Business Report: Analysis of Wesfarmers Supply Chain Management

This report provides a detailed analysis of Wesfarmers' supply chain management. It begins with an executive summary and table of contents, followed by an introduction that highlights the importance of the supply chain in business. The report then provides background information on Wesfarmers, including its history, types of products, major customers, number of employees, management style, organization structure, and financial position. It explores Wesfarmers' facilities and supply chain structure, including its distribution chain, supply chain model (upstream and downstream), contracts, and materials sourcing. The report further examines potential long-term relationships, cost considerations, and quality control. It also covers the goods and services production system, offering suggestions for improvement in transportation, warehousing, and demand control, including causes of demand changes, inventory management, and cost considerations. The report concludes with a summary of findings and references.

Running head: SUPPLY CHAIN MANAGEMENT 1
Supply chain
Institution
Student name
Student id
Date

SUPPLY CHAIN MANAGEMENT 2
Executive summary
The term business implies a mere exchange of goods or services at a fee to the majority.
However, business entails many activities, which include the trader, the products, customers,
site, and the process of preparing or processing the goods and availing them to the customers.
The method of making goods to the customers begins from sourcing the raw materials,
transforming them, and availing them to customers. The above process is known as the supply
chain, and it is a point of discussion in this report.

SUPPLY CHAIN MANAGEMENT 3
Table of Contents
Introduction.................................................................................................................................................3
Business background...................................................................................................................................3
Types of product..........................................................................................................................................5
Major customers.........................................................................................................................................5
Number of employees.................................................................................................................................5
Management style.......................................................................................................................................5
Organization structure.................................................................................................................................5
Financial position.........................................................................................................................................6
Facilities of Wesfarmers..............................................................................................................................7
Supply chain structure of Wesfarmers........................................................................................................7
Distribution chain........................................................................................................................................7
Supply chain model.....................................................................................................................................8
Upstream supply chain................................................................................................................................9
Downstream supply chain...........................................................................................................................9
Contracts.....................................................................................................................................................9
Materials sourcing.....................................................................................................................................10
Potential long term relationship............................................................................................................10
Cost........................................................................................................................................................11
Quality...................................................................................................................................................11
Goods and services production system.....................................................................................................11
Suggestion for improvement.....................................................................................................................12
Transportation...........................................................................................................................................12
Warehousing system.................................................................................................................................13
Improvement suggestion...........................................................................................................................14
Demand control.........................................................................................................................................15
Causes of changes in demand commodities..............................................................................................15
Cost........................................................................................................................................................15
Season and technology..........................................................................................................................16
Change in taste and preference.............................................................................................................16
Inventory used in demand control............................................................................................................17
Improvement suggestion...........................................................................................................................18
Conclusion.................................................................................................................................................18
References.................................................................................................................................................20

SUPPLY CHAIN MANAGEMENT 4
Introduction
Generating profit from raw materials requires value addition. Adding value to the raw
material is all about transforming it to the customers' desired characteristics depending on its
ability to satisfy his wants. The transformation or processing and distribution activities are
known as the supply chain. The supply chain is ideal for all businesses, and Wesfarmers is no
exception in this case Stadtler, (2015).
Business background
Wesfarmers came to being in 1914 through the joined efforts of the farmers and the
settlers' association of the Western region of Australia. It began as a co-operative society
collecting farmers produce from the rural areas of Australia. It also and offered merchandise
services in an agent's capacity. The business was doing well, and in ten years, it had started the
first public radio station that was later acquired by Australian Broadcasting Commission
Bernhardt, (2017). In 1949 it acquired Ashburton Transport. This company was making losses by
then, but after being acquired by Wesfarmers, things changed for the better. In 1950, Wesfarmers
acquired its then competitor Gascoyne Trading; this expanded the territory of the organization
and introduced its activity in the North of Australia.
By the year 2001, the organization had diverse interests owing to the diversified needs
and interests of the owners joining the organization. It was no more entirely reliant on the
merchandise of farm products, and it managed to a merger with other many businesses in
Australia.

SUPPLY CHAIN MANAGEMENT 5
Types of product
Having started as a farmer's co-operative society is the organization was to dwell on farm
products. These include the likes of cereals like wheat, fruits like bananas, wool, meat, skin
products, animal products, insurance, transport services, and auctioneers. It also dwells on-farm
inputs with the like of chemicals and fertilizers.
Major customers
The product the organization deals with is a clear indicator of the potential customers.
The customers are mainly the farmers being provided with farm inputs like the chemicals, seed,
and fertilizers. Other customers include businesses and farmers seeking for insurance services
Christopher, (2016). The general consumers of farm products with the like of wheat, animal
products, and fruits also constitute a significant percentage of customers.
Number of employees
Wesfarmers is the largest employer in Australia with about 230000employees at various
capacities.
Management style
The organization is managed by a board of managers with Rob Scott being the director in
the assistance of finance, sales, and Bunning's managers Su, Horng, Tseng, Chiu, Wu, & Chen,
(2016).
Organization structure
The organization has adapted to the hierarchical management structure, where the
director commands instructions to the individuals below them in the hierarchy.

SUPPLY CHAIN MANAGEMENT 6
Financial position
The below diagram summarizes the organizations' financial position for the last two
years.

SUPPLY CHAIN MANAGEMENT 7
Facilities of Wesfarmers
The facilities owned by the organization include storage facilities, transport vehicles,
pieces of machinery, and the retail shops whose number is yet to be determined.
Supply chain structure of Wesfarmers
Wesfarmers buy farm products from its shareholders, transport them to their premises,
process them, and resell them to the customers Formentini, & Taticchi, (2016). As pointed out
earlier in this report, some of the products are sold to the farmers. For instance, meat, skin
products, fertilizers, and farm chemicals are produced from farm products and resold to them.
Distribution chain
The distribution chain refers to the entire channel the goods take from the extraction of
raw materials to reaching the final consumers. Some of the organizations' products are sold
directly to consumers from the organization. Some take a sequence of steps and possession
transfer before reaching the end-users. The choice of distribution channels used by the
organization depends on the nature, use, and volume of goods the customer will have to purchase
and use at ago.
Except for the farm products like the vegetables, fruits, meat, and dairies whose
perishability is high hence the need for selling directly to consumers other products has a
complex distribution channel. Products like refined petroleum products are rarely sold to direct
consumers Genovese, Acquaye, Figueroa, & Koh, (2017). The products are first sold to
wholesalers, retailers, and later the consumer. The channel of these products and others like
fertilizers, farm chemicals, farm machinery, among others, takes the most extended distribution
channel.

SUPPLY CHAIN MANAGEMENT 8
The channel involves moving the raw materials form the primary source of the
organization. Here the entire process of transformation is carried out. The raw materials are
transformed to form consumable to satisfy the want at hand. The products are sold to wholesalers
to break the bulky. This is also a strategy to reduce the number of transactions and congestion in
the organization. The goods are then sold to retailers to further break bulky into sizes the
customers have the ability to buy. This is the second last distribution step because the last step is
all about selling the products to the consumers.
Supply chain model
Supply chain refers to the integrated coordination and planning for the flow of goods between
the co-businesses. These businesses include the manufacturers, suppliers, distributors, retailers
and wholesalers working together.

SUPPLY CHAIN MANAGEMENT 9
Upstream supply chain
The upstream supply chain of Wesfarmers revolves around the direct extraction of crude oil and
coal. The organization is also involved in commercial farming.
These materials are not sufficient to run the organization hence the need to source supplies form
farmers, miners and information technology experts. The organization upstream supply is short
since it only invo0lves sourcing raw material from the primary source and primary produces.
Downstream supply chain
The downstream of the supply chain of the o0rganization is lengthy and it involves supplying
goods to the wholesalers and distributors who supplies to the retailers and final users.
Contracts
In a struggle to improve the quality of goods and services sold to and by the organization.
The management has opted to hire experts to carry out these activities rather than employing
them owing to the cost to be incurred. The organization contracts special and fast transport for
perishable, flammable, and bulky goods Fredendall, & Hill, (2016). The experts are also hired on
contracts in the processing of the goods.
The management also has considered involvement in quality farming. To this effect, the
organization has hired extension farming services to provide the competent knowledge required
in farming in the struggle for quality improvement. The extension services are dedicated to
advising farmers on the modern methods of farming. They also give suggestions on best breed or
seeds to plant in the given environment, chemicals to use, and the farm management activities
critical for quality production Wang, Gunasekaran, Ngai, & Papadopoulos, (2016).

SUPPLY CHAIN MANAGEMENT 10
Materials sourcing
Sustainability in business requires competent materials and services sourcing. Failure or
drawbacks in this process are, however, hard to be pinpointed in case of occurrence. The
challenge in most organizations is only realized from low financial status. Many managers or
directors end up blaming the marketing and pricing department adding more complication to the
organization further increasing losses to the extent of a business closure.
The management of Wesfarmers is proactive in this effect. It has installed a department
in the organization with the primary goal of managing materials sourcing to ensure sustainability
in the operations of the organization Zhong, Newman, Huang, & Lan, (2016).
Materials sourcing require competence. Otherwise, the organization will suffer loses.
Wesfarmers source materials and services with a high protocol vigilance of the source. The
selection of the source is very selective, and it is meant to protect and maintain high standards
and quality of output Hugos,(2018).
For one to qualify to make supplies to the organization, he must portray and maintain the
following competent characteristics.
Potential long term relationship
The suppliers to be selected must prove the possibility of a long term relationship with
the organization. This is determined through the evaluation of the goals and commitments of the
producers. The volume of production and resources used in production ownership is also put into
consideration to evaluate the possibility of continuous output.

SUPPLY CHAIN MANAGEMENT 11
Cost
The suppliers selected are the ones willing and able to sell their materials at a favorable
price to the organization. The high cost of raw materials adds to the value of production hence
reduced the profit of the organization.
Quality
Being capable of committing to the organization and establishing long term relationships
or selling their products at a favorable price to the organization is not all it entails to be selected
for making supplies. Quality also comes into play, and it must be maintained high. Business laws
dictate that quality is the best marketing strategy from the organization since happy customers
come back with their friends. The quality of raw materials has a directly proportional
relationship with the quality of the final product Kshetri, (2018).
The above selection criterion also applies to the labor force. Supply of experts in
transport management, information technology initialization, and maintenance of machinery as
well as the operation is determined by the ability to commit to the organization for the long term
and charging reasonable prices of the service and lastly the ability to provide quality services.
Goods and services production system
After a thorough consideration of the above aspects, the best supplier is selected. The
organization uses its transport mechanism to move the raw materials from the source or the farm
to the processing unit.
The processing units involve a range of activities, depending on the raw material that
needs to be transformed. These production processes involve oil refinery to gases and other
products, manufacturing of fertilizers, farm products manufacturing, and processing of food
products.

SUPPLY CHAIN MANAGEMENT 12
The organization also provides services critical in the business, including business
management services, the offering of extension farm services, and provision of insurance
services Laari, Töyli, Solakivi, & Ojala, (2016).
Suggestion for improvement
Wesfarmers is reliant on raw materials from the Australian farmers; this is critical to the
organization and possesses a great threat to the production process. If climate change it will
affecting the farmers in Australia, the organization will also be affected, and the production will
be halted, thus making losses. The organization should extend the sourcing of raw materials
territories to other continents to reduce the mentioned uncertainty.
The organization should also engage in the direct production of raw materials used in the
production of final goods Mangan, & Lalwani, (2016). This will reduce the cost incurred in the
production process hence increased profit.
Mining degrades the environment. The organization is recommended to install an
environmental conservation strategy to control pollution and maintain high land productivity.
Transportation
Wesfarmers is involved in a variety of production, merchandise, and extensive services
provision to other organizations. The production units are all located far from the sources of raw
materials. They are also located far from the markets to reduce environmental pollution in the
peoples' residences.