Assignment Business Logistics Assessment Answer

Background and Introduction

The management of the movement of goods and services is referred to as supply chain management, and it also encompasses the procedures used to convert raw resources into completed commodities (Zekhnini et al. 2020). In order to maximize customer value and achieve a competitive edge over competitors in the market, it also entails actively streamlining the supply-related activities of the company. With the use of supply chain management, business organizations can more effectively and efficiently reduce extra expenses related to the delivery of goods to customers. Business logistics is the area of supply chain management responsible for organizing, implementing, and overseeing the effective, efficient, and reverse flow of goods and pertinent information between the point of origin and the point of consumption in order to satisfy customer demands (Waters 2019). This report aims to critically analyze the supply chain and operational practices of the Australian Stock Exchange (ASX) Listed retail, and non-service company, Woolworths, along with the relatable aspects. In the following paragraphs, the same aspects will be discussed as described above.

Description and critical analysis of supply chain practices of the chosen business

1. Introduction to Woolworths

A international retailer, Woolworths was established in Australia in the year 1924. The business began as a tiny store but throughout the years had incredible growth that allowed it to expand into one of Australia's biggest retailers (Woolworths 2023a). This company is well-established in New Zealand and a number of other nations. Woolworths currently runs a number of retail brands, including Woolworths supermarkets, BWS, Dan Murphy's, etc. The business is well known for its higher-quality items, keen emphasis on customer service and affordable prices. The business has been actively working on the reduction of environmental effects and implementation of numerous projects with the goal of achieving sustainability in recent years (Woolworths 2023a). Some of these initiatives include employing renewable energy sources, decreasing plastic waste, and assisting local farmers and producers.

1.1 Nature of business

Because Woolworths sells tangible things to customers, its business is primarily a non-service firm. As was previously mentioned, the corporation operated under a number of retail brands, one of which, Woolworths supermarkets, is engaged in the sale of a wide variety of groceries, household goods, and health and beauty products (Jocevski 2020). Additionally, the companies BWS and Dan Murphy's sell a range of alcoholic beverages, including beer, wine, and spirits. The essence of this business entails sourcing and buying goods from producers and manufacturers, managing supply and inventory chains, marketing goods to final consumers, and running physical and online retail storefronts for sales in terms of the end consumers (Zekhnini et al. 2020).

1.2 Competition level that the Company Faces

Woolworths faces a significant level of competition in the retail industry of Australia in terms of business logistics. A few of the competitors are discussed below.

1. Aldi: It is a discount supermarket retail chain that has been seeing rapid growth in Australia in recent years. The company follows a strategy of lower pricing so that many of its competitors can make it a famous option for budget-conscious customers (KPMG 2022).
2. Coles: Another major competitor to Woolworth is Coles, which is a major supermarket chain that is a direct competitor to the company. It offers a similar range of products, stores, liquor stores, and online shopping options, and has a wide portfolio of the brands like Woolworths.
3. Costco: It is a membership-based warehouse store that is involved in the selling of a range of products in bulk. In Australia, it is having a smaller presence in comparison to the other retailers on the list (KPMG 2022). It is still in competition with Woolworths because of its wide range of locally sourced commodities.
4. IGA: Independent Grocers of Australia (IGA) is a network of independently owned and operated supermarkets that competes with larger chains like Woolworths and Coles. While IGA stores are generally smaller than the major chains, they can offer more personalized service and a wider range of locally sourced products (KPMG 2022).

Woolworths is focusing on offering a broad range of products at competitive prices to remain competitive in the Australian retail sector, along with investing in technology and logistics for the improvement of its supply chain and customer experience.

1.3 Target customers

The target market for Woolworths includes a wide spectrum of people from different age groups, lifestyles, and socioeconomic levels. In terms of a strong emphasis on customer service and convenience, the organization's major focus is on providing products of a higher quality with competitive costs (Boone et al. 2019). The business offers grocery, home, health, and beauty products to singles, families, and couples of all ages. Woolworths also aims to attract customers who are concerned about the environment because it sells sustainable and organic goods and makes efforts to reduce waste and promote recycling (Woolworths 2023a).

Hence, the company aims to appeal to a broader range of the customer base by giving a range of products for meeting the needs and preferences of its customers.

1.4 Financial performance

One of the biggest retailers in Australia is Woolworths, and their annual report contains a plethora of data regarding the business's financial success. Revenue is a crucial indicator for retailers, and in 2022, Woolworths recorded total revenue of AUD 63.7 billion, a rise of 8.1% from the year before (Woolworths 2022). Strong sales across all of the company's business areas, including supermarkets, alcohol, and hotels, were the primary driver of this rise. Profitability is a crucial financial indicator for retailers, and Woolworths reported a net profit after tax of AUD 1.6 billion, up 5.5% from the prior year. Strong sales growth, cost-cutting initiatives, and operational improvements all contributed to this profitability (Woolworths 2022).

The annual report from Woolworths includes details on the company's financial status and cash flow in addition to revenue and profitability. With total assets of AUD 34.8 billion and total liabilities of AUD 17.7 billion, the company's balance sheet was robust. Strong operating cash flows were also produced by the business, which were used to finance capital investments and reduce debt (Woolworths 2022).

Overall, according to Woolworths' annual report, the company will have a successful financial year in 2020, led by increased sales, operational efficiency, and healthy cash flows (Woolworths 2022).

2. Major sources of Supply and Current Supply Chain and Operational Practices of the Company

Sourcing is the process of identifying the suppliers who would buy goods and services to satisfy the anticipated demand in the most effective and affordable way. Suppliers must meet a number of requirements in order to ensure that the company is providing clients with high-quality products (Saragih et al. 2020). The following sections detail the company's main supply sources, current supply chain, and operational procedures.

2.1 Major Sources of Supply

The two major sources of supply are discussed below.

1. Local farmers and producers: Woolworths Company purchases a significant amount of its goods from regional Australian farmers and producers. This encourages the organization to assist or support local businesses and offers customers high-quality goods (Min et al. 2019).
2. International vendors: Woolworths also purchases goods from vendors abroad, including producers of food and drinks in the United States, Europe, and Asia.

2.2 Current (Post-pandemic) Operational and supply chain practices

Currently, in the post-pandemic era, Woolworths have implemented a number of supply chain and operational practices to ensure that it can effectively manage its supply chain and meet customer demand. In terms of SCM theoretical aspects or frameworks, the operational and supply chain practices are:

1. Lean management: Lean management techniques have been used by Woolworths for many years. This strategy places a strong emphasis on cutting waste and increasing productivity across the supply chain. Woolworths has stepped up its lean management efforts in response to the pandemic to make sure it can react swiftly to changes in supply and demand (Baliga et al. 2020). As an illustration, Woolworths has streamlined its supply chain procedures to shorten lead times and reduced the number of product lines it offers to concentrate on high-demand commodities.
2. Risk management: Supply chain management requires effective risk management, especially in the post-pandemic era. In order to lessen the effect of the pandemic on company operations, Woolworths has established a number of risk management techniques (Gurtu and Johny 2021). For instance, Woolworths has created backup plans to deal with supply chain interruptions and diversified its supplier base to decrease dependency on any one provider. In order to safeguard its workers and clients, Woolworths has also put in place a number of health and safety precautions, such as the requirement for mask use, social seclusion, and routine store and distribution center cleaning.

Some other general operational and supply chain practices are described below.

1. Efficient logistics and distribution: The company operates a highly efficient distribution and logistics network, with a fleet of trucks and delivery vehicles that are involved in the transportation of goods from distribution centers to retail stores across the country. The company also utilizes the advanced technology and data analytics for the optimization of its supply chain and for ensuring that the products are delivered to the stores in a cost-effective and timely manner (Schleper et al. 2021).
2. Innovation and technology: The company is investing in innovation and technology for the improvement of its operational efficiency and customer experience (Sharma et al. 2021). This also involves the initiatives such as online grocery delivery and order, along with the use of data analysis for a better understanding of the behavior and preferences of the consumers.
3. Sustainability initiatives: Woolworths is committed to promoting sustainability and reducing its environmental impact. The company has implemented a number of initiatives to reduce waste, including a commitment to reduce plastic packaging and promote recycling. Woolworths also works closely with its suppliers to ensure that products are sourced sustainably and responsibly (Ramakrishna 2022).

In general, Woolworths' operational procedures and supply chain management strategies are made to ensure that the business can successfully manage its supply chain, satisfy customer demand, and promote sustainability and efficiency throughout all aspects of its operations.

3. To the Extent that the Operations Management and Supply Chain of the Company is Sustainable

The Australian retail, Woolworths has made great progress in recent years to enhance the sustainability of its operations management and supply chain. The corporation has established challenging goals to lower carbon emissions, use more renewable energy, and cut waste throughout its operations.

The Australian Financial Review (AFR) reported that Woolworths has made great strides toward its sustainability objectives (Australian Financial Review 2021). The corporation beat its goal of a 40% decrease by 2025 by reducing carbon emissions by 45% in 2020 compared to levels in 2015 (Australian Financial Review 2021). Additionally, Woolworths has pledged to get all of its electricity from renewable sources by 2025, which will substantially lower its carbon footprint (Australian Financial Review 2021).

Woolworths has concentrated on minimizing waste throughout all of its processes in addition to reducing its carbon emissions. The business has implemented programs to reduce food waste, including giving away unsold food to charities and turning food waste into energy. In the fiscal year 2021, Woolworths rescued more than 2,000 tonnes of food waste from the landfill, according to a report by ABC's Business Review Weekly (BRW) (Smith 2021).

Additionally, Woolworths has put a lot of effort into strengthening the sustainability of its supply chain. By 2025, the company wants to have sourced all of its own-brand items exclusively from sustainable sources (IBIS World 2020). Woolworths has established sustainability criteria for suppliers in order to do this and is collaborating with them to enhance their sustainability practices. In order to increase productivity and lower emissions, Woolworths is also investing in supply chain technology, according to a report by IBIS World (IBIS World 2020).

However, Woolworths has come under fire for its environmental policies. After it was discovered that some of its own-brand items used unsustainable palm oil in 2021, the company was charged with greenwashing. Since then, Woolworths has vowed to only purchase sustainable palm oil by 2025 and has added new sustainability standards for suppliers. It is admirable that the company is committed to lowering carbon emissions, boosting the use of renewable energy, and minimizing waste, and that it is taking steps to make sure its suppliers adhere to sustainability standards. However, the business must continue to be watchful to avoid charges of "greenwashing" and to advance toward its challenging sustainability goals.

3.1 Business’s ongoing relationship with its main suppliers

Presently, Woolworths is dedicated to providing the best in convenience, quality, and value for its clients. This commitment extends to Woolworths' ongoing partnership with its major suppliers. The corporation currently operates 3000 outlets and currently serves 28 million clients weekly across all of its brands (Woolworths 2023b). In order to maintain access to the products that its customers love and are enthusiastic about for the in-store experiences, efficiency, and friendly services, the partnership with the Woolworths group means putting its customers at the center of every decision that it makes. The company also values its partnerships, which are generally governed by the three philosophies of fairness, collaboration, and source loyalty. The company’s supply partners ensure that the company works towards these ideas and continues to transform the way its customers' shop.

Over 80% of the company's suppliers have been dependable partners for more than ten years, and the business continues to collaborate closely with them to improve its products and services in accordance with their wants and preferences (Woolworths 2023b). The business can provide superior products and improved experiences for its communities and consumers thanks to its suppliers (Woolworths 2023b).

3.2 Resilience of the operations and supply chain practices in terms of any future disruptive events

The COVID-19 pandemic presented Woolworths with a big issue in 2020 (Frederico 2021). The business swiftly adjusted to the new climate by putting in place new safety measures, including stricter cleaning procedures, mandates for social seclusion, and the usage of personal protective equipment (PPE) for employees (Frederico 2021). To match the growth in demand from customers staying at home, Woolworths increased online ordering and delivery services. Brad Banducci, the company's CEO, acknowledged the difficulty of the situation but commended the team's fortitude in handling it, saying, "I am extremely proud of our team's efforts to respond to this crisis with agility, speed, and care for our customers and communities (Frederico 2021).”

Additionally, Woolworths has proven its supply chain practices to be resilient. Due to pandemic-related interruptions in global supply chains in 2020, the corporation encountered difficulties with product availability. But Woolworths was able to overcome these difficulties by utilizing its size and connections with suppliers to find substitute sources of supplies. Woolworths also made investments in domestic procurement to decrease their dependency on foreign suppliers, which paid off during the pandemic (Linkov et al. 2020). Industry experts have noted the company's emphasis on supply chain resilience, and the Dow Jones Sustainability Index has named Woolworths as the top Australian retailer for supply chain sustainability. In reaction to more disruptive circumstances, Woolworths has also demonstrated resiliency (Linkov et al. 2020). The company encountered difficulties in 2019 as a result of a widespread IT outage that hindered the ability of its stores to process transactions. As soon as the technology problems arose, Woolworths implemented manual measures to guarantee supply continuity. Similar to this, the business experienced a supply chain disruption in 2018 as a result of a truck driver strike. In order to lessen the impact on customers, Woolworths responded by finding alternate sources of supplies and increasing deliveries to stores (Linkov et al. 2020).

Hence, Woolworths has proven to be highly resilient in its business operations and supply chain management, successfully handling a variety of disruptive occurrences. The business is well-positioned to handle any upcoming disruptive events thanks to its quick response time to shifting market dynamics, innovative technology, and supply chain resilience.

Recommendations for Maintenance of the Sustainability and Resilience

In order to maintain/improve the sustainability of their sourcing policies and resilience to future disruptions going forward, the following recommendations are given:

1. Establish clear sustainability goals and targets: It is crucial for Woolworths that it should set clear goals and targets for its sustainability initiatives, such as reducing carbon emissions, reducing waste, and promoting sustainable sourcing (Negri et al. 2021). These goals should be integrated into the company's overall business strategy and regularly reviewed to ensure that they remain relevant and achievable.
2. Promote transparency and collaboration with suppliers: Woolworths should work closely with its suppliers to promote collaboration and transparency throughout the supply chain. This can involve sharing data and information on sustainability performance, as well as collaborating on initiatives to reduce environmental impact and promote social responsibility (Sarkis 2020).
3. Implement sustainable sourcing practices: Woolworths should prioritize sustainable sourcing practices, such as sourcing products from local farmers and producers, promoting fair trade practices, and using sustainable packaging materials. The company should also ensure that its suppliers meet strict environmental and social responsibility standards.
4. Adopt innovative technologies and practices: Woolworths can explore the use of innovative technologies and practices to promote sustainability and resilience in its supply chain (Negri et al. 2021). This can include initiatives such as using renewable energy sources, adopting circular economy practices, and using data analytics to optimize logistics and reduce waste.
5. Continuously monitor and evaluate sustainability performance: Woolworths should continuously monitor and evaluate its sustainability performance across its supply chain activities, using key performance indicators (KPIs) and metrics to track progress (Sarkis 2020). This can help the company identify areas for improvement and make adjustments to its sustainability strategy as needed.

By implementing these recommendations, Woolworths can promote sustainability and resilience throughout its supply chain activities, while also meeting customer demand and maintaining a competitive edge in the market.

Conclusion

In order to optimize its delivery system and ensure optimal business processes, Woolworths has established smart logistics and operations techniques. The organization has improved the accuracy, speed, and customer happiness of its delivery service by investing in cutting-edge technology and automation. The logistics and operational planning of Woolworths are centered on satisfying consumer needs by offering high-quality goods and services. According to the research, Woolworths has taken the initiative to integrate sustainable practices into its logistics and business practices. It is admirable that the company is dedicated to lowering carbon emissions through the use of environmentally friendly packaging and shipping, as this is in line with its CSR goals. In order to meet consumer needs and improve corporate success, Woolworths' logistics and operations are designed, delivered, and managed effectively. Woolworths is in a good position to maintain its competitive edge and spur expansion in the retail sector by continuing to implement cutting-edge technologies and sustainable business practices.

References

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Baliga, R., Raut, R. and Kamble, S., 2020. The effect of motivators, supply, and lean management on sustainable supply chain management practices and performance: Systematic literature review and modeling. Benchmarking: An International Journal, 27(1), pp.347-381.

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Jocevski, M., 2020. Blurring the lines between physical and digital spaces: Business model innovation in retailing. California Management Review, 63(1), pp.99-117.

KPMG, 2022. Australian Retail Outlook 2022. Available at: https://assets.kpmg.com/content/dam/kpmg/au/pdf/2022/australian-retail-outlook-2022.pdf (Accessed on 21 April 2023).

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Negri, M., Cagno, E., Colicchia, C. and Sarkis, J., 2021. Integrating sustainability and resilience in the supply chain: A systematic literature review and a research agenda. Business Strategy and the environment, 30(7), pp.2858-2886.

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Schleper, M.C., Gold, S., Trautrims, A. and Baldock, D., 2021. Pandemic-induced knowledge gaps in operations and supply chain management: COVID-19’s impacts on retailing. International Journal of Operations & Production Management, 41(3), pp.193-205.

Sharma, M., Luthra, S., Joshi, S. and Kumar, A., 2021. Accelerating retail supply chain performance against pandemic disruption: Adopting resilient strategies to mitigate the long-term effects. Journal of Enterprise Information Management.

Smith, 2021. Woolworths diverts over 2,000 tonnes of food waste from landfill. ABC Business Review Weekly. Available at: https://www.abcbusiness.com.au/woolworths-diverts-over-2000-tonnes-of-food-waste-from-landfill/ (Accessed on 21 April 2023).

Waters, D., 2019. Supply chain management: An introduction to logistics. Bloomsbury Publishing.

Woolworths, 2022. 2022 Annual Report. Available at: https://www.woolworthsgroup.com.au/content/dam/wwg/investors/reports/2022/full-year/2022%20Annual%20Report.pdf (Accessed on 21 April 2023).

Woolworths, 2023a. About us. Available at: http://www.woolworthsgroup.com.au/ (Accessed on 21 April 2023).

Woolworths, 2023b. Why partner with us? Available at: https://partnerhub.woolworthsgroup.com.au/s/how-to-become-a-supplier#:~:text=our%20customers%20shop.-,Our%20Supply%20Partners,partnership%20built%20on%20mutual%20trust (Accessed on 21 April 2023).

Zekhnini, K., Cherrafi, A., Bouhaddou, I., Benghabrit, Y. and Garza-Reyes, J.A., 2020. Supply chain management 4.0: a literature review and research framework. Benchmarking: An International Journal, 28(2), pp.465-501.

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