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Suppliers

Discuss about the Logistics and Supply Chain Management of Woolworth Meat.

Woolworth or as popularly known,“Woolies”, is Australia’s largest supermarket chain. They are in the business of offering groceries, seasonal goods and home supplies. Woolworth believes in providing ‘fresh’ products for its customers, and it relies heavily on its Australian base suppliers for fresh production of fruits and vegetables and meats. Woolworth has the habit of changing their strategy in order to empower their suppliers and develop inventory management. Their retail stores are spread all over Australia, and to ensure uninterrupted supply to all those stores, they have set up distribution centres at strategic points to have a smooth delivery of products (Gilmour 2013).

Woolworth has kept its trust on differentiation strategy, a strategy that has brought them the desired results. The “Fresh Food People” mantra of it is a hit among the customers. Woolworth’s huge market share is due to its business position that revolves around the food being “fresh”.

This report would take into account the logistics and supply chain details of Woolworth’s meat along with fruits and vegetables.

The supplier base of Woolworths is pretty steady and the company consists of a team of scientists for developing new products. Woolworth’s reputation in the market is that of a tough buyer whose demands are very strong too. Suppliers have found it challenging to work with Woolworth and the CEO of the company, Simon Susman backs up their comment.

Woolworth’s retail supply network is very tightly integrated ranging from farmers to the IT firms. The suppliers need to maintain the required industry standards every time. Woolworth provides every possible support to their suppliers, once deal is being made, as the company heavily invests on new product processing and development (Oke, Prajogo and Jayaram 2013). Selecting the best possible supplier is a reason for Woolworth’s success in the retail market.

The suppliers’ bargaining power is very low in this case, as Woolworth has a market share of over 80%, making them the key purchaser, or in some cases the only purchaser of the a producer’s manufacture. According to Coyle et al. (2016), the reason Woolworth is being able to pressurize many of their local producers to supply the exact things they need like type of crops, methods in agriculture and prices these producers accept, based on the entity’s product class requirement.

Woolworth does not produce the items it sells to its customers. It is responsible for only controlling the distribution network. The goods Woolworth distributes is at first being shifted from the producer’s house to the regional distribution centre, where products are stored for quality check and certification on meeting the standards, which once done is then transported directly to the stores as required. This system has been quite effective and it has facilitated in reducing Woolworth’s cost by a staggering $2.5 billion.

Distribution Centre

The Brisbane Regional Distribution centre (BRDC) is situated in the south western suburbs of Larapinta, which supplies products to around 180 supermarkets located in the state. Woolworth also offers their ‘fresh’ produce to many of these locations with the help of DC satellite at Townsville that takes into consideration the supply of far north Queensland.

Product quality is maintained in the best way by Woolworth by operation through this distribution centres. The distribution centre holds within itself, less than a day’s supply of fresh food at a time which is around 0.7.

The primary freight of Woolworth offers a consistent and suitable transport service from the producer’s manufacturing unit to Woolworth distribution Centres. Recently the company is also providing freight temperature controlled meat and produce facilities. The primary freight chips in with close to 50% of capacity in to Woolworth’s DC. Woolworth’s Primary Freight guarantees even and dependability to the goods into the supply chain of Woolworth. Its distribution network is boosted by the trucks owned by the company only, ensuring proper supply of items to shops as and when required, thus maintaining the desired punctuality. Moreover, as the trucks are owned and operated by Woolworth, they can prevent any kind of labour strike. This enables Woolworth to maintain the efficiency level in distribution.

In 2012, Woolworth entered into a five year contract with Linfox to carry on its store distribution from the Wyong distribution centre of the retailer situated in the Central coast of NSW. 50 Linfox drivers have the job of delivering goods from the Wyong distribution centre to the 45 stores located in various part of Sydney. The drivers have been providing an exceptional service for their customers. 

In Australia there is the presence of around 3500 businesses which supplies Woolworth with fresh food. The company sells around 96% of the fresh fruits and vegetables that are grown in the Australian firms. It has the habit of storing Australian fresh food at any possible locations and imports only when local vegetables and fruits are out of season.

When a company is in the business of selling fresh food items along with storage stuffs, it has to take into account the required food safety measures, as prioritized by consumers. In Woolworth there is this micro-biological testing facility that checks both the safety and quality of the company’s fresh food. While buying goods of such kinds, people do evaluate the quality, price and freshness of such foods. A state-of-the-art Sensory Evaluation Kitchen is used by Woolworth where customer panels have the benefit of testing the taste of the company’s fresh food items and their functionality. Woolworth is the first among many to earn the Meat Standards Australia (MSA) accreditation, which ensures consumers of enjoying gentle juicy lambs and beef every time they intend to purchase (Laosirihongthong, Adebanjo and Choon Tan 2013).

Transport

Woolworth has the habit of buying directly from the real producers and maintains a strong relationship with all the farmers in and around Australia. The strong relationship has assisted these farmers in believing that their fresh products will long be in demand. Woolworth has provided them with enough support and channelized their investments in farming practices, new technologies and other environmental management systems. Woolworth wants to minimize the middlemen factor from their distribution network so that the farmers get the best possible return. This in turn ensures Woolworth to keep a check on their prices and keep it at a competitive level. Dealing directly with the producers guarantees enough time to Woolworth to deliver products from the farm gates to the shelves of supermarket, which results in the consumer being provided with better quality and fresher products (Juan Ding et al. 2014).

Woolworth is exclusive wholesaler of many items where it has entered into deals with some of Australia’s home grown firms. For example Woolworth is delivering new varieties of apples to the Australian households which resulted from a long term relationship between Woolworths and Australian family owned business Montague fresh. 

The inventory level that is being held at stores is high and only effective inventory management will ensure in increasing the net income of Woolworth. It favours the contemporary inventory management approach that applies radio frequency identification in order to communicate with the reader through radio waves for purpose related to tracking and identification (Simpson et al. 2015). This technology reduces the loss that is caused due to theft, done by employees and consumers. The shrinkage cost reduction increases the net income. Woolworth worked in tandem with its suppliers to bring in elasticity into its system. It also uses the conventional type too where every item is processed through a scanner under bar code technology, which is a bit time consuming. 

Woolworth aims at customers in the LSM groups of 6-10, focusing more on the age group of ‘30’. They have other products which caters to younger age groups having children’s wear, teenagers but their main focus is on the ‘30’ age group. However, because of the fact that Woolworth provides fresh food to its consumers, every age group can have a taste of it. 

Direct channels: the oldest format where products are being sold directly without involving middlemen through retail stores and door to door sales. Woolworth sells products through its own retail outlets.

Buying and Handling at Woolworth

Online: Woolworth has gone online too where shopping has been made easy. The prices are being kept same in accordance to the prices they have in store. It also provides free delivery to shoppers purchasing for the first time. 

Spine layout

Spine layout

(Source: https://www.slideshare.net)

(Created by Author)

Spine layout is the process of making the customers wanders the entire store and makes shopping. This layout has been stated as simple and is basically put in use for medium sized stores that caters to wide range of merchandise.

It’s all about understanding the flow of consumer where store owners try and analyze the different areas in which the store is performing exceptionally well and where it is going wrong.

The stores of Woolworth are getting a new design that is being hoped to draw more customers to cover up for the losses suffered during the yearly earnings of the company. The company has come up with fresher looks with the farmer’s market style stores being upgraded to features like new signage, improved lighting and broader aisles along with a new makeover has also been planned for the meat and the deli section. The new look is just going to make shopping a fun experience for customers with proper displays of products and checkout wait times. A proper ambience helps in more shopping for consumers, just the way the company wants.

Woolworth is stated to be one of the most innovative retailers of Australia. They understand their customer’s need and implement ideas and strategies that make their shopping an easy affair. The best part of Woolworth is their groceries can be distributed instantly from the kitchen bench.

  1. For better control of inventory, Woolworth should go for perpetual inventory control process. It is the process of collecting data from the individual outlets and based on the sell rate can store proper levels of goods as per consumer needs. It will increase sales and minimise storage of inventory.
  2. Forecasting should be done at the store level in accordance to the rate of sale and product turn around. It helps reducing overstock situations and develops in-stock for consumers. 

Conclusion:           

Woolworth has been doing a great job over the years for the people of Australia. However, there is always scope for improvement, and Woolworth is coming up with some. It is not easy to be a leader in the market over the years, but Woolworth has just been doing that. It faces competition, but it has the power to sustain that and move on. Certain supply chain improvements will serve better for Woolworth.

Reference: 

Coyle, J.J., Langley, C.J., Novack, R.A. and Gibson, B., 2016. Supply chain management: a logistics perspective. Nelson Education.

Gilmour, P., 2013. Benchmarking supply chain operations. International Journal of Physical Distribution & Logistics Management.

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.

Laosirihongthong, T., Adebanjo, D. and Choon Tan, K., 2013. Green supply chain management practices and performance. Industrial Management & Data Systems, 113(8), pp.1088-1109.

Oke, A., Prajogo, D.I. and Jayaram, J., 2013. Strengthening the innovation chain: The role of internal innovation climate and strategic relationships with supply chain partners. Journal of Supply Chain Management, 49(4), pp.43-58.

Simpson, D., Meredith, J., Boyer, K., Dilts, D., Ellram, L.M. and Leong, G.K., 2015. Professional, research, and publishing trends in operations and supply chain management. Journal of Supply Chain Management, 51(3), pp.87-100.

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