INFS5870 Operations Management - Woolworths’ Organizational

You need to choose between one of the following levels for your analysis:

• Operations level
• Supply network level

In the report, you are required to:

• Describe the organisation so that the reader can clearly understand what the organisation does and the organisational context.
• Describe the process flow (or the supply network flow) of the organisation and define the key performance objectives and their relative importance for the business. If it is a large organisation, you may focus on only a part of the operation/network or one product line.
•  Use some of the concepts from process design (or supply network design) topic to critically analyse the current operations design and propose recommendations, which would contribute to improving one or more operations performance objectives that you identify as most important for the business.
• Discuss briefly, how emerging digital technologies, such as the examples provided in the article, could assist in further improving the operations performance of the business. 

Answer

Woolworths’ Organizational Context

Woolworths Limited, the leading retailer in Australia initiates its operations with a fundamental aim of establishing customer as well as store-led culture and team along while generating sustainable sales and distribution momentum in food retail market (Woolworths.com.au 2018). The company initiates its business operations with efficiently setting up an established retail association which is responsiveness towards the customer base, team members, distributors and suppliers. Woolworths’ Australian food team has been performing towards a distinct strategy in order to put the customer base at the core of the business (Juan Ding et al. 2014).

                                                                              Woolworths’ Business Operations

                                                                              Source: (Woolworths.com.au 2018)

Jie, Parton and Cox (2013) reveal that the past few years, advanced technologies have transformed every aspect of life in particular the retail sector. However, customers have the competence to shop at their convenience but can further benefit from greater level of accessibility of products and services from every corner of the world. Woolworths serve to a wide-ranging base comprising of over 18 million customers and value each and every buyer of the company (Bock, Iansiti and Lakhani 2017).

Woolworths Supply Network System

justify;">Redesign Function and Series of Distribution Outlets

Woolworths has the potential to implement direct supply chain management since it will reduce expense and sustain its own regulation over supply chain. The company associates vendor and stores through the distribution centres. Furthermore, Woolworths has been managing Direct Store Delivery (DSD), which further facilitates merchants to supply products directly from distributors’ warehouses to Woolworths’ stores (Woolworths.com.au 2018). Drawing variance to implementation of supply chain management, Woolworths has concentrated as well as merged its supply centre from 31 to around 10 regional distribution centre (RDC) and supervise 2 national distribution centre (NDC). This strategy however has been one of the crucial operations strategies of Woolworths in order to restore its business organization to be more efficient and productive as more supply centres cause surplus capacity which lead to excessive amount expense  (Jie, Parton and Cox 2013).

                                                                                   Woolworths Supply Chain System

                                                                                  Source: (Woolworths.com.au 2018)

RDCs of Woolworths are primarily located across Australia such as Brisbane, Perth, Adelaide and Townsville, while two national distribution centres has been located in Victoria and New South Wales. However the decision to execute two NDCs in Victoria as well as New South Wales has been identified as the company’s strategic decision making procedures (Woolworths.com.au 2018). The company has executed the strategic decision process to successfully reduce freight expense from suppliers to distribution centre as over 80% of productions are generated in regions of Eastern Australia. Furthermore, the decrease of delivery and supply centre will reduce warehousing expenses such as site or warehouse centres as well as stock handling expenses  (Jie, Parton and Cox 2013).

Woolworths’ Market Segmentation

Australia’s food supermarket sector is distinguishing Coles and Woolworths as dominant and significant players who have been prevailing in the Australian retail for years (Woolworths.com.au 2018). However, the Woolworths group has been continuing to attain a substantial market share within the Australian supermarket food retail market and at present standing at around 39%.  Pulker, Scott and Pollard (2018) reveal that Woolworth’s market share has been witnessing significant decline along with critical competitors namely Coles has been decreasing the areas of gap with a current market division positioned at 33.5%. However Grimmer (2018) indicates that in the past one decade, Aldi’s market share has heightened from an approximate of 3% to 13%. However such a risen trajectory does not appear to be narrowing.

                                                                                    Woolworths’ Market Share

                                                                                         Source: (Morgan 2014)

Sullivan and Gouldson (2017) reveal current data which further indicate Woolworths’ incompetence in sustaining their current market position in Australian retail. It is highly inconsistent for the company to pursue similar price-driven market share such as Coles and Aldi, thus they need to seek their areas of divergences to compete in this competitive retail market. Market segmentation will facilitate Woolworths with distinct focus on the range of customers who have greater degree of inclination towards the Woolworths brand  (Bayne, Schepis and Purchase 2017). Woolworths can segment their market purchasers with transparent customer designs and needs and further distinguish the areas of segment where Woolworths can serve with utmost efficiency.

Woolworths’ management could take into consideration a significant quality as well as convenience proposition by further providing its buyers with excellent quality goods at great and attractive prices range which could magnetize high rate of customers at diverse store locations (Juan Ding et al. 2014). Furthermore, eliminating the focus on price assessment to quality and product excellence, the Australian leading retail organization, Woolworths market differentiation has also retained its position and ‘The fresh food people ‘will sustain its relevance in a quality market context. Mialon et al. (2016) has suggested that the strongest growing demographic is primarily based on singles as well as couples without children (SWOCs) who constitute the highest disposable incomes. This particular group will signify approximately over 55% of households by the next 10-12 years (Pulker, Scott and Pollard  2018). However, major segment of these upwardly mobile demographic are identified in metropolitan areas and seeking for conveniences. Furthermore, as an additional segment are those with high earnings and potentially with higher disposable earnings level. It has been noted by Woolworths.com.au (2018) that the company’s higher quality products would further appeal to wider range of achievement consumers- referred to those purchasing goods and products as well as services which illustrate achievements to others.

As a result, Woolworths would be aiming at various segments with a greater level of disposable earnings as well as in relation to segmentation strategy which could adapt diverse product ranges to dissimilar customer segments at each location (Pulker, Scott and Pollard  2018). For instance, high quality convenience meals in the city as well as high quality food products along with specialized ranges in the larger outlets. It has been noted that the concept behind an attainable market segmentation strategy is to successfully establish a dominant position within the market whereby competitors will be reluctant or incompetent to contest completion successfully. However, Woolworths’ primary target market that is the Woolies is being encountered by its primary competitors such as Coles  (Morgan 2014). Evaluating market segmentation based on geography in the domain of globalization, restricted geographical existence of Woolworths is the major cause of limited customer range in comparison to other retailers  (Jie, Parton and Cox 2013). For instance, it has been noted that one of Woolworths’ global primary rivals, Walmart who comprises extensive business operations in the United States, South America, Europe and Mexico, whereby Woolworths functions its business operations only in Australia and New Zealand (Woolworths.com.au 2018). Furthermore, Woolworths’ restricted existence tends to restrict its consumer base and further does not permit the company to benefit from geographical diversification and further enhances its level of risk related with these narrow markets. Thus, Woolworths sells its products and services to all range of demographic base and their marketing activities tend to target all ages of people (Juan Ding et al. 2014). However this strategy is distinguished as less productive as reiterating similar marketing strategies to diverse customer base is referred as less convincing in comparison to single individual (Pulker, Scott and Pollard  2018). Thus, Grimmer (2018) note that in such scenarios, process of mass customization of products along with marketing activities is required for Woolworths’ to enhance customers’ relationship promotion strategies.

Woolworths’ Adaptation of Business Model

All managers in globalized market scenario has been making operating decisions whereby decisions which stimulate strategies and planning which interpret strategy into action. Digitization has been dramatically transforming the characteristic, locus and rapidness of these decisions and technologies, methods which facilitate effective as well as productive operating performances. Bock, Iansiti and Lakhani (2017) noted that broad employment of digital technology necessitates rethinking of both businesses as well as operating models in which a business model aims to define the course executed by the organization of the way it creates as well as captures value. Studies revealed that strategies which took Woolworths to adapt to the growing B2B grocery buying segment (Bock, Iansiti and Lakhani  2017). Recently, Woolworths has evolved its digital competencies in order to attain the increasing market developments in business purchasing groceries. Furthermore, it has been stated that Woolworths digital expansion will be purposed to give its consumer base improved level of choices while providing an enhanced level of B2B convenience.

Woolworths has been facing significant challenge as its brand perception has typically relied on B2C comprising broad target market dimension and profile. Furthermore, Woolworths brand had been more challenging customer demands and expectations along with strong competitors (Bock, Iansiti and Lakhani  2017). The company in order to adapt B2C space must initiate in thriving new online service offerings and endorsing Woolworths Online-e-commerce cite as a place whereby businesses can acquire wide ranging grocery needs and in one-stop-shop and further delivered to them in order to consume time and reduce expenditure costs (Cameron 2015). The new and advanced digital platform will further offer tailored business support, discounts, offers along with interest-free credit accounts. It has been noted that over 40,000 businesses have registered in the company’s digital website and Woolworths’ online digital forum has witnessed double-digit revenues and incomes in prospective years. In addition to this, with regards to product improvement and innovation (Bock, Iansiti and Lakhani 2017), Woolworths will be setting up new business division that is Woolworths FoodCo which will comprise the accountability for launching new product segments and enhancing sourcing business partner associations. Thus digital transformation has been the core pillar in accomplishing buyers along with an increasing factor of Woolworths’ revenue and incomes.

References

Bayne, L., Schepis, D. and Purchase, S., 2017. A framework for understanding strategic network performance: Exploring efficiency and effectiveness at the network level. Industrial Marketing Management, 67, pp.134-147.

Bock, R., Iansiti, M. and Lakhani, K.R., 2017. What the companies on the right side of the digital business divide have in common. Harvard Business Review”, January 31st.

Bock, R., Iansiti, M. and Lakhani, K. 2017. What the Companies on the Right Side of the Digital Business Divide Have in Common. Available from https://hbr.org/2017/01/what-the-companies-on-the-right-side-of-the-digital-business-divide-have-in-common Accessed on 1st October 2018.

Cameron, N. 2015. Woolworths details 3-year strategy to become customer centric. Available from https://www.cmo.com.au/article/574302/woolworths-details-3-year-strategy-become-customer-centric/ Accessed on 1st October 2018.

Ghaderi, H., Cahoon, S. and Nguyen, H.O., 2015. An investigation into the non-bulk rail freight transport in Australia. The Asian Journal of Shipping and Logistics, 31(1), pp.59-83.

Grimmer, L., 2018. The diminished stakeholder: Examining the relationship between suppliers and supermarkets in the Australian grocery industry. Journal of Consumer Behaviour, 17(1), pp.e13-e20.

Jie, F., Parton, K.A. and Cox, R.J., 2013. Linking supply chain practices to competitive advantage: An example from Australian agribusiness. British Food Journal, 115(7), pp.1003-1024.

Juan Ding, M., Jie, F., A. Parton, K. and J. Matanda, M., 2014. Relationships between quality of information sharing and supply chain food quality in the Australian beef processing industry. The international journal of logistics management, 25(1), pp.85-108.

Mialon, M., Swinburn, B., Allender, S. and Sacks, G., 2016. Systematic examination of publicly-available information reveals the diverse and extensive corporate political activity of the food industry in Australia. BMC public health, 16(1), p.283.

Morgan, R., 2014. Market share narrows between Coles and Woolworths, while ALDI makes important gains. Retrieved December, 30, p.2015.

Pulker, C.E., Scott, J.A. and Pollard, C.M., 2018. Ultra-processed family foods in Australia: nutrition claims, health claims and marketing techniques. Public health nutrition, 21(1), pp.38-48.

Sullivan, R. and Gouldson, A., 2017. The governance of corporate responses to climate change: An international comparison. Business Strategy and the Environment, 26(4), pp.413-425.

Woolworths.com.au 2018. [online] Woolworths.com.au. Available at: https://www.woolworths.com.au/ [Accessed 1 Oct. 2018].