The Essay Highlights Inventory And Operations Management In Woolworths Supermarket.

Prepare an explanation of the topic, working independently. This explanation communicates the topic to a manager, makes clear important areas of theory and states why the topic would be important to the operations management of particular types of businesses.

Inventory Management in Supermarkets

Inventory management is proper supervision of different stock as well as assets items. Inventory is the idle stock of goods of a respective company that holds economic value that can be held in different forms in the packaging as well as processing or sale in the near future. The report is based on Woolworths Company based in Australia wherein proper inventory management has to be maintained by them in order to oversee the storage as well as production of different food items in the respective company (Woolworths.com.au, 2017).

The main aim and purpose of the assignment is to analyze the importance of the inventory as well as operations management in Woolworths Company. As Woolworth is a supermarket in Australia, it is essential for the company to understand the requirement of inventory management and analyzing the ways to increase the profit of the company. The purpose of the assignment is to understand the process through which the company can understand the levels of inventory that is required to be maintained by the company.

The structure of the assignment includes analyzing the importance of inventory management in different companies. The strategies is required to be adopted by the organization has to be explained properly in order to generate profitability in the competitive market.

Woolworths Supermarket is the largest organization across Australia and it has more than 900 stores in Australia as well. As Woolworths is a supermarket, proper inventory is required to be maintained by the company as to have proper understanding about the economic value of the goods and evaluating the external and internal factors through proper review and planning (Govindan, Soleimani and Kannan 2015). The inventory management plays a vital role in the supermarkets as this helps in understanding the purpose of maintaining inventory of the goods and services (Fleischmann, Meyr and Wagner 2015). Woolworths need to maintain inventory management in the organization as this will help in understanding the requirement of units of various products that has to be ordered by the specific departments as well as the period to order the products along with the discounts that can be gained from ordering various products in lot (Costantino, Di Gravio and Tronci 2013).

• Raw materials-Different inputs that are transformed into the finished products and services with the help of transformation process.
• Finished Products- It will help in manufacturing completely finished goods to the customers (Christopher 2016).
• Work in progress- It helps in understanding the products that are semi manufactured in nature and converting them into finished products for sale to the customers (Cohen, Lobel and Perakis 2015).
• Transportation of goods and services- It helps in proper transporting the goods and services that are delivered to the customers from their supermarkets. Proper transportation costs are to be charged from the customers as well (Heizer 2016).
• Equipments and tools-It helps in understanding the different tools and equipments that are required to be undertaken by Woolworths in Australia as it help in maintaining inventory for the products of the company (Yang and Birge 2013).

According to Sundar, Balaji and Kumar (2014), there are various effects along with discounts that can be used by Woolworths in Australia as this can help in analyzing the needs of the customers. The bullwhip effect can be adopted by Woolworths supermarket as it helps in providing higher safety of the stocks and are stored properly in the store itself. However, Woolworths deals with different sale of items that are seasonal in nature and it does not require to be kept in inventory for the entire year by the company. However, Jaber (2016), proper inventory needs to be set up by Woolworths as it helps in price discounts that are offered by the company in the various seasons. Inventory management will provide proper independence among different stages as to avoid stoppages in work and work in progress inventories has to be kept by the Woolworths supermarket as to analyze the issues that can be faced by them in maintaining the inventory (Bozorgi-Amiri, Jabalameli and Al-e-Hashem 2013).

Inventory Management Strategies for Woolworths Supermarket

According to Johnson (2014), dependent demands are used in order to understand the different kinds of demand for the production of the final goods and services. It can be properly utilized by Woolworths supermarket as to analyze the demand for the products that needs to be properly kept in inventory for future purpose. On the other hand Stadtler (2015), proper demand that is helpful in analysis of the demands of the external customers are independent demand.

Woolworths supermarket needs to understand the tastes and preferences of the customers in order to provide them with accurate and proper quality of goods and services as this will help in gaining competitive advantage in the market. The inventory has to be sufficient in nature as to provide the customers’ quality service as this will help them in maintaining proper quality of goods and services in the future. The costs of inventory needs to be analyzed properly by the respective company as to identify the different kind of costs namely carrying, ordering and shortage costs (Baños-Caballero, García-Teruel and Martínez-Solano 2014).

According to Ho et al. (2015), Woolworth supermarket needs to generate continuous as well as periodic system as this can help in understanding the quantity and period that has to be maintained properly by them. However, on the other hand according to Kwon, Lee and Shin (2014), in continuous system, the amount of orders remains constant and the situation demands that proper level has to be predetermined by the company as to understand the quantity of orders that has to be placed for order. On the other hand, periodic system will help Woolworths supermarket in understanding the kind of orders that has to be placed within a fixed frame of time.

 Shortcomings of Inventory Management

• High implementation cost is a disadvantage for Woolworths as continuous inventory cannot be maintained thoroughly. The cost of implementation has to be reduced, as it will help in generating profit.
• Complexity is involved, as Woolworths have not provided proper training to few employees regarding maintenance of inventory system in the organization.
• Time consuming as time is required in maintaining proper inventory system in the business. Proper actions have to be taken by the officials in order to review the transactions.

According to Ho et al. (2015), proper actions has to be taken by the officials of the company by saving cost along with saving time, as this will help the entire company in reducing the issues that are faced by the employees and the company as well. However, according to Baños-Caballero, García-Teruel and Martínez-Solano (2014), proper strategies relating to the system of the inventory is to be taken as this will help in understanding the issues and solving it accordingly. 

The fast moving goods inventory management is been in trend and it is used by Woolworths supermarket as it will help in understanding the total orders that are been made and the time for delivery as well. 

Shortcomings of Inventory Management

Woolworths supermarket needs to determine as well as analyze the optimal amount of units that has to be ordered by them. It has to be done by the respective company as to minimize the overall cost that is associated with the overall purchase of goods along with delivery and storage of goods and services (Brandenburg et al. 2014). The economic order quantity has to be properly maintained by Woolworths in order to analyze the production and the quantity of the products that has to be kept in the inventory.

• Demand has to be known by the company in order to analyze the consistency and independency as well.
• Lead-time has to be known as well as constant in order to understand the importance of inventory.
• The quantity of the order has to be complete and instantaneous
• There should not be any kind of shortage of goods and services of Woolworths as this will affect the customer base (Ahi and Searcy 2013).

· In the year 2000, proper ERP inventory system was introduced that helped in increasing the efficiency of the organization and saved the cost as well.

• In the year 2010-2017, the cloud inventory system was introduced and it worked well as it helped in tracking the real time order along with easy level of integration as well.

Woolworth Supermarket needs to implement ABC analysis, as this will help them in analyzing the inventory into three different categories namely:

• Class A: It is for the kind of inventories that are highly consumable in nature
• Class B: It is for the kind of inventories that are for medium consumable inventories in nature
• Class C: It is for the kind of inventories that are less consumable inventories in nature

According Baghalian, Rezapour and Farahani (2013), ABC analysis helps in identifying the items that needs to be properly taken care of by the different items that are vital, essential as well as desirable in nature. The A items need to have proper tight control as well as it needs to maintain proper records about the various goods and services. Similarly, for B items proper focus has to be provided by the company as to understand the goods that does not need good records in the later stage. However, on the other hand according to Axsäter (2015), for C items are the less important goods that do not need proper storage, minimal records are necessary, and no periodic reviews are required for such items in the market. In order to conduct proper inventory management, proper control is required in order to understand the level of criticality as it requires effective control in such environment.

V: Vital in nature wherein variation as well as substitute gap are not required.

E: Essential in nature that allows the one to get changed either substitute or variation gap.

D: Desirable in nature that allows either of the gaps in one of the parameters.

Conclusion

Therefore, it can be inferred that proper inventory management has to be maintained by Woolworths supermarket for achieving greater performance goals in the organization through proper supply chain and inventory management. The production level has to be properly controlled by the respective company, as this will enhance the level of inventory in order to understand the importance of maintaining inventory in the organization. The operations and inventory management is necessary as to analyze the key decisions that has to be taken by the respective company as to analyze the demand of the customers in the market to check the availability of goods and services from the particular company. With proper usage of inventory management, it will be easier for the organizations to check the required quantity as well as quality along with the price of the products. With proper implementation of inventory and supply chain management, it is essential for the organizations and the employees to be more effective and efficient as well.

References

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Woolworths.com.au. (2017). {{metaController.metaData.title}}. [online] Available at: https://www.woolworths.com.au/ [Accessed 6 Sep. 2017].

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