Analysis of Woolworths' Logistics and Supply Chain Management

This report provides a comprehensive analysis of Woolworths' supply chain and logistics operations, focusing on their scope of operations, supply chain activities, key partners, and the elements that contribute to their competitive edge in the Australian retail market. It highlights Woolworths' long-term relationships with suppliers and their use of IT technologies to enhance connectivity with vendors, consumers, and partners. The report also examines Woolworths' sustainable supply chain practices, including the use of MetricStream and TradeStone platforms, and their commitment to customer satisfaction through effective products, services, and strategic initiatives. Ultimately, the analysis concludes that Woolworths' strategic approach to supply chain management contributes significantly to their leading position in the retail industry.

Running Head: MANAGEMENT 0
LOGISTICS AND SUPPLY
CHAIN MANAGEMENT

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Executive Summary
This report outlines the supply chain and logistics operations of Woolworth, an Australia retail
brand. It also described their scope of operations, supply chain activities, partners and elements
in the supply chain and various sustainable practices in the supply chain necessary for them to
get competitive edge in the industry.
Woolworth has maintained a long-term relationship with their suppliers and employed various IT
technologies help them in connecting with their vendors, consumers, partners in an effective
way. The company is currently leading in the retail industry in both Australia and New Zealand.
This report also gives a strategic analysis of Woolworth in its Australian retailing and grocery
industry. In last, examining all these aspects, metrics and performance, it can be said that the
company is providing end-customer satisfaction with the help of their products, services and
strategies.

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Table of Contents
Introduction......................................................................................................................................3
Woolworth Supply Chain................................................................................................................4
Woolworth Sustainable Supply Chain.............................................................................................5
Collaboration with Suppliers and Logistics partners.......................................................................6
Conclusion.......................................................................................................................................8
References........................................................................................................................................9

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Introduction
Woolworths Limited is an Australian organization committed to serving the customer with
delivering superior value, convenience and choice across all the regions of country. The
company is currently leading in Australian supermarket and retail brands (King, 2014). In terms
of revenue, it is second largest company in Australia. In 2017, the company earned a revenue of
around A$55.669 billion with around 205000 employees (Powrbot, 2018).
The company first store was opened in Sydney in 1924 as a bargain basement outlet. Later on,
the company grew with opening of second store in Sydney, Brisbane and Perth. By the end of
1933, the company had successful in opening with 23 stores (woolworthsholdings, 2018).
Through various acquisitions and expansions, Woolworth has become one of the major
supermarket chains in Australia with functioning of around 995 stores across Australia.
Woolworth operates in an oligopoly market structure by dominating most of the market segment.
However, Aldi is now trying to entering in the market with their cost cutting strategies and thus
taking up the market share from the hands of the company. The company had successfully
established their business in Australia and New Zealand. They had also launched Woolworths
online and a mobile app for shopping from home (Winterford, 2012). The company is operating
with various supermarket chains, petrol market, Liquor business, General Merchandise, Home
Improvement products and has several Hotel & Gambling. Their vision is committed to
customers, people and the planet.

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Woolworth Supply Chain
Woolworths has implemented direct supply chain since it will help them in reducing cost at
several places and sustain its own control over the supply chain. With the help of distributions
centers, Woolworths connects vendor and stores. In addition, the also manage Direct Store
Delivery (DSD) as it allows merchant to distribute products openly from their warehouse to the
Woolworth stores (Smith, Lawrence and Richards, 2010). The company also reduced and merges
its distribution center as more number of distributions centers can cause excess capacity which
Stores
Inventory Management
Receiving
Sales
Distribution Centers
Receiving
Stock
Pick
Dispatch
Inventory Management
Cross
-Dock
Distributed
Case
Movement
Vendors
Order /
Planning
Production
Storage
Dispatch
Demand
Planning
Replenishment
Planning
Order
Management
Performance
Management
Distribution
Centre Planning
Reverse
Logistics
Transport
Management
Vendor
Communication
Promotions
Management
Records
Management
Price / EDLP
Management
Range / Space
Management
Network
Planning
Enabling
Processes
Ordering
Processes
Support
Processes
Physical
Processes
TO BE DC PROCESS
DSD Transport
Primary
Transport
Secondary
Transport
Store
Order Purchase
Order

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will lead to more cost for the organization. Their RDC are positioned across Australia like
Wyong, Perth, Brisbane, Townsville and so on. Decreasing of numbers of distribution centers
will also help the company in minimizing warehousing costs (like stock handling cost and site
lease cost). In addition, the cost of inbound freight will also be reduce by this strategy.
Woolworth Sustainable Supply Chain
Woolworth is always striving to operate in more sustainable manner. The company always looks
for entire manufacturing process to the supply chain and logistics to enable sustainable practices
and do business with people and process in a strategic manner (Burch, Dixon and Lawrence,
2013).
One of the major activity employed by Woolworth to enhance supply chain sustainability is
MetricStream. It is an integrated and streamlined approach to capture sustainability metrics and
indicators and thus administers several assessments and third-party audits across the supply chain
(Berthiaume, 2014). This solution provides Woolworth a centralized framework to register and
onboard suppliers for their sustainability management program, evaluating supplier compliance
with the help of self-assessments on various intervals. Moreover, it also helps in maintaining
supplier data and manage supplier certifications (Berthiaume, 2014). The company also align this
program with the Total Quality Management (TQM) and this gives them company a
comprehensive view of their supplier performance, sustainability and management programs.
MetricStream gives Woolworths a common point where they can track, assess, and score
sustainability initiatives across their wide suppliers worldwide. This gives them various benefits
like workflow automation, enhanced collaboration with the suppliers and this is very significant
for their long-term success and vision.
The second activity in respect with sustainable supply chain, Woolworth also chose TradeStone
Merchandise Lifecycle Management platform to manage its supply chain effectively (Pymnts,
2015). TradeStone proposes a platform for organizations in managing their suppliers and orders,
B2B sales and financing. Woolworth has adopted this approach by facilitating a single platform
across all divisions and product groupings and this gives them a distinct position in retail brands
to dealing local and international sourcing (Pymnts, 2015). The TradeStone platform will

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manage Woolworth array of products, containing general merchandise, food and liquor, fashion,
petrol and home improvements.
The third activity in response with sustainable supply chain adopted by Woolworths is boosting
their value chain with the help of technology such as service-oriented architecture (SOA). The
company have employed various software to manage their supply chain effectively. This
software can pinpoint bottlenecks in real-time and thus reduce development cost at various
stages (Ordanini and Pasini, 2008). This will leads to further improvement in their whole
business life cycle. The company also added these new tools for a service oriented architecture
(SOA) project to the retailers’ checkout list.
The company is also managing all the elements of the supply chain to ensure efficient operations
in their integrated platform. Woolworths installed its own B2B integration platform to offer real
time assimilation with the system of supplier's. This has four strategic partners for the
endowment of B2B integration with its supplier community. Their key elements of the supply
chain include customers, forecasting, processing, suppliers, location, logistics, design, inventory
and purchasing. The company identifies the necessary demand of the customers and thus
incorporate these customers’ wants into their planning and design. With the help of technology
like MetricStream, the company also reduces inventory costs. They also have maintained
effective logistics system to best move and store materials. In their logistics system, the company
is using technology like RFID, which reduces warehousing, and transportation cost. The
company also manage their wide range of suppliers present over worldwide and routinely
monitor quality, relation and delivery with them.
Collaboration with Suppliers and Logistics partners
Supply chain links value chain. It also associates totally procedure incurred within a business
enterprise from sourcing raw materials from suppliers to delivery final products to consumers
(Ketchen Jr and Hult, 2007). Moreover, this also comprises of order processing, sourcing and
procurement, production and scheduling, stock management, transport, warehousing, and
customer service. In addition, it also emphasis on information system important to evaluate all of
those actions.

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Managing a firm value chains means to accomplish linkages between interrelated value actions.
Woolworth achieves competitive edge in this process by focusing on low cost and differentiation
strategy and thus manages its linkages effectively.
The company connects with suppliers to win back customers. They reconstruct channels with the
suppliers and gain further shoppers by offering food and grocery manufacturers unique access to
the necessary data of the consumers (Flax, Bick and Abratt, 2016). More than 80% of their
suppliers have been there collaborating for a decade or longer and they work closely with them
to build products and services for their final customers. The company also collaborate with the
suppliers through a supplier connect programme where they obtain free periodic scorecard and
marketable reports states and evaluate their performance against the competitor's business in
many sorts like service, customer loyalty, market share and sales. These suppliers can also pay
for supplementary reports and gears, which examines spending habits of the shoppers by
frequency, budget and level of assignation, and thus deliver understandings into marketing
effectiveness with various promotional solutions. Woolworth believes that with these type of
programs, they can maintain healthy relationship with the suppliers and this will surely lead
towards them in positive consumer satisfaction.
Woolworth has their private logistics service that tackle both primary and transport services to
supply stocks from vendors to nearest DC (National or Regional), and secondary transport
services to transport stocks from RDC to the respective stores (Sutton-Brady, Kamvounias and
Taylor, 2015). The company has their own control of the logistics services and this helps them to
accomplish time of delivery time and thus enhance safety. In addition, it will subsequently
reduce cost of delivery and thus provide greater bargaining power to decrease inventory cost.
Their logistics system is also backed by Information Technology (IT) based on Electronic Data
Interchange (EDI). The company believes that these systems and technology are very important
in gaining synergies in any supply chain alteration.
These all collaborations have relocated the cost saving to consumers by keeping the prices lower.
By doing all this, the company distributes value not only for its vendors and stakeholders but
also to its consumers. This helps them to achieve competitive advantage in the industry.

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Conclusion
A competitive advantage in supply chain can be achieved by using differentiating strategy or cost
leadership strategy. Woolworth has embedded both these factors in their supply chain and
undoubtedly gains a competitive advantage in the industry. The company also reengineered its
distribution system by maintaining long-term relationships with the suppliers, applied enhanced
IT technology to optimizing, and manage linkages in the supply chain. This tactic will result in
huge cost savings and thus gives them a distinct position in the retail industry.

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References
Berthiaume, D. (2014) Woolworths enhances sustainability with MetricStream [ONLINE]
Available from: https://www.chainstoreage.com/store-spaces/woolworths-enhances-
sustainability-metricstream/ [Accessed 30/12/2018].
Burch, D., Dixon, J. and Lawrence, G. (2013) Introduction to symposium on the changing role of
supermarkets in global supply chains: from seedling to supermarket: agri-food supply chains in
transition. Agriculture and Human Values, 30(2), pp.215-224.
Flax, J., Bick, G. and Abratt, R. (2016) The perceptions of supplier-buyer relations and its affect
on the corporate brand. Journal of Brand Management, 23(1), pp.22-37.
Ketchen Jr, D.J. and Hult, G.T.M. (2007) Bridging organization theory and supply chain
management: The case of best value supply chains. Journal of operations management, 25(2),
pp.573-580.
King, M. (2014) 10 facts you need to know about Woolworths Limited [ONLINE] Available
from: https://www.fool.com.au/2014/02/06/10-facts-you-need-to-know-about-woolworths-
limited/ [Accessed 30/12/2018].
Ordanini, A. and Pasini, P. (2008) Service co-production and value co-creation: The case for a
service-oriented architecture (SOA). European Management Journal, 26(5), pp.289-297.
Powrbot. (2018) Woolworths Ltd Company Profile [ONLINE] Available from:
https://powrbot.com/companies/profile/woolworths-ltd/ [Accessed 30/12/2018].
Pymnts. (2015) Australia’s Woolworths Chooses Supply Chain Management Platform
[ONLINE] Available from: https://www.pymnts.com/news/b2b-payments/2015/australias-
woolworths-choose-supply-chain-management-platform/ [Accessed 30/12/2018].
Smith, K., Lawrence, G. and Richards, C. (2015) Supermarkets’ governance of the agri-food
supply chain: is the ‘corporate-environmental’food regime evident in Australia?. International
Journal of Sociology of Agriculture and Food, 17(2), pp.140-161.

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Sutton-Brady, C., Kamvounias, P. and Taylor, T. (2015) A model of supplier–retailer power
asymmetry in the Australian retail industry. Industrial marketing management, 51(1), pp.122-
130.
Winterford, B. (2012) Woolworths app offers mobile shopping [ONLINE] Available from:
https://www.itnews.com.au/news/woolworths-app-offers-mobile-shopping-290493 [Accessed
30/12/2018].
woolworthsholdings. (2018) OUR HISTORY [ONLINE] Available from:
https://www.woolworthsholdings.co.za/overview/our-history/ [Accessed 30/12/2018].