BIT247: Supply Chain Analysis Report on Woolworths and Costco

This report provides a detailed analysis of the supply chains of Woolworths and Costco. It begins with an introduction to supply chain analytics, followed by company overviews, including their business models, customer types, suppliers, and current supply chain implementations. A comparative analysis highlights the similarities and differences in their supply chain and logistics goals, operations, and issues. The report also includes a literature review, discussing how supply chain and logistics issues are addressed in similar case studies. The conclusion summarizes the findings, emphasizing Costco's adoption of sustainable practices. The report uses information from various sources, including company websites and academic literature, to provide a comprehensive understanding of the supply chain management of the two companies.

9/17/2019
RUNNING HEAD: SUPPLY CHAIN ANALYTICS
Management
Supply Chain Implementation

SUPPLY CHAIN ANALYTICS 1
Contents
Introduction......................................................................................................................................2
Company..........................................................................................................................................2
Woolworths..................................................................................................................................2
COSTCO......................................................................................................................................2
Comparative analysis.......................................................................................................................3
Literature..........................................................................................................................................4
Conclusion.......................................................................................................................................5
Bibliography....................................................................................................................................6

SUPPLY CHAIN ANALYTICS 2
Introduction
The research report is prepared on the title ‘Supply chain analytics’. It is a network including
organization, individuals, resources, activities, technology and information in the creation and
sale of product (Christopher, 2016). The key focus of the repot is on Woolworths and COSTCO.
The report initiates by providing a brief introduction about the two recognized companies named
as. The next section emphasizes on the supply chain implementation and comparison of both the
companies. Lastly, to provide an effective understanding, it also focuses on the literature review
of supply chain models. The key purpose of the report is to pour light on the managerial concepts
and models. Additionally, it provides an opportunity to upgrades the knowledge with respect to
both the organization.
Company overview
Woolworths
It is an Australian supermarket chain store founded in the year 1924 by Woolworths Group. It
offers multiple products to its customers like furniture, jewelry and electronics. It follows
‘Franchisee business model’ (Maritz , 2019). It is studied that Woolworths has altered its
business model. Its new operating model aims to change customer shopping experience and
habits (Hall , 2019). It serves around 3 million customers per day (King , 2019). Its top supplier
are Teys Australia and Red meat (Insidefmcg, 2019). Others include Perfection Fresh, Driscoll’s
Australia and Kailis Brother as award winner suppliers (AFN, 2019). In order to make its supply
chain effective, it has adopted better practices. This is because it aims at achieving competitive
lead and sustainability through its supply chain implementation (Woolworths Group , 2019).
COSTCO
It is an American company founded in the year 1983. It is also a supermarket brand engaged in
selling variety of products like groceries, vegetables and cosmetics. As per the research, it is
examined that COSTCO relies on ‘Subscription business model’. It states that customers who
want to shop at the COSTCO store must buy a membership to purchase. Globally, it has 98.3
million customers with Costco membership (Conway, 2019). It has high number of suppliers and
they are called vendors. It is examined that it follows ‘high volume, low margin’ strategy in its

SUPPLY CHAIN ANALYTICS 3
supply chain. Its supply chain implementation is fine as it is called as one of the reason for its
success (COSTCO , 2019).
Figure1: COSTCO total customers
Source: (Conway, 2019)
Comparative analysis
In order to gain knowledge, Woolworths and COSTCO are compared with respect to each stage
in the Supply chain process. Following are the main components of its process:
Attaining resources: It is the first step that initiates the supply chain process. Woolworths
obtains raw material from suppliers like Teys Australia and RED Meat. It emphasizes on specific
indicators while obtaining raw material. It has developed ‘Woolworths Quality Assurance to
check the standard of its raw material (Wowlink , 2019). COSTCO obtain its raw supplies from
the farmers that follows sustainable activities in the farming practice. It lays prior attention on
implementing organic farming to offer healthy products to its customers (COSTCO
WHOLESALE , 2019).
Manufacturing commodities: In the manufacturing process, it lays prior attention on its
manufacturers and producers to ensure that product met the quality standard (Woolworths
Group, 2019). COCTCO only obtains its products from forests that has the certification of FSC
and SFI. This is because, it aims at protecting the forest for upcoming period. To pack the
manufactured products, it uses Fiber Based Packaging (COSTCO WHOLESALE , 2019).
Inventory control: To reduce wastage in the packaging, Woolworths uses FIFO method (First
in, First out) (Farmsoft, 2019). It also has an inventory manager to control the process (Payscale ,

SUPPLY CHAIN ANALYTICS 4
2019). To avoid wastage and attain control over inventory, COSTCO has inventory control
specialist (Indeed, 2019).
Conveyance and Control: This the last component in the process. Woolworths uses ‘Primary
Freight’ as a ‘Transport management system’ to provide convenient transportation service
facility (Wowlink , 2019). COSTCO relies on using conveyance method that uses low possible
energy and emit low Harmful gases like carbon. It has adopted the use of electric vehicles and
electric plugin shore power in its transporting vehicles (COSTCO, 2019).
As per the research and on the basis of above discussion, following points are analyzed:
 Similarity: Woolworths and COSTCO, both attains similarity as they both have
appointed specialized individual for inventory control (Indeed, 2019).
 Logistic goal: In general, both attains a goal to minimize the inventory wastage in the
supply chain process.
 Issue: Woolworths is facing issues of poor relation with suppliers and exploitation in its
supply chain (Sit, 2018). Similarly, COSTCO has faced a lawsuit that can affect its
supply chain transparency (Moote, 2017).
Literature review
Based on the theory of sustainable supply chain management, literature reviews are discussed
below:
Joseph Sarkis, Qinghua Zhu and Kee-hung Lai (2011), focuses on the significance of Green
Supply Chain Management. According to the review, it is adoption of environmentally friendly
practices in the business. It involves taking decisions that will assists in safeguarding the
environment and sustaining the natural resources of the global world (Sarkis, 2011).
According to Stephan Seuring (2013), sustainable activities should be added to the daily
practices of business operations. He state that it has gained an adequate attention in the industry
as well as among the customer. He has emphasized on the benefits of green marketing (Seuring,
2013).

SUPPLY CHAIN ANALYTICS 5
As per Stephan Gold, Stephan Seuring and Phillip Beske (2010) sustainable supply chain
management is practiced by certain organization. However, its implementation has not taken
seriously by the business organizations. Thus, they emphasizes on the adoption of Green and
Sustainable practices in the supply chain process as it is valuable for meeting the future demand
(Gold, 2010).
Conclusion
From the above discussion, it is analyzed that Woolworths and COSTCO both operates in the
form of supermarket stores. They are involved in similar business practices and offers alike
products. However, they both differ in its supply chain implementation. It is assessed that among
both, COSTCO is highly adopting the sustainable practices in its Supply chain process.
Additionally, as per the literature review, it is analyzed that COSTCO is aligning with the
sustainable practices that the review is focused on.
Hence, on the basis of Supply chain implementation and Literature review, COSTCO is consider
to be healthier and better submarket brand.

SUPPLY CHAIN ANALYTICS 6
Bibliography
AFN, 2019. Wooolworths announces its Supplier of the Year award. [Online]
Available at: https://www.ausfoodnews.com.au/2018/12/10/woolworths-announces-its-supplier-
of-the-year-award-winners.html
Christopher, M., 2016. Logistics & supply chain management. [Online]
Available at: https://scholar.google.co.in/scholar?
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%2Fscholar%3Fq%3Dinfo%3ANpONtdeZlbEJ%3Ascholar.google.com%2F%26output%3Dcite
%26scirp%3D0%26hl%3Den
[Accessed 16 September 2019].
Conway, J., 2019. Costco membership worldwide 2014-2018. [Online]
Available at: https://www.statista.com/statistics/718406/costco-membership/
COSTCO , 2019. Supply Chain Disclosure. [Online]
Available at: https://www.costco.com.au/supply-chain-disclosure
COSTCO WHOLESALE , 2019. Environmental Impact. [Online]
Available at: https://www.costco.com/sustainability-environment.html
COSTCO, 2019. TRANSPORTATION & LOGISTICS. [Online]
Available at: https://www.costco.com/sustainability-support.html
Farmsoft, 2019. Woolworths fresh produce compliance software for fruit and vegetable packers
& wholesalers. [Online]
Available at: https://farmsoft.com/perishable-inventory/woolworths-compliance-software.html
Gold, S. S. S. a. B. P., 2010. Sustainable supply chain management and inter‐organizational
resources: a literature review. Corporate social responsibility and environmental management,
17(4), pp. 230-245.
Hall , J., 2019. Woolworths investing $10 million on training and store restructures. [Online]
Available at: https://www.news.com.au/finance/business/retail/woolworths-investing-10-million-
on-training-and-store-restructures/news-story/b140f1b4b1c7bfd4c1d6c9becd8a7f5c

SUPPLY CHAIN ANALYTICS 7
Indeed, 2019. Costco Wholesale Employee Reviews for Inventory Control Specialist. [Online]
Available at: https://www.indeed.com/cmp/Costco-Wholesale/reviews?
fcountry=ALL&fjobtitle=Inventory+Control+Specialist
Insidefmcg, 2019. Woolworths names top suppliers. [Online]
Available at: https://insidefmcg.com.au/2016/12/14/woolworths-names-top-suppliers/
King , M., 2019. 10 facts you need to know about Woolworths Limited. [Online]
Available at: https://www.fool.com.au/2014/02/06/10-facts-you-need-to-know-about-
woolworths-limited/
Maritz , J., 2019. Woolworths adopts new business model for African expansion. [Online]
Available at: https://www.howwemadeitinafrica.com/woolworths-adopts-new-business-model-
for-african-expansion/12295/
Moote, K., 2017. What the Costco lawsuit means for supply chain transparency. [Online]
Available at: http://news.trust.org/item/20170214112432-iofra
[Accessed 17 SEPTEMBER 2019].
Payscale , 2019. Average Inventory Manager with Inventory Management Skills Salary at
Woolworths in Australia. [Online]
Available at: https://www.payscale.com/research/AU/Job=Inventory_Manager/Salary/
966b8114/Woolworths-Inventory-Management
Sarkis, J. Z. Q. a. L. K., 2011. An organizational theoretic review of green supply chain
management literature. International journal of production economics, 130(1), pp. 1-15.
Seuring, S., 2013. A review of modeling approaches for sustainable supply chain management.
Decision support systems, 54(4), pp. 1513-1520.
Sit, S. S., 2018. ‘Serious exploitation’ in Woolworths cleaning supply chain. [Online]
Available at: https://www.cips.org/en-SG/supply-management/news/2018/february/fwo-finds-
serious-exploitation-in-woolworths-supply-chain/
[Accessed 17 September 2019].

SUPPLY CHAIN ANALYTICS 8
Woolworths Group , 2019. Promoting better labour practices in our global supply chains.
[Online]
Available at: https://www.woolworthsgroup.com.au/page/community-and-responsibility/group-
responsibility/partners/Labour_Practices_in_our_global_supply_chain
Woolworths Group, 2019. How we do business. [Online]
Available at: https://www.woolworthsgroup.com.au/page/about-us/our-approach/how-we-do-
business
Wowlink , 2019. TRANSPORT MANAGEMENT SYSTEMS (TMS). [Online]
Available at: http://www.wowlink.com.au/wps/portal/topic_centre?
WCM_GLOBAL_CONTEXT=/cmgt/wcm/connect/Content%20Library%20-%20WOWLink/
wowlink/topic+centre/supplychain/primaryfreight/transport+management+systems+%28tms%29
Wowlink , 2019. WOOLWORTHS QUALITY ASSURANCE (WQA). [Online]
Available at: https://www.wowlink.com.au/wps/portal/topic_centre?
WCM_GLOBAL_CONTEXT=/cmgt/wcm/connect/Content%20Library%20-%20WOWLink/
WOWLink/Topic%20Centre/StandardsCompliance/WQA/WQA