A1. The big decision taken by Woolworths was restructuring of its operation model, which included brand-wise splitting of its online Ezi-business which was previously integrated with Big W.
A2. The major challenges Woolworths has been facing were lack of efficiency in its supplier relationship management due to issues with its replenishment and inventory system.
A3. Such strategic decision was taken as a fire emergency drill in its Eastern Creek Centre shut down the facility, due to which the data collection and replenishment system was effected. This created problem of processing the orders to the suppliers when the Big W platform was introduced to the customers, which resulted in losses of sales in millions.
A4. Porter’s five forces model:
The Porter Five force model can help an organisation the model of the industry and in ascertaining its stakeout position in the market to become more profitable and less vulnerable (Porter, 2008). The porter’s five forces model on Woolworths is as follows:
- Bargaining Power of Buyers:The Supermarkets of Australia are more or less homogenous, hence there is low switching cost between the store. In such a scenario, the bargaining power of customers is very high, excepting those stores which are offering customised services (Technaivo, 2017).
- Bargaining power of suppliers:The bargaining power of the suppliers in the supermarkets vary as per the brand name and size of the store. For example, coca cola and British American Tobacco enjoy very high bargaining power. Hence the bargaining power of the suppliers in the retail markets of Australia varies from high to moderate.
- Industry substitutes:In the industry of super market, the customers have a lot of option for substitution, like grocery stores, pharmacist, fresh-food shops, local retailers, online etc. The customers don’t mind even if they have to pay little higher for securing the facilities like, accessibility, parking facilities, proximity, no queues, etc. Hence, the industry substitutes in the supermarkets of Australia also varies from high to moderate.
- Threat of new entrants:The supermarkets of Australia don’t seem to be a lucrative option for the new entrants, on grounds of low price offers. Moreover, the high prices of market land, heavy investments and restrictions and regulations by the government also act as barrier to the new entrants. Hence, the threat of new entrants’ n moderate.
- Rivalry among competitors:There is aggressive and intense competition in the super markets of Australia.
Hence, the main threat for Woolworths is from the existing supermarkets to which the customers can switch on due to their high bargaining power. The balance of power can be attained by offering quality products the lowest possible prices and closing down the underperforming stores was a step in this direction (Woolworths, 2017). The impact on IT/IS strategy is to use them for ensuring efficiency in the supply chain managements.
A5. The short-term pros of new IT/IS system are efficient supply chain management which would help processing the data in less the time and would help in enhancing accountability and performance. The short-term cons are heavy expenditure and it may take lot of efforts and time to implement it.
Long-term pros are that it would lay foundation for efficient supply chain management in future. It would help in securing an enduring profitability in the coming years. The long-term cons are that it would need continuous upgradation and maintenance to ensure efficiency. Plus, there will be need to keep a check on it for ensuring its vitality in coming years.
A6. In my opinion, the IT is very important for Woolworths is very important as it can help in keeping up the records for order taking, order processing and placing the orders with the vendors. No. I don’t that the new management has underestimated this role as the redesigning of its operation system, it has streamlined the procedure to ensure smooth flow and accuracy.
A7. Yes, it was a good decision to write down a heavy investment in IT sector. With the upcoming online super market stores like Amazon, Ebay etc.; the growing popularity of online stores can be seen.
A8. If I was CIO of Woolworths, I would also have suggested in implementing efficient supply chain management SCM. For convincing my CEO I would have cited example of Walgreens Boots Alliance Inc. which has become second largest Pharmaceutical chain of US by transforming its supply chain in 2016 (Investopedia, 2017). In case of rejection of idea, I will give explain the advantages of SCM, viz. speed, efficiency, cost reduction, etc.
A9. The information systems which Woolworths should have (Oz, 2009), are:
- Inventory management system: To accurately map the flow of inventory and to be able to forewarn about re-order levels and slow-moving items (Fishbowl, 2017).
- Vendor management system: To ensure the vendors are well managed in terms of giving them appropriate time to supply and ensure their payments are smooth (Beeline , 2017).
- Customer relationship management system (CRM): A robust CRM will keep the management abreast of customer’s buying trends and need analysis.
A10. No, doubt slashing of the previous IT/IS project, Woolworths has impaired heavy costs. However, in the light of forthcoming profits, the potential gains are several. The Woolworth will be able to make up the losses in the long run.
A11. Stake holders for various IT system are (Heijden, 2009):
- Inventory management system: Head of purchase, Head of Stores, Operations Head
- Vendor management system: Head of contracts, Commercial head, Head of purchase
- Customer relationship management system (CRM): Head of Customer Services, Head of Operations, Head of Marketing
A12. Most important functional requirements (Lucey, 2005), for the following IT systems will be:
Inventory management system:
Vendor management system:
- Ease of usage through single window interface
- Should allow rating of vendors
Customer relationship management system (CRM):
- Flexible to integrate with other systems
- Complaint & request management
- Insightful data on customer’s preferences
Beeline . (2017). Retrieved from Beeline : https://www.beeline.com/resources/vendor-management-system-vms/
Fishbowl. (2017). Retrieved from Fishbowl: https://www.fishbowlinventory.com/inventory-management/
Heijden, J. G. (2009). Designing Management Information Systems. New York : Oxford Univeristy Press.
Investopedia. (2017). Supply Chain Management. Retrieved August 28, 2017, from Investopedia:
Lucey, T. (2005). Management Information Systems (9th ed.). London : Thomson.
Oz, E. (2009). Management Information Systems. USA: Thomson .
Porter, M. E. (2008). The Five competitive Forces that Shapes Strategy . Harvad Business Review .
Technaivo. (2017). Autralian market. Retrieved from Technaivo: ttps://www.technavio.com/report/australia-general-retail-goods-and-services-retail-market-australia-2016-2020
Woolworths. (2017). Media. Retrieved August 25, 2017, from Woolworths: