Analysis of Coles' Procurement and Sustainability Strategies

This report analyzes Coles' procurement management, focusing on the Australian retail market and sustainable practices. It begins by describing the retail trade market in Australia, considering both private and business customers, and how purchasing behaviors are evolving, supported by relevant data and statistics. The report then outlines possible sustainable procurement practices for Coles, examining its approach to capital management, maintenance, and operating activities, and differentiating between project and operational procurement. It further explores the impact of new technologies, such as cloud-based platforms, analytics, and collaboration tools, on both end customers and producers within the supply chain. The report concludes with a project integration management plan, detailing item procurement, contract types, associated risks, cost determination, standardized procurement documents, constraints, and the contract approval process. The report aims to provide insights into how Coles can optimize its procurement strategies for sustainability and efficiency.

Running Head: PROCUREMENT MANAGEMENT 0
Procurement
Management
Student details:

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Contents
Retail trade market in Australia...................................................................................................................1
Possible sustainable procurement practices for Coles..................................................................................3
Project integration management plan...........................................................................................................6
References...................................................................................................................................................9

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Retail trade market in Australia
Australia is one of the most developed societies in the world and includes about 24 million of the
total population of the earth. Australia's Retail Sales has witnessed a growth of 3.7 % Year to
year in September 2018, matched with a 3.7 % growth in preceding month (Mordorintelligence,
2019). This segment is categorized based on produce group, delivery channel, and market
undercurrents. Australia registered an ominously high per capita Gross Domestic Product, value
at about United States Dollar 50,000. Besides, it recorded the subsequent highest average wealth
per adult. The Australian retail sector has witnessed a great growth, notwithstanding suggestively
little increase in salaries and rising domestic debt. Stimulating development is listed by the
covering marketplace, held by reduced interest rates and growths in domestic praise and affected
the consumer-spending design (Adams, Parmenter & Verikios, 2014).
Americans and Australians have a resilient association that spans the antiquity of both nations.
Australia and US have common cultural and language considerations because of this these
nations have helps each other at a great extent in history.
The future of retail sector of Australia hinges on troublemaking forces. For instance, the
changing buyer spending arrays and invasion of foreign corporations that focuses on framing
fresh tactics in retailing.
Also, the segment is facing interruption. The increasing influx of foreign enterprises has resulted
in changing the retail landscape and taste and preferences of the consumer. There is a substantial
change in buyer preferences, principally due to the developments in technology.
The Australian retail chain needs agility and multiplicity of delivery platforms, which can detect
non-responsive traders.
The sector registered has registered a growth rate of 5% in New South Wales, 3% in Victoria,
and 2.6% in South Australia (Latter, Phau & Marchegiani, 2010). The growth of economy in
Australia was majorly driven by individualistic investments in mining and house markets, with
rate of inflation at 1.75%, which is comparatively less than what is detected by Reserve Bank.
The graphical representation below represents sales growth of fashion E-commerce Industry of

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the year 2017 in Australia. The retail sector of female garments has witnessed an immense
growth i.e. of 43.80% (Booth, et al. 2018). Therefore, if investments are made on women’s
fashion can be fruitful for the sector but at the same time this segment of the sector faces a huge
competition.
(Source: Modorintelligence, 2019)

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(Source: Modorintelligence, 2019)
There are different stakeholders attached with retail industry. Their actions have long term
impact on the decisions of the buyers. For instance government’s changes to 457 Visa program
will restrict them in accessing specific responsibilities required in the modern retail environment
which probably might hinder the development and growth of local retail talent. The major
amendments in 457 visa scheme includes eliminating 216 jobs from the program and putting 268
jobs on Short-Term Skills Occupation List, restricting the holder to a two-year stay, no way to
permanent residency and one renewal (Mechanicos, 2018).
Possible sustainable procurement practices for Coles
Coles has adopted the idea of sustainable procurement. Concept of Sustainable Procurement is a
method where the organization meets their requirements for services, goods, utilities and work in
a manner that attains worth for expenditure for a long run basis in terms of earning interests to
not only the firm also to civilization and the economy, at the same time as minimizing harm to
the atmosphere. In this sustainable procurement approach Coles finds out the challenges that they
are facing in the procurement and does procurement only when it is required. This is critical for
the management of resources and also plays a critical role in reducing the overall management of
cost as it reduces the cost of the overall operations. In the time when resource scarcity is the
major issue that an organization is facing, sustainable procurement can help the firm in managing
their overall operations and will also allow them to fulfill the future demands of the operations
(Meehan & Bryde, 2011).
The sustainable procurement practices of Coles are efficient and provide good results to the
company. Coles adopted the concept of sustainability procurement few years back and since then
it is functioning as per the concept. Some of the areas in which procurement practices of Coles is
moving are:
Coles approach towards Capital management
Capital management should be Cole’s top priority and it has become critical for the management
of finances for their new projects. This is also true in terms of fact that Capital management
allows the company to procure things at lower prices. It is also seen that capital management

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within the firm is according to the challenges that is confronting the business. The more the
capital is invested within the firm, the more is their chance of gaining competitive advantage
over the rivals. After its partnership with bigger firms such as Wesfarmers, their approach
towards Capital management changed a bit as they started to do strategic investments (Walker &
Brammer, 2012).
Coles approach towards maintenance
The company has started using its capital for maintenance processes. Coles donates the unsold
edible food from every supermarket store of Australia. They need to invest more on maintenance
as maintenance also allows them to increase their inventory lifetime which again has a
significant influence on the firm’s cost. This helps them in not only bringing sustainability but
also works as their CSR approach which is critical for improving the overall image of the
organization (Kaye Nijaki & Worrel, 2012).
Coles approach towards operating activities
Coles understand that operating activities of the firm has to be according to the changing
requirements of the international business environment. They should concentrate on importance
of having skilled labor force within the firm. This is because skilled labor force understands the
way in which they are going to conduct their operating activities (Crespin-Mazet & Dontenwill,
2012). This increases the inventory lifetime and hence procurement is done sustainably.
Project versus the operating activities
Coles need to manage their operational activities with the help of concept i.e. project versus the
operating activities. There are several projects running in any organization and Coles need to
think that whether they want to procure according to the projects running within the firm or
according to the operating activities. The selection of procurement plan has to be done wisely
(Preuss & Walker, 2011).
New technologies and the impact they are having on procurement
 Cloud based platforms: Since data technology plays a critical role in the management of
operations like procurement hence cloud based platform can be effective. Providers like

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SAP provide hybrid cloud solution to managing data related to procurement. This
technology has impact on the procurement as it helps the end customers in selecting the
best product on the basis of their choices or their previous choices. It also helps producers
in the supply chain to find the best channels for supply chain (Kaur & Singh, 2016).
 Analytics: Most of the procurements these days are done with the help of analytics
technology. This not only boosts the company’s process of procurement but also
improves the quality of the procurement. This is because analytics allows the firms to
have an understanding about the environment as large amount of data is being analyzed
so as to come to a conclusion about which type of procurement has to be done and
through which channels. It will improve the decision making power of both end
customers as well as producers in the supply chain (Grob & Benn, 2014).
 Collaboration: This type of technology is also effective in improving the procurement
process. For instance ERP systems allow the companies to achieve strategies goals and
create sustainable value. One such technology is P2P suites which is a postmodern
procurement technology which offered diverse set of options to automate and link the
‘administrative’ and ‘transactional’ side of procurement through collaboration. For
moving out of the traditional buyer role and deliver strategic value to the business, teams
that are procuring the products has to be collaborative i.e. both internal (with other
business units) and external (with suppliers) collaboration is needed. Internal
collaboration enhances productivity and helps in cost saving while external collaboration
will enhance supplier relationship and reduce the risks in supply chain. This will help the
end users as they will get better service and at same time for manufacturers in the supply
chain, it helps in reducing the numbers of errors (Testa, Annunziata, Iraldo & Frey,
2016).
In the coming future technologies such as mobile technologies has a major part to play in
procurement of products. This is also critical for the management of organizations such as Coles
which needs to make strategies according to the data that is available with them. In the time
when costing and sustainability are two major challenges along with competition that is faced by
the organization like Coles, these technologies can play a major role in giving them competitive
gains and also ensure that sustainable procurement is done within the organization (Naoum &
Egbu, 2015).

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Project integration management plan
For effective procurement related to any project, it is critical that any firm has a better project
integration management plan. This ensures that procurement is done as per the plan so that
effectiveness can be managed within the firm and its activities. It also allows the firms to save
money in the procurement procedures and improves the sustainability chances of the firm.
Item to be procured
In this procurement procedure the items such as inventory and technologies such as data
management software is to be procured.
Type of contract
It is a fixed price contract as the companies from where things will be procured and Coles both
knows the importance of the new projects going on within the firm. In this Coles will have to pay
a fixed price for their work.
Risks associated with procurement management
It is highly likely that procured items might not be as per the expectations of the firm or their
might be chance of poor quality products being procured and in the long term these items might
underperform.
Procurement risks mitigation
These risks in the procurement can be mitigated with the help of risk avoiding measures such as
 Contract performance metrics: These metrics will allow checking the performance of the
contract at different levels of the organization.
 Insurances: It will ensure that in case of any damage they get full money back.
Cost Determination
Costs can be mainly given in response to Request for Quote. In this vendor will submit the
quotes and then analysis will be done about whether the quote is justified according to the
quality, vendor’s experience and value it is delivering and then only quotes will be made.

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Standardized procurement documents
 Standard Request for Proposal Template includes
 Background
 Proposal guidelines
 Proposal process and timelines(Belfitt, Sexton, Schweber & Handcock, 2011)
 Pricing forms
 Proposal formats and media
 Terms and Conditions
 Source selection criteria
 Statement of work
 Letter of intent
 Internal source selection evaluation forms
 Procurement audit form
 Non-disclosure agreement
 Procurement performance evaluation form
 Firm fixed price contract
 Lessons learned form
Procurement constraints
Some of the constraints are:
 Cost: Procurement budget is limited and cannot be exceeded.
 Scope: The procurement must be done within the procurement scope statement.
 Resources: No surplus individuals will be re-allocated and hired to strengthen activities
related to procurement within the firm.
 Technology: The technology that is currently used within the firm for procurement is not
so advanced and there must be use of advanced technologies so as to reduce the overall
cost of procurement (Islam & Siwar, 2013).
Contract approval process

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First step is to find out services and items needs to be purchased from outside vendor or not and
this will be done through cost analysis and when external vendor is finalized then purchasing and
contract unit will engage with outside vendors. The contract review board will analyze all the
aspect and on the basis of it they will do procurement.
Decision Criteria
The measures on the basis of which selection will be done are:
 Capability of the vendor to give all goods by the provided delivery date
 Expected delivery date
 Quality
 Past performance
 Cost
 Comparison of outsourced cost versus in-sourcing
Vendor management
Vendor manager will have the responsibility of it. He will regularly review the contract by
analyzing the performance of procured item on the basis of discussion with different
departments.
Performance metrics
The performance of procurement will be measured on the basis of following metrics.
Vendo
r
Produc
t
Qualit
y
On
Time
Deliver
y
Documentati
on Quality
Developme
nt Costs
Developme
nt Time
Cos
t
per
Uni
t
Transaction
al Efficiency
Vendo
r 1
3 2 3 2 3 2 2
Vendo
r 2
3 3 3 2 1 1 3

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1 – Unsatisfactory
2 – Acceptable
3 - Exceptional

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References
Adams, P. D., Parmenter, B. R., & Verikios, G. (2014). An emissions trading scheme for
Australia: national and regional impacts. Economic Record, 90(290), 316-344.
Belfitt, R. J., Sexton, M., Schweber, L., & Handcock, B. (2011). Sustainable Procurement–
Challenges For Construction Practice. In TSBE EngD conference (pp. 1-9).
Booth, S., Begley, A., Mackintosh, B., Kerr, D. A., Jancey, J., Caraher, M., ... & Pollard, C. M.
(2018). Gratitude, resignation and the desire for dignity: lived experience of food charity
recipients and their recommendations for improvement, Perth, Western Australia. Public
health nutrition, 21(15), 2831-2841.
Brammer, S., & Walker, H. (2011). Sustainable procurement in the public sector: an
international comparative study. International Journal of Operations & Production
Management, 31(4), 452-476.
Crespin-Mazet, F., & Dontenwill, E. (2012). Sustainable procurement: Building legitimacy in the
supply network. Journal of Purchasing and Supply Management, 18(4), 207-217.
Grob, S., & Benn, S. (2014). Conceptualising the adoption of sustainable procurement: an
institutional theory perspective. Australasian journal of environmental
management, 21(1), 11-21.
Islam, M. M., & Siwar, C. (2013). A comparative study of public sector sustainable procurement
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Papers, 9(3), 62-84.
Kaur, H., & Singh, S. P. (2016). Sustainable procurement and logistics for disaster resilient
supply chain. Annals of Operations Research, 1-46.
Kaye Nijaki, L., & Worrel, G. (2012). Procurement for sustainable local economic
development. International Journal of Public Sector Management, 25(2), 133-153.

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Latter, C., Phau, I., & Marchegiani, C. (2010). The roles of consumers need for uniqueness and
status consumption in haute couture luxury brands. Journal of Global Fashion
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Testa, F., Annunziata, E., Iraldo, F., & Frey, M. (2016). Drawbacks and opportunities of green
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FORECAST (2019 - 2024). Retrieved from: https://www.mordorintelligence.com/industry-
reports/retail-industry-in-australia
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https://blog.retail.org.au/newsandinsights/defending-australias-retail-talent