Strategic Supply Chain Management: Woolworths Challenges & Solutions

This report delves into the supply chain management challenges faced by Woolworths Australia, a major supermarket retail chain. It identifies key issues such as the impact of increasing fuel prices on transportation costs, inconsistencies in product quality from suppliers, and the need to adapt to fast-changing market demands and consumer preferences. The report analyzes the causes and implications of these challenges on Woolworths' present operations and future sustainability. Furthermore, it provides recommendations for mitigating these challenges, including adopting fuel-efficient transportation methods, improving quality control measures, and leveraging technology to track and manage the supply chain effectively. The ultimate goal is to enhance Woolworths' supply chain performance, maintain customer loyalty, and ensure long-term growth and development in the competitive Australian market. Desklib provides access to this assignment and other study resources for students.

Supply chain management
Woolworths
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Table of Contents
Introduction.................................................................................................................................................2
Main body...................................................................................................................................................2
Recommendations.......................................................................................................................................9
Conclusion.................................................................................................................................................10
References.................................................................................................................................................11
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Introduction
Supply chain management is the process of managing the flow of services and goods. This
generally deals with the transformation of the raw materials into the final product. The supply
chain management includes mostly everything continuing from the production of the product to
product development. This optimizes the various aspects of the company such as the financial
capital, materials information, inventory and many more. There are times when these supply
chain faces certain challenges and that hamper the processing of the company in a various
manner. The general challenges that are being faced by the company are related with access to
the latest technology, then supplier base consolidation and many more (Catalogimages, 2019).
The paper deals with all these challenges and what are their impacts on the company
Woolworths Australia. Woolworths is considered as one of the big supermarket retail chain
business in Australia. For example, one of the common challenges that the company Woolworths
faces is that the company is not providing quality materials to the customers. As the company
has many supply chains all around, some supply chains do not provide quality raw materials and
it causes problems in customer’s loyalty grounds. This hampers the brand name of the company
(Arli & Dylke, 2013). The causes of the challenges and the impacts on the present state and on
the future of the company are also being discussed in a broader manner. The main objective of
this paper is to firstly showcase the challenges faced by the supply chain management of
Woolworth and secondly providing efficient recommendations to mitigate those for the proper
development of the company on the Australian grounds and worldwide. Supply chain
management plays an important role in the company’s growth and development. So the company
manages its supply chain very strategically and evidently. This is the reason for which the critical
analysis is being done to understand the challenges and issues faced by Woolworths in managing
its supply chain (Aries.mq., 2019).
Main body
Challenges of supply chain due to increasing fuel price
The Australian giant Woolworths Group is experiencing significant challenges due to the
changes in the business environment. In the last few years, the global business environment is
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continuously changing. Globalization is rapidly extending and advanced technologies are
arriving, which have been bringing radical changes in the business environment across the globe.
Apart from this, the fuel price is also increasingly growing over the years and it also affects the
supply chain of companies across the globe. Furthermore, like other big companies, Woolworths
also face problems due to increasing fuel prices. The incrementing fuel price affects the supply
chain of the company as the transportation cost of the company is increasingly growing due to
incrementing fuel cost and it affects the operation of the organization. The increasing operational
cost affects the profitability of the organization and hence the sustainability of the organization is
also affected (Directdrivelogistics, 2019).
The increasing fuel price is a critical challenge for the supply chain management of Woolworths
as the company is a very big organization and it is operating in vast areas if the Australian
Country, hence, the company has a huge supply chain to produce and distribute its products and
services all across the areas (Scholten, Sharkey Scott & Fynes, 2014). The company has to use
any means of transport to enable the organization to accomplish an efficient supply chain.
Furthermore, all the transports are running by fuel and hence, increasing price of fuel has
increased the fuel cost and transportation cost for the company, which in turn influences to
increase the operational cost of the company. Hence, the increasing fuel cost imposes significant
threats and challenges to the Woolworths for maintaining the operational cost and profitability of
the organization. Hence, the increasing fuel price is a crucial supply chain challenge for
Woolworths Group (Augustine, 2019).
The specific supply chain challenge due to the hiking of the fuel price across the globe is an
important challenge for business organizations like Woolworths. It is important as it increases
the transportation cost of the organization considerably, which impacts on the operation of the
organization. The operation cost of the organization uses to be increasing due to the hiking of the
fuel cost, which in turn impact on the profitability of the organization (Kasanagottu, 2018).
Moreover, organizations like Woolworths Group has to bear considerable expenses for
transportation due to increasing fuel cost. Hence, it affects the profitability of the organization,
which in turn reduces the sustainability quotient of the organization (Osoro, 2015). In this
context, the increasing price of fuel in the global market is an important challenge for supply
chain management of Woolworths.
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The specific supply chain management challenges regarding the increasing fuel price would have
significant implication on Woolworths Group. The operation cost of the organization will be
increasing signs that not only impact on the company's current profitability but also impose
significant threats to the future sustainability of the organization. Hence, the challenges regarding
the increasing fuel cost would have significant implication in the Woolworths present business
operation and future sustainability (PYMNTS, 2015).
The challenges regarding the increasing fuel price are significant for the undertaken business
organization Woolworths Group. Furthermore, the company has to provide adequate focus on
developing efficient policies and strategies in order to reduce the operational cost of the
company. The company has to adopt more fuel-efficient ways to cope up with the supply chain
management issue. The company has to use green vehicles for transporting its necessary supplies
in order to cope up with the increasing fuel price in the global market(Pearce, 2018)
Qualities and expenses
Woolworths provides its product and services to the customers through useful distribution. The
suppliers have the responsibility to provide better quality products to the organization. It is seen
that all the suppliers are not providing the same quality products. It can be said huge challenges
for the organization. The suppliers provide a massive volume of products to the organization.
The organization has the responsibility to check the quality of the products. But, it is very
difficult to check all the products. If the organization will fail to detect the quality issues then,
the customers can get defective products. By getting defective products, the customers can be
dissatisfied by the organizational services. Supply chain management challenges can be able to
demean the image of the organization. The organization has to exchange defective products with
new products. In this case, the expenses of the organization will increase. Another effect of this
issue is its customer base. A defective product can create a negative impact on the mind of the
customers. This type of activity can decrease the numbers of existing customers. Supply chain
activities are one of the most important functions of Woolworths. The organization has to solve
this issue to expand its business activities (Customer, 2019).
Detection of inferior products is a very important duty of the organization. The organization has
adopted a customer-centric approach for the betterment of the customers. Inferior products can
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be able to create dissatisfaction among customers. The management team has the responsibility
to provide quality services to the customers. Many times, it has seen that the customers got
inferior products. Due to this reason, the organization provided compensation to the customers.
This type of issue shows the inefficiency level of supply chain management. This issue is very
important to discuss the matter for the senior management team of Woolworths. Supply chain
management is a very vital part of the organization. The issue of inferior products can create a
negative impact on the organizational supply chain management. Inferior products can increase
the cost of the organization. The organization does not want to increase its cost and decrease
profitability. So, it is a very important issue for the organization. For long term activities, the
organization has to mitigate these issues (HAYES, 2019).
Inferior products can be able to decrease the values of the organization. The customers are the
main stakeholders of the organization. Customer satisfaction is the major responsibility of the
organization. Inferior products can be able to worsen the relationship between customers and the
organization. To get long term success, it is very vital for the organization to have effective
supply chain management. Any inequality in product distribution can hamper the organizational
image of Woolworths. The organization has the duty to exchange defective products by new
products. In this case, the expenses of the organization will increase. Increment of expenses can
impact organizational profitability (Ibm, 2019).
The organization has to take significant steps to mitigate the occurred issue. At first, the
organization has to communicate with the suppliers. The suppliers have to provide correct
information to the organization related to the products. The organization has to detect the
suppliers who are involved in providing defective products. The organization has several
numbers of suppliers (Infosysblogs, 2010). The organization can be able to reject the products of
ineffective suppliers. In the supermarket industry, there are multiple numbers of suppliers' exists.
The organization can be able to contact with new suppliers. Due to numerous numbers of
suppliers, the organization can easily shift from one supplier to another supplier. The switching
cost is also low for the organization. The organization has to pay significant attention to its
quality control management. Effective quality control management can be able to detect inferior
products. The organization should engage more employees in quality control management.
Repeated checking of the products' quality can mitigate the issue. The organizational senior
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management team has the responsibility to implement these types of strategies to mitigate
occurred issues (Turrillo, 2017).
Fast changing market
The behavior of consumers is influenced by the social, cultural, psychological and personal
aspects. These factors get modified by globalization and technological advancement. The social
media platform is also putting pressure for the customers to confirm. These social media
platforms enforce pressure upon the organization towards utilizing the accessible information
source. This would be helpful in responding to the changing preferences for remaining relevant
and interesting.
The goods and services of the company have a smaller life cycle. The life cycle of products is
confined to some extent. This is mainly due to the changing demands of the market. The business
enterprise is under severe pressure to carry out innovative approaches and latest trends for being
competitive. The change in the marketplace such as global sourcing, introduction to a new
product, credit availability, consumer demand, political agendas, could bring about major issues.
Through the shorter life cycle of a product, the business is forced to take upon a lean journey.
This is very crucial to acknowledge that strategies of supply within the lean environment and can
assist the operational plan. The challenge is to identify both working lean solution as well as the
lean concept. Through the service of process and design optimization, this puts more emphasis
on enhancing the manufacturing productivity along with reducing the total cost of ownership.
There is a significant need to utilize the value stream assessment (Bossard, 2019).
Woolworth organization uses the technology of radio frequency. Therefore with the innovative
technology of radio frequency, the company is able to track and control their supply of products.
This technology also allows the company to noncontract recognition. This is identified as the
most optimized process of the value chain. The technology of radio frequency provides
Woolworth an inclusive control upon their products flow. The adoption of new and innovative
technology mainly involves a huge amount of funds. Therefore the company needs to allow a
huge amount of budget for its supply chain approaches. The indulgence of huge cost within the
supply chain management could be identified as one of the challenges. For being competitive in
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the market the company needs to incur a huge amount of funds within its supply chain
(Chainalytics, 2019).
In addition to this, the company has also indulged in sharing and optimizing the supply chain that
requires an inventive collaborative format within the distribution process. The awareness of
consumers regarding the sustainability demand has made the organization to adopt CO2 friendly
products supply. This has given rise to innovative approaches within the material selection and
sourcing. It also gives rise to the delivery of final goods to the customers. The environmental
business practices were also enhanced through improved development in the supply chain. To
adopt more sustainable approaches the company incurs a huge cost (Heard, 2019).
The changing environment has an adverse effect on the organization. The organization has to
provide more focus on generating more and more revenue. Thus the company needs to minimize
its overall expenses in order to save money for their supply chain innovations. The company
could consider the advantage of adopting Just In Time. The system of inventory management
could enable the company to cut the extra cost of the warehouse. Through this approach, the
company could be able to receive and order inventory as per the requirement. This would
decrease the company's carrying fee for inventory. There is also safeguard the organization from
write-downs attributable. The company could be able to get free from the overhead stemming of
surplus inventory. This facilitates the company to save huge costs (Grossi, 2016).
No maintenance of sustainability
Environmental is the most significant factor to be concern about. One of the challenges that
could be analyzed many of the suppliers does not operate in proper sustainable ways. This is due
to the maximum of the supplier's company serving the retail chain does not carry out their task in
a sustainable way and thus the environment disruptions take place. Another challenge that could
be evaluated is the rapid growth of technology in the market had led to significant disruptions
within the supply chain of the company. However several suppliers of the retail chains had
included themselves in illegal activities such as forced labor. The major challenges that could be
taken into considerations were the wastages of food; it is noticeable that that adequate amount of
food is being wasted as it does not meet the quality standards of wool worths. Here quality does
not mean the tastes of food; it means the sizes and shapes of vegetables and fruit.
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Sustainability is the most important aspects of carrying out business activities. Sustainability
includes the quality of the environment to lead a healthy atmosphere within the country.
Woolworth therefore very precisely have to operate their activities by keeping in mind what
types of factors will decrease the valuation of the environment. Sustainability is a matter to
concern because a considerable amount of people were not at all getting an adequate amount of
food and here a huge amount of food was being wasted. Therefore it can be said that supply
chain retailers to eliminate the wastage of food are required to be improved (Sotiropoulos, 2017).
The physical environment of Woolworth in Australia with that of the contribution of staples and
food is playing the most crucial role in establishing a potentially strong market in the country.
Sustainability approach is an important matter for Woolworth. This type of sustainability
approach could not be done alone, but with the help of entire team members, this committed
approach could be executed properly. If properly and efficiently the supply chain retailers could
out their business activities then it will also be benefitted by the company too. By reducing the
number of wastages of food company will also be able to attain a high profit when sustainability
is maintained (wowlink, 2018).
Company has faced a huge challenge when the wastages of food are being done. Woolworth has
faced a loss due to an abundance amount of loss on food. If this is continued in the coming future
then Woolworth for surely will run at loss. Therefore sustainability should be maintained by the
company.
In order to cope up with the situations, Woolworth has aligned solar panels with the Tesla
battery. It is considered the most modern way of discovering and learning of new things in a new
manner. For maintaining sustainability Woolworth had taken initiatives for reducing the waste of
food and creates up to a food rescue partnership for the people who are needed in actual. At
present Woolworth main key theme is to engage their entire team for maintaining sustainability.
Additionally, they had also moved forward for eliminating the packaging through plastic and had
improved the opportunities for their customers to recycle. In order to make easier for their
customers, they are going to offer Bag for Good which is recyclable. For continuing the recycle
program they had implemented various programs by which recyclable could be done in a
continuous process. Woolworth has also aimed at achieving net-zero supply chain deforestation
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in their products. Sustainability is not only reducing wastages of food but the company has also
focused on decreasing emissions of carbon by about 10 percent (Woolworthsgroup, 2018)
Recommendations
The company has to implement efficient supply chain management policies and strategies in
order to manage the issues regarding the supply chain issues related to the increasing fuel price
in the global market. The company has to adopt more fuel-efficient ways of transportation. The
green energy resources should be used by the organization for the supply chain of the company.
The uses of green vehicles for the supply chain are also effective to manage the situations related
to increasing fuel prices in the global market(Wahyuni, 2010)
Woolworths has to implement a useful quality control system to detect inferior products. The
senior management team has to identify the area where the quality control management teams
are lacking behind. By increasing the members' number of quality control management team, the
organization can be able to solve the issue. The organization can also undertake new suppliers
for its product distribution process. The numbers of suppliers in the business market are high.
The organization should utilize this opportunity and solve the occurred challenge (KENTON,
2019).
Woolworth could be more effective and efficient the company needs to quantify and identify the
risks. By quantifying and identifying the risk, the organization could be able to mitigate and
control it. The business needs to form a risk management strategy towards overcoming and
handling major disruption in Woolworth supply chain. Woolworth needs to take a holistic and
balanced approach to steer on-shelf availability. The company also needs to monitor its key
indicators of performance upon a cyclic basis. This could enhance the value chain of Woolworth
and could ensure an effective system (Opentext, 2019).
From the viewpoint of recommendations, it could be suggested that the company for increasing
sustainability has implemented various initiatives. They have to build up a food rescue
partnership for the people who are hunger actually. They are initiating their whole team to
maintain sustainability. They engage their team in a program for reducing the packaging of food
with the help of plastics. Also, they had insisted on their customers to recycle the products in a
circular way. Various fundraising program is being launched which has especially done for
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rescuing the surplus food and then turn out into free meals for millions of Australians for
bridging the gap of hunger every consecutive year. For fully removing the plastic packaging they
had started offering Bag of Good which is a reusable bag (Web.nchu, 2018).
Conclusion
In Woolworths, the supply chain holds a very essential position. This supply chain is responsible
for business and capital generation of the retail chain. However, the supply chain goes through
several challenges due to its vast and huge size. The challenges that are being faced by the
Woolworths on the grounds of supply chain management are general safety and quality products,
change of market and access to the latest technology, Sustainability, and fuel pricing. The
manufacturers are always on a verge of making good product son that they can satisfy their
customers but in Woolworths, they face the product recall cases in regular intervals of time (Sit,
2018). This damages the company’s image and generally the company has to go through
expensive situations. After that, the challenge is accessing new innovative technology that can
improve the management of the supply chain in a more efficient manner. The proper individuals
are to be assigned so that this can be executed properly. For mitigating this some
recommendations and solutions are also been discussed in the paper for the development of the
company. The supply chain is also responsible for bringing out economic development among
the Australian local communities at a great extent. It is also evidently being pointed out that
some other supporting firms also generate capital by serving the supply chains of the company
Woolworths. By following the recommended path the company Woolworth can efficiently solve
out its challenges and also maintain a good eye on the processing’s of the supply chain
management so that in the near future they do not face such challenges anymore (Spjain, 2018).
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References
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