Supply Chain Network of Woolworths

Executive Summary

The assignment is based on the process of supply chain networks in the service industries of Australia. It has been referred to the current business situation taking place in Woolworths, which has faced several problems with its high cost of labours. The report has provided critical evaluation of the three principles of operations management, which are mainly capacity planning and control, supply chain configuration and agile supply chains with reference to the chosen organisation. In addition, it has identified two critical issues based on the analysis and suggested suitable areas of improvements using “operations strategy matrix”.

 

 

Table of Contents

Introduction. 4

Description of the Supply Chain Network. 4

Map of Supply Chain Network for understanding the process in detail 4

Critical Evaluation of the Supply Chain Network of the Service Sector Woolworths in Australia. 7

1. Supply Network Configuration. 8

2. Capacity Planning and Control 8

3. Agile Supply Chains. 9

Two Identified Critical Issues. 11

Demonstrate how the recommendations proposed can have a strategic impact on the business in a holistic and coherent way:- 11

Conclusion. 13

References. 14

 

 

 

Introduction

The supply chain process is a chain of networks that is built on the basis of a number of stakeholders associated with it. In fact, the supply chain network is better known as a process that can enhance the productivity and profitability of a particular business. In this report, it will be discussed about the supply chain process of the chosen service sector, Woolworth based in Australia. In order to discuss and evaluate the process of the supply chain network, it will be analyzed through specific operations principles, which would identify some critical issues from the topics below. Moreover, it will provide recommendations for future improvements, as per the problems identified, which would impact on the business in a holistic and coherent manner. 

Description of the Supply Chain Network

Supply Chain network works in association with a long chain of people involved in the systematic flow of business from one place to another. In other words, supply chain management is a wide area of network that involves the operations team and the flow of information within these channels (Stadtler, 2015). In this respect, organizations existing in the service sectors of Australia are mostly engaged in a flow of information in a chain of process. For example, Woolworth is one of the recognized retail sector organizations going through some challenges in its supply chain network, which has compelled it to take boycott the recruitment process in the labor supply chain network (Woolworthsgroup.com.au, 2019). Hence, this is the current situation of this organization that is facing high pressure related to the labor hiring processes that have violated Fair Work Laws.  

Map of Supply Chain Network for understanding the process in detail

 

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Figure 1: Hierarchical Process of Supply Chain Network

(Source: Stadtler, 2015)

Based on this above figurative structure of supply chain network, it can be recognized that service sector firms are interconnected with one another from one door to the other that is flowed down from the suppliers to the manufacturers and then to the distribution centers and the final products are received at the end of the retailer. In addition, the figure showing the process of supply chain network involves a number of suppliers, which can be from local or overseas regions ready to supply the raw materials to the nearest warehouse or manufacturing location. Further, the raw materials are carried out by the distributors after reaching the destination point. On that basis, retailers collect the goods and raw materials from the end of the distribution centers within the given time limit (Eskandarpour et al., 2015). From the understanding of the flow of the network process of the supply chain, it is evident that almost every retailer works in accordance with this common flow of the network. With reference to the current situation with Woolworths, there is an issue with the long-time supply chain networking process that is being slowed down in the upstream flow, which is being collected by the retailer in the market. According to this issue that is being addressed in the organization, it can be understood that every organization tend to have two types of flows that are the material flow and the other is the information flow that goes on vice-versa directions from upstream to downstream as well as from the downstream to the upstream for maintaining the supply chain network active and effective all the time. 

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Figure 2: Flow of Supply chain network in an Upstream and Downstream process

(Source: Liu et al., 2019)

Material Flow

Material flow mainly generated from the raw materials that come from the suppliers to the manufacturers and then allocated to the respective distributed centers and finally delivered to the customers, as a finished product (Rajkanth et al., 2017). In this respect, it is evident from the description of the material flow that if there any kind of lack of network connection between the suppliers to the retailers, it might be only due to insufficient team cooperation or lack of information system in the chain of network. The reason for the occurrence of such issues mainly takes place due to breakdown down of middle network or non-adequate support of technology for sending the right information at the right time. For example, in respect of Woolworths, it can be assumed that because of the similar kind of communication barrier, the firm is currently facing such a challenging situation in its supply chain process.

Information Flow

On the other hand, information flow arrives from the end of the customers, as the customers’ demands a targeted amount of goods or products from the retailers or from the manufacturers directly. The accurate flow of information is successfully carried out by responsible staff taking care of the entire supply chain process in an organization (Liu et al., 2019). It determines the fact that based on the information shared by the end of the consumers to the central firm, i.e., the retailer; the rest of the process flow is passed to the next member. Estimating the demand of the customers, the retail firm provides the necessary information, as per customer demand along with the sales rate of the current situation. Depending on the information provided by the retailer to the suppliers for supplying the bulk of goods and products and maintaining the quality at the same time, becomes important here. Therefore, it becomes the sole responsibility of the suppliers to implement lean production principles for cost minimization and control the unwanted waste as well in the entire process of the supply chain network. In other words, strengthening the communication system between the retailers to the distribution centers or else with the manufacturers, it is significantly important to consider the suppliers at prime level, as the suppliers are mostly taken with intense care and effective relationship with the upper levels. For Woolworths, it would need to ensure about effective communication channel between the suppliers and the other middlemen associated with the distribution and flow of products and raw materials, as the customers expecting the delivery of goods within the given deadlines (Australian Financial Review, 2019). Therefore, in this description and conceptual understanding of the supply chain process, it is clarified from the above figure that the entire process of network needs to be enhanced with standard tools and techniques, which might be affected if there inefficiency in any of them. 

Critical Evaluation of the Supply Chain Network of the Service Sector Woolworths in Australia

According to the understanding of the above description, it is justified that overall planning and process of supply chain network moves around the common link between the suppliers and retailers, which is operated in between by the producers and distributors. Stadtler, (2015) opined that managing appropriate planning and execution of the distribution of goods and products helps in managing the product delivery within time and satisfies the customers as well. In this regard, it can be recognized that if there is strategic planning and measurement of the budget and efficiency of products to be delivered, it assures timely delivery and cost-effective management of goods. Below are the three chosen topics of discussion, which are the main principles of operations management as follows:- 

1. Supply Network Configuration

In this process of operations principle, business strategies are being aligned with the supply chain network and processes on time that can be possible in achieving business goals and benefits. Kim et al. (2015), stated that the strategic configuration of the network aligned with the sharing network can be able to find the accurate form of results and appropriate delivery of product. Besides, Ghani (2016), contradicted with this idea that configuring a strategic planning and network can be broken in between, as it would be depending on the major barriers of transportation time and receiving time to the end of manufacturers and then to the end of distributors. According to the placed arguments, it is evident that even if there is a suitable configuration of new product development processes in a setup business, it might be affected due to the unwanted barriers and uncertainties like transport flow, inventory management, cost reduction, and procurement issues in middle. For Woolworths, it would need to be quite proficient in its approach of handling the challenges of the external environment and always prepare risk assessment planning in advance for maintaining its cost of raw materials and the delivery methods within the given time. 

2. Capacity Planning and Control

According to Gyulai et al. (2015), capacity planning and control management process comes under the core responsibility of operations manager in an organization. It tries to demonstrate that if there is an issue with the overall capacity of delivering goods and raw materials in a bulk, it would signify that an organization is inefficient in its capacity to handle productions on time due to whatever is the reason behind. Based on the current situation of Woolworths, as it seems to be facing some challenges with its suppliers’ channels in Australia, it would currently need to interconnect between capacity and demand with strategic planning and controlling the extra cost of production. This can be pursued by the organization by engaging the operations manager those are working at present in the firm. In fact, the operations managers would need to be provided with training and induction process for controlling the access demand that comes from the end of the customers. Besides, Li et al. (2017) argued that capacity planning and controlling the right distribution of goods can be managed with an ease way by implementing sustainable productions and finding adequate resource implications that can be communicated to the suppliers from the end of the operations team for changing their techniques and equipment on time. In this respect, Woolworths would need to consider their available capacity and financial strengths in providing quality products on time and improve the profit as well. For implementing this kind of ideas and principles, it is mandatory to conduct a regular communication process with the suppliers and the manufacturers and distributors as well. Therefore, based on these arguments, it can be relevant to this situation, which is being going in most of the retail service companies in Australia. 

3. Agile Supply Chains

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Figure 3: Agile supply Chain management

(Source: Christopher et al. 2016)

The agile Supply chain process is different from the above-mentioned processes and it mainly rests upon four distinctive dimensions, which are mainly as follows:-

 

 

Market Sensitiveness 

Being sensitive to the market is important for a supply chain manager in an organization like Woolworths need to conduct proper research and analysis of the suitable market, as it can provide the firm to recognize and estimate the actual demand from the customers and forecast the demand accordingly to the suppliers. According to Gligor et al. (2016), the agility of the supply chain network results in a proactive process of being efficient in managing customer demand and satisfy them, as per demand. This can be chosen, as one of the means of understanding the target market. 

Virtual Supply Chain

On the other hand, Tarafdar and Qrunfleh (2017) commented that the virtual supply chain is another dimension of agile supply chain management that can be further enhanced with the help of using efficient tools and techniques with quality use of techniques among the other departments of an organization. In other words, it goes in a collaborative process in a virtual integration of the original requirement of customers and successful delivery of the actual products on time.

Network-Based

Being in the network is the most significant part of the responsibility that is connected within the functional departments of an organization. According to Christopher et al. (2016), the networking system of an organization can be improved by involving all the staff in a chain of networks. This can be improved by strengthening the networking channels as well as increasing the competencies of all the players in it. 

Process Aligned

In the process alignment network, the majority of invention and product designing is merged between the suppliers and the product designers. Cheung et al. (2018) commented that the process alignment of the supply chain network is enhanced in accordance with supplier managed inventory system in collaboration with production and design. From this statement, it can be understood that if an agile supply chain management needs to be successfully managed, it would need to be addressed with effective synchronization of the major players in the process flow. 

Therefore, based on the overall concept and principle idea of agile supply chain management, it can be recognized that for Woolworths, it would need to be technically strong enough to maintain lean management of invention and reduce the cost and at the same time, it would also need to learn how to be flexible with changing demand of the customers and manage fluctuation of demand and supply at a time. 

Two Identified Critical Issues

Based on the evaluation above, it has been identified that from each of the three processes of supply chain network, the two major issues are concerned with managing the time of delivery of products and flexibility of addressing the changing demands of the customers that keep on changing in the market. Hence, pointing these two critical issues at the top level, it can be further suggested to the business of the retail sector as well as in reference to Woolworth, which is mainly facing trouble with the balancing estimation of stock supply, as per consumer demand measurement. 

Demonstrate how the recommendations proposed can have a strategic impact on the business in a holistic and coherent way:-

According to various scholars and researchers, it can be available that operational strategy has a key role and responsibility on an organizational supply chain management. In this respect, the concept of an operational strategy matrix is considered to be profound with the capacity to manage uncertain boundaries of risks associated with a business. Below is the presentation of a structural form of how to manage strategic matrix for managing operations under control:- 

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Figure 4: Operational Strategy Matrix

(Source: Slack and Brandon-Jones, 2018)

Understanding the key concept of the operational strategy matrix, it can be perceived that organizations tend to face challenges from an uncertain external business environment. According to Slack and Brandon-Jones (2018), it tries to depict that if the firms try to plan and propose strategies concerned with their operations, it would be convenient for them to identify and measure uncontrolled barriers and risks affecting the operations directly in a market. In respect of this concept, it can be realized that if the operations of the supply chain network need to be enhanced in a better form, it would have to follow some instructions for maintaining quality, speed, dependability, flexibility, and cost of production together. According to an online review of an article, Bollard et al. (2017), it is evident here that the initiatives taken for improving the operations of an organization would only depend on digital integration and automation process of data analytics and lean process design as well as better business outsourcing processes under the obligation of McKinsey’s digital approach. Understanding the concept of operational strategy matrix, it can be further recommended for Woolworths based in Australia to adopt some suitable strategies below for improving the key areas of the supply chain process:-

Developing the Lean process Design

If the firm incorporates lean process design, it would impact on the streamlined chain of network and at the same time, it would also reduce the cost of production. Hence, this would provide Woolworths to manage its existing stock of supply and able to manage adequate resources from the market for gaining low-cost consumption in the invention. 

Digitalization

If the organization takes digital implication from a recognized brand of IT specialists, it can easily better technical assistance from the IT Team support. Hence, it can be preferable for the business like Woolworths to resist barriers of digital marketing techniques and tools.

Smart process of Automation

In the case of Woolworths, it is recommended to hire influential clients ready to invest in the smart process of automation in its supply chain process in order to increase the speed of communication between the customers and the retailers. This would provide effective information flow from the downstream that would clarify the demand exactly from their end and execute the operations accordingly to the suppliers.

Proper outsourcing of business

In this area, proper outsourcing is recommended for the organization, as it would enhance further the application of lean systems and techniques properly in the lower level of the suppliers.

Conclusion

Therefore, it can be realized from the overall discussion and critical evaluation of the supply chain process of the retail sector from the service industry of Australia that the supply chain process is a wide area of network, which runs along with key partners and resources in association with an organization. In addition, based on these above concept and recommendation generated from the research and understanding of the operational strategy matrix that if firms of either service sector or manufacturing sector implements and includes this strategic idea into practice, it would give positive results into actions as well as it would also provide future scope of sustaining the business for long-term aspects.

 

 

References

Australian Financial Review. (2019). Woolies backs supply chain revolution. [online] Available at: https://www.afr.com/chanticleer/woolies-backs-supply-chain-revolution-20190422-p51g7d [Accessed 28 Nov. 2019].

Bollard, A, Larrea, E, Singla, A & Sood, R 2017, The next-generation operating model for the digital world, McKinsey & Company, viewed 12 January 2019, https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/the-next-generation-operating-model-for-the-digital-world [Accessed 28 Nov. 2019].

Cheung, W., Chiang, A.H., Sambamurthy, V. and Setia, P., 2018. Lean vs. Agile Supply Chain: The Effect of IT Architectures on Supply Chain Capabilities and Performance. Pacific Asia Journal of the Association for Information Systems, 10(1).

Christopher, M., Harrison, A. and van Hoek, R., 2016. Creating the agile supply chain: issues and challenges. In Developments in logistics and supply chain management (pp. 61-68). Palgrave Macmillan, London.

Eskandarpour, M., Dejax, P., Miemczyk, J. and Péton, O., 2015. Sustainable supply chain network design: An optimization-oriented review. Omega, 54, pp.11-32.

Ghani, A., 2016. Exploring the Relationship between International Supply Network Configuration and Policy: Interventions, Influences and Capabilities (Doctoral dissertation).

Gligor, D.M., Esmark, C.L. and Holcomb, M.C., 2015. Performance outcomes of supply chain agility: when should you be agile?. Journal of Operations Management, 33, pp.71-82.

Gyulai, D., Kádár, B. and Monosotori, L., 2015. Robust production planning and capacity control for flexible assembly lines. IFAC-PapersOnLine, 48(3), pp.2312-2317.

Kim, Y., Chen, Y.S. and Linderman, K., 2015. Supply network disruption and resilience: A network structural perspective. Journal of operations Management, 33, pp.43-59.

Li, R., Dong, Q., Jin, C. and Kang, R., 2017. A new resilience measure for supply chain networks. Sustainability, 9(1), p.144.

Liu, Q., Rezaei, A.R., Wong, K.Y. and Azami, M.M., 2019. Integrated modeling and optimization of material flow and financial flow of supply chain network considering financial ratios. Numerical Algebra, Control & Optimization, 9(2), p.113.

Rajkanth, R., Srinivasan, G. and Gopalakrishnan, M., 2017. Material flow optimisation in a multi-echelon and multi-product supply chain. International Journal of Logistics Systems and Management, 26(1), pp.105-124.

Slack, N. and Brandon-Jones, A., 2018. Operations and process management: principles and practice for strategic impact. Pearson UK.

Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer, Berlin, Heidelberg.

Tarafdar, M. and Qrunfleh, S., 2017. Agile supply chain strategy and supply chain performance: complementary roles of supply chain practices and information systems capability for agility. International Journal of Production Research, 55(4), pp.925-938.

Woolworthsgroup.com.au. (2019). [online] Available at: https://www.woolworthsgroup.com.au/icms_docs/195396_annual-report-2018.pdf [Accessed 28 Nov. 2019].

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