Woolworth is an Australian chain of grocery and supermarkets that accounts for 80% of the Australian market. The retailer specializes in the sale of groceries, health and beauty products, magazines, baby and pet supplies, stationery, among other essential products in the country. The retailer currently has over 980 supermarkets, 43 metro stores, and online platforms which all deal with the sale of these products. Woolworth has an efficient supply chain management which helps in the provision of items to all its stores The effectiveness of the firms’ supply chain management has helped the retailer in remaining competitive amongst its peers, both in Australia and globally.
Supply Chain Management Concepts
There are different supply chain management concepts that Woolworth has integrated into its operations. The first major concept is Customer-relationship management. Wool worth has a well laid out customer relationship management which is a critical aspect of its supply chain management. First, the retail firm has ensured that it has strategic locations, which is convenient for its consumer base. Many of its stores are easily accessible by people, where they are designed to suit the needs of the customers and ensure easy accessibility of the products (Jie and Gengatharen 5). Additionally, the firm has an e-commerce platform, where clients can make their purchases online and have them delivered to their homes.
Woolworths has effective customer relationship marketing. This has enabled it to increase its market size and ensured that it has a good public image, a factor that enhances its brand name. Woolworth’s currently has implemented a differentiation strategy, which involves having a differentiated product line, which it uses in managing an effective sale of products (Serrano and Lekkakos 201). The firm is one of the leading global companies that has taken advantage of the strategy in its supply chain management. Its key strategy involves delivering products to its customers at a lower cost as compared to its competitors.
Improving the shopping experience has been a major supply chain strategy that Woolworth has incorporated in its business model. According to the management, the firm places the customers first in everything it does, which resulted in lower and greater innovation. The company’s strategy focuses on improving its core functions as a way of ensuring that the consumer is put first (Jie and Gengatharen 10). It also focuses on growth, where this is executed by meeting more of the consumer needs. Woolworth is also focused on efficiency, where it creates the customer base through organizing for success and executing a lean retain model. However, at some point to reduce the costs of products, Woolworths undertook a measure of reducing the wages offered to the supply chain employees, a factor that did not augur well with them. This move, hurt the company operations since it was adverse effects on a part of its supply chain which are the workers. Nevertheless, the firm managed to amend this mistake and currently has gone back to treating all its stakeholders appropriately and equally. Its key focus remains on consumer satisfaction. The Woolworths Supply Chain Management System entails 7,000 employees, where 2% of the workers are associated with the mobility and transport of goods (Devin and Richards. 200). The rest are mainly involved in other operations of the company such as in the stores, IT sector mad the administration amongst other facets of the supply chain.
The primary suppliers of fresh foods and vegetables are the local suppliers, who are mostly from the Australian continent. The company has a good relationship with its suppliers who ensure that there is a constant efficiency supply of goods to its customers. Woolworth has established warehouses all over Australia, which is one of its strategic moves, under its supply chain management system. Over the years, the major objective of Woolworths has been to achieve smooth mobility for its goods and services. As a result, the company has established distribution centers winch enhance the efficiency to deliver (Jie and Gengatharen 15). The firm also has a great transport facility for its goods, which is a factor that aided in the success of Woolworths. A well-laid transportation network ensures efficiency in the movement of the goods and products from the suppliers to the distribution centers, stores, and outlets.
The firm has a very heavy influence on the Australian indigenous suppliers. It is hence able to procure products which are at very cheap costs and also able to emulate the principles of the Woolworth supply chain management system of selling quality goods at lower prices (Avelar-Sosa, García-Alcaraz and Maldonado-Macías 15). This proves that the firm relies on the domestic sources and channels for procuring its goods. Woolworths uses a need-based procurement system, which helps in obtaining goods that comprise of both local and international suppliers.
Inventory is a major part of the supply chain management of Woolworths. The company has continually undertaken measures of ensuring that it has a well laid out management process. The inventory integrates with modern technology and the use of modern software, which ensures that goods move in and out effectively hence minimizing delays and extra charges associated with inventories (Ricardo 56). The company has also constantly developed measures of reducing excess stocks and wastages of food, which has been the greatest challenge faced in its inventory management efforts. Another major challenge facing the inventory was the forecasting mechanism, which resulted in the accumulation of stock in its stores. These forecasting mechanisms also lead to more demands in certain stores, hence resulting in a shortage of goods and other outlets. This resulted in huge amounts of wastages and also hampers sales. This challenge in supply chain management has been constantly addressed. However, the firm is still in the process of exploring alternative measures that could help in dealing with this challenge.
Transport Management System (TMS)
The company has a well laid down transport management system, where it runs its logistics. This is a major factor in ensuring that it has a well laid out supply chain management. This includes both the primary transport services, for delivering stocks from the vendors and delivering to its stores. It has a well laid structure, where it has, accomplished to manage delivery times and improve safety (Devin and Richards. 205). It consequently has managed to minimize delivery costs and bureaucracies. Having its own logistics services, Woolworth has also been able to reduce the cost of inventories, which could have been higher in the vent of outsourcing.
Information Technology (IT) Systems
Woolworths has greatly invested in information technology in its supply chain management systems. This has consequently led to the enhancement of its operations, including, more speed and efficiency. The firm acknowledges that “technology and systems are critical in achieving synergies in any supply chain transformation” (Jie and Gengatharen 21). Through the incorporation of Information Technology in its processes, Woolworths has been able to share useful information, knowledge, and experiences between the firm and the customers and also the suppliers. This is a factor that has improved its service delivery and relationships. The distribution centers, inventories and stores are also integrated into the company system, making it easier to have links between all these departments and achieving more success.
Effects of Corona Virus on Woolworth’s supply chain
The COVID 19 pandemic has had numerous negative effects and disruptions to Woolworths supply chain. The pandemic has resulted in the loss of jobs for a high number of staff members, due to the closure of some stores and outlets from the suppliers. It has also impacted the suppliers of essential commodities that the firm was dealing with, factors that are likely to dent its sales, and ultimately its revenues and profit margins. This shows that the normal routines and the supply chain of the firm have been hit hard by the pandemic. However, the stores continue to operate in the country, considering the fact the firm provides some of the indispensable commodities in the country, which include food and beverages and other commodities (Woolworths group 1). However, the company led by its CEO continues to improve the flow of products to its stores, to ensure that the clients can access the critical goods.
Supply chain management entails and interconnection of activities ranging from the acquisition of the raw materials to their delivery as finished products and finally to the consumers. The value chain management concepts are broad terms that includes the links between the value chains of interrelated forms. The Woolworths supply chain management hence involves the suppliers, distributors, the transporters, and the entire personal involved in this chain. The company has numerous stores within Australia, which serve as outlets for its products, which mostly entails food products. The company has greatly invested in innovation, where it has continuously improved its supply chain to meet the increasing needs and demands of its consumer base in Australia.