………………………………………………6
Recommendations……………………………………………………………………………..7
References……………………………………………………………………………………..8

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Introduction
While carrying out Supply chain analysis and design, the case study company is Kmart which
is located in Australia(Betty, 2011). Kmart Australia is a chain of retail stores within
Australia offering low prices. It is owned by the Wesfarmers. It operates over 288 stores
within and across New Zealand and Australia. It has its headquarters or office located within
Musgrave, Melbourne. The company has over 31,000 employees, it has a computed revenue
of Australian $6 billion as per 2018.Kmart Australia supply chain structure is characterized
with a number of attributes. Given the fact that Kmart faced consistent loses, within the year
of 2007 the company designed their supply chain structure so as to be in position of meeting
its business planning requirements. Kmart Australia made a modification of its practices
within business over a decade so as to favorably compete with other brands operating
internationally for example Woolworths, Wal-Mart, and others. The company invested in
logistic chain so as to increase on its profitability rather than mere reduction of costs. The
company is focusing on controlling tight control over basics or fundamentals for example
price citation, merchant choice, check of ethical actions, superiority, etc. The company
employs a Core's CBX system which is very helpful in meeting the requirements for
coordinating the different departments. The company acquired an "enterprise resource
planning system" which is very useful in sourcing unit. The goal for the company as well as
the established supply chain system is to combine merchants, buyers, as well as other
departments from the start to end to a single system where there is free transmission of
information among clients, time zones, and offices. Kmart Australia introduced the cross-
docking system within its supply chain. It is the first company to introduce the cross-docking
system within Australia, this technology was to help in consolidation of the distribution
operations within the different offices or branches of the company. This technology was

4SUPPLY CHAIN ANALYSIS AND DESIGN
appropriate for the structure organization of the company and is very crucial in meeting the
company’s requirements within the ongoing business environment of the company(Betty,
2011),.
.
The new cross-dock supply chain system is based on 75,000 m2 DC, it has space
within Truganina, Melbourne. This DC features the biggest cross-belt categorization system
of the conveyor executed by a retailer. Its mechanical capacity ranges over 6,000 items in
each hour to orders of individual for up to 88 alongside stores. Kmart implements a lean
methodology such that it increases on its sales. It does this through using its supply chain
procedures to attain maximum benefits, one of the supply chain procedures include the "pick
and pack procedure". The company also implements Direct sourcing system (DSS) which
employs Core Solutions' CBX an "extensive supply chain software". When the system was
employed initially, Kmart reorganized its operations and also there was diminishing of the
costs. These supply chain system have played a significant role of serving Kmart in executing
its policies helping it to raise from Zero profits within the year of 2008 to one of most and
best money-making retail stores within Australia. The current balance of payment sheet for
Kmart identify a revenue of Australian $5.2 billion, net assets summing to Australian $2.3
billion as well as operating income Australian $470 million.
Problem identification within Kmart Australia
Kmart Australia has a number of challenges. These challenges are all based on
improving on the levels of production within the company. The company operates in general
merchandise and clothing retail sector. It operates both internationally and locally. It was
formed in the year of 1969, opening its first store within Burwood, Victoria. Kmart over the
years has experienced great challenges in improving employee safety and health, increasing

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community investment as well as community welfare, increasing on the safety and quality of
the products which are distributed by the company, increasing on the diversity of the products
and services distributed, reducing on the waste of products, ethical sourcing, as well as
sourcing sustainable materials. The company has laid a number of strategies on how to curb
on these challenges. It has set different priorities over different years on how to overcome the
challenges. To improve safety and health, the company is willing to launch a new Kmart
safety and health service model. To handle the challenges that are community based, the
company is expanding on community activities and partnerships so as to have greater impacts
on the physical and mental wellbeing of the youth. The challenge of energy within the
company is solved through lighting upgrades, managing of peak demand, and investing in the
building controls so as to cut the use and costs of energy. The company is trying to overcome
the problem of waste through continual implementation of "Kmart's national ban" on use of
shopping single plastic bags. Kmart urges to use learnings and data from "Kmart waste
audits" so as to commence on the implementation of changes to Kmart's recycling systems
and practices, diversion practices, and waste management. The company is also trying to
overcome the challenge of ethical sourcing through rolling out the key initiatives which are
identified within the three year "ethical sourcing program" guideline. The company on the
challenge of use of sustainable materials, it is enhancing further progress and programs
towards the meeting of sustainable cotton commitments and other material.
Given the fact that Kmart is improving its production and deliverance of services to
the different customers, the company is facing the problem of quality and safety of the
products. The company has undertaken a number of activities to improve safety and quality
such as building risk based model that would be useful in facilitating the identification of
items -based risks/hazards as well as adopting risk mitigation plans and strategies. There are a
number of individuals who are bitterly complaining on the quality of goods offered by Kmart.

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Different individuals are identifying that the retail sales deliver cheap, bargain able products
but of poor quality which are very dangerous to the environment. There is a possibility of sale
of items with scratches, some are wonky; in other words some goods on display are damaged.
Selling and displaying of goods which are damaged leaves customers puzzled and
unsatisfied, therefore there is a need of improving on the quality of goods inorder to increase
satisfaction of the customers. The quality of the goods being displayed by the retail outlets of
Kmart can be improved but also the way of offering services to the customers is unpleasing.
This would become one of the major reason why there is an increase on the number of
complaints from the different individuals. The Kmart staff as well as the managing director
Ian Bailey is fundamentally unsatisfied with the way customer expectations are met at the
discount-department stores(David, 2010). Since the retail store is failing to offer what the
customers are expecting and also are failing to offer adequate information to the consumers,
the customers are unfortunately resorting to obtaining what they need from the immediate
competitors of Kmart. Kmart is short of providing and offering the needful information and
services to its customers.
Chosen topic
The chosen numerical method used for solving the problem of cost on offering high
quality products is project management(David, 2010). Project management is a business tool
that poses a number of advantages to all sizes of business. It offers guidelines, techniques,
and processes that are useful in the management of people as well as the work they are
involved in within the given projects. The reasons why project management is very useful is
that there is an increase in the success chances and also help in the consistent delivery of
projects as well as offering best solutions to the occurring projects within the possible
specified time and budget constraint.

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Project management has a number of advantages as compared to other topics. The
major advantage of project management is that it will be useful to the organization in
managing the existing projects effectively which will be useful in the resolving of the existing
problems in a very quick way. Given that it takes money and time to manage the existing
projects and problems, this quantitative method is a very good practice because of the
following.
 It is essential in the improvement of the chances of achievement of the results
acquired.
 It is helps in gaining fresh perspective on the project, how it is fitting with the existing
business strategy.
 It helps in the prioritizing the existing resources of the business and also ensures their
effective usage.
 It is easy to mitigate the existing risks of the failing project.
 It helps in the increment of customer satisfaction.
 It help the organization in gaining competitive advantage and also boosting the
bottom line.
 Project management quantitative methodology improves quality of work and
productivity.
 Project management is helpful in causing satisfaction of the various needs for the
customers and stakeholders.
 It is very easy to implement as compared to other quantitative methodologies.
Through using other quantitative methodologies in managing the cost on the offering
of high quality products, there is a possibility of misusing time, besides time there is also
inconsistency because the methodologies are very abstract. Failure to have process which
may be useful in managing the problem of the company can lead to poor performance, waste

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of the resources of the company. While managing the companies problem, project
management will offer planning, defining, organizing, and implementation of the desired
probe which becomes a project to be undertaken. After the problem is established as a project
and this project is defined by scope, resources, time frame, and money. The problem which is
established as a project is made to be unique in its own way; there are project management
principles that should be applied. These principles are project objectives, project constraints
as well as project lifecycle. These principles during the obtaining of the solution will offer a
project management process a very solid foundation that will be helpful in the using of the
different resources and available tools efficiently thus helping in the successful completion of
the project(David, 2010).
While solving the given problem, the main point for the successfulness of the project
is achieving the given business objectives and goals. It crucial to make an establishment from
the beginning what the project manager has to accomplish. So as to be effective, the
objectives should be very specific as possible .improving on the cost of quality of products is
very measurable though there is need for advanced setting of this objective so as to fully
qualify to be used in the management of the project. The objectives can be expressed in the
following manner; the objectives for solving the project can be identified as outputs,
outcomes, strategic objectives, as well as benefits. Whenever the project has fulfilled its
existing objectives, it closed. After the completion of the project, it shows that the solution to
the existing problem has been obtained. It’s always right to set goals as well as objectives
when carrying out the project because without the goals and objectives, the overall project
will lack focus and the results will therefore be hard to measure. The goals and objectives are
measurable, attainable, and time bound.
Data Collection

9SUPPLY CHAIN ANALYSIS AND DESIGN
Kmart Financial data
The company’s total revenue in the year 2016 stood at $5.2 bn registering a for 14 percent
increased. The overall levels of sale increases were due Custer transactions growth and the
relatively cheaper prices on specific products but high quality products remained expensive.
The earning of growth were due to the Kmart’s ongoing enhancement and at the same time
the improvements being undertaken to curb some products costs which are being incurred by
the company.
However as per available data, there is a current follow in sales being registered by the
organization which has made the attainment of its specific targets. Prices of high quality
products still remain high, thus limiting the overall levels of sale. The company persues, the
sales maximization objective, however with the prices of some items still very high, the
overall target of $10 billion. The company if it does not undertake effective techniques aimed
at reducing the levels of costs, it is likely lose a total of 201 million dollars to the current
competitors by the year 2026

10SUPPLY CHAIN ANALYSIS AND DESIGN
Tax and Interest before earnings for K Mart
Problem formulation and analysis
To effectively get rid of the inefficiencies that make the company incur high levels of costs
on its operations thus leading to higher charges on high quality products, there will cost
tracking and estimating through the use of project management soft wares. Tracking of the
overall expenses incurred by the company will include among others establishing controls,
estimating budgets, continuous communications, updating forecasts and measuring results.
To effectively track the costs incurred by the company emphasis will be put on the following
steps pre planning, estimating Budgets, establishing the overall levels of cost controls,
continuous improvements, updating forecast, and tracking costs and results measurements
Kmart Australia is a chain of retail stores within Australia offering low prices. Project
management tools will be used to aid in eliminating high costs at each and every stage of the
supply chain management of the company. It is important to note that proper supply chain
management in projects entails the transformation of ideas into reality. For instance the
merging of software’s helps the organization to formalize its operations which helps in
getting rid of inefficiencies, eliminating risks, increasing accountability vital in encouraging
efficiency
Project based approach that will be used to manage supply chains in the company

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To effectively enhance the overall level of supply chain logistics and cut down the
operational costs, there will be equipment of the current infrastructure capabilities of Kmart
to effectively handle the too many manual processes, direct to manufacture relationship
which will enhance the overall efficiency levels thus cutting down operational costs.
Therefore, there will be procuring of direct sourcing systems to solve various complexities.
With the utilization of these strategies there will be reduced costs, no need for staff increases
or expenses and at the same time streamlined operations
Supply chain project Driven system that will be used to reduce costs

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It is important to note that cost and time are very critical activities in the process of managing
supply chains. The software above will be used to optimize the decisions that will be
undertaken during the project like allocation, resource planning and scheduling in order to
eliminate the overall inefficiencies in the supply chain process.
The prioritization of risk management by management of the company will enhance the
likely causes of inefficiencies in the overall operations of the company. It is important to note
risks affect the overall quality, budget and schedule thus resulting into unnecessary costs
incurred by the organization. Therefore enhancing the overall levels of substantive risk
reporting will aid in the elimination of unwanted inefficiencies in the options of the company.
The spotting of risks at each and every stage of the supply chain management process and at
the same evaluating their overall impacts towards the overall success of the company
production operations will help in getting rid of the likely inefficiencies
Further, the application of analytics will help in cutting down the overall costs of high
quality products. There some levels of linearity in the overall processes aimed at reducing
variability in the aspect of demand planning. Forecasting is easy which helps in developing
strategies that can lead to higher expenses being incurred in the production process. Analytics
will be relied on to determine and sense the overall demand signals emanating from the side
of consumption

13SUPPLY CHAIN ANALYSIS AND DESIGN
The utilization of these project management techniques like cost tracking will enable the
company to increase it overall levels of growth and restore sales for high quality products.
The loss making chain will be eliminated by reducing reliance on discounting. The total
capital and earnings will be increased through the reduction of costs. Inefficient stores will be
closed to eliminate the struggles to maintain the overall separate identities. Further quality
and prices will be the main basis of differentiating the chains. Quality fashions will be
lowered. Therefore such strategies will enable the company double her sales in the shortest
time possible
Recommendations
 So as to increase on the performance of Kmart Australia through improving on the
quality of commodities that are sold in the stores, the company has to effectively
manage its problems or challenges which are referred to as projects. To improve
quality the company has to look at ways of reducing on the costs of improving
quality(Betty, 2011). During the improving of quality, the company has to involve in
offering what is exactly needed by the customers.
Some of the measures that should be undertaken to reduce on costs on improving on the
quality of goods are;
 Formulating and implementing customer reports on the quality of goods offered so as
to capture their feedback at the level of the store. Capturing feedback will involve low
quality feedback, high priority feedback, as well as faulty merchandise reports.
 The company should formulate a clear and new customer target feedback root causing
process analysis.
 There should also be introduction of stern button battery measures or policy which is
aimed at safety of the customers.

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 The enterprise should launch a supplier scorecard that is based on the safety and
quality compliance and performance measures.
 The enterprise should target the mental contamination policy so as to include penalty
systems as well as unannounced audits. There should also be relevant training offered
to the internal suppliers and members on the new policies.
 The company should target at offering and delivering quality and safe products to the
customers through ensuring that the products supplied to them are of high standards,
they are complying with the legal requirements which are applicable, and also
meeting the customer quantity and quality expectations (David, 2010),
References

15SUPPLY CHAIN ANALYSIS AND DESIGN
Betty A. K. (2011), Supply Chain Management Guide to Business Continuity, American
Management Association, ISBN 9780814416457
David, B.(2010), Supply Chain Management Best Practices, 2nd. Edition, John Wiley &
Sons, ISBN 9780470531884