How procurement and demand management is applied by Woolworths in the real world?
The main aim of this task is to provide a brief overview about the procurement and demand management of Woolworths. Woolworths is the biggest retail company which delivers retail products and services to the customers across the world. In today’s competitive world, the firm is expanding and flourishing its business activities day by day. Also, it explains that how procurement and demand management can be applied in the Woolworths. Further detail of the task has been discussed below.
Woolworths group is a major Australian company which operates and manages its business activities and operations in Australia and New Zealand. It is the second largest organization in Australia and New Zealand evaluated by revenue. The company is the biggest takeaway liquor retailer in Australia. The firm was incorporated in 1924 with it’s headquarter is situated in Bella Vista, New south wales, Australia. The main object of this company is to deliver valuable and best quality products and services to its customers in the market place. There are approx 205,000 employees employed in the organization. The firm is trusted on business partners such as manufactures and local farmers. Along with this, the organization has approx 3,000 stores in different countries across the world. In addition, Woolworths follows corporate social responsibilities effectively and efficiently. Woolworths values include customer obsessed, being responsible, inspirational, collaborative and quality. The main mission of the corporation is to create a bright future by delivering unique and effective products and services to the customers across the world (Woolworthsgroup, 2018).
Procurement and demand management
Woolworths uses effective and unique procurement and demand management to save the resources and capital. Procurement is a process and method by which items and stocks are bought from outside suppliers. Managing the ordering, review, receipt and approval of items from suppliers are involved in the procurement management process (Varley, 2014). On the other hand, demand management is a key practice in the procurement process to reduce costs by managing the necessities, controlling demand and distinctive between needs and wants. The procurement and demand management helps to overcome the competitors in the marketplace. The firm uses tradestone’s merchandise lifecycle management platform to deal with its supply chain within the organization. The tradestone offers a platform for the business activities and operations to handle orders, B2B sales, suppliers and financing. It is connected with more than 6,000 suppliers. This management also helps to handle the various types of products such as food and beverages (Varley, 2014). Therefore, the company uses tradestone platform to manage and control the procurement and demand of the customers. The key strategies which are involved in merchandise life cycle management have been stated below.
Strategic planning: Under this stage, the firm needs to ensure planning processes to integrate goals and objectives. SAP solutions help streamline merchandise life cycle processes so retailers can easily execute and implement strategic merchandise decisions.
Merchandise and assortment planning: SAP solutions are unable to define the channel, plans and merchandise with including place holders for new styles. Actions and events can be assigned for sales, buy and margin targets at all levels of the location.
Promotion planning: Promotion planning plays a vital role in Woolworths Company to increase the number of customers in the marketplace. Along with this, performance details are easily available to provide support for implementation of vendor rebates.
Life cycle pricing: SAP (system application and product) helps the company to manage and control the trade-offs between profit, returns and price image and keep the prices that provide support a retailer’s brand strategy. By evaluating shopper demand, location price, SKU level and channel, price changes that meet strategic goals and objectives can be chosen. Along with this, life cycle pricing helps to set the appropriate prices of the products and services.
Along with this, Woolworths uses procurement and demand management process to stay in the competitive market. This process also helps to buy the goods and services from the enormous suppliers. The company uses demand management to fulfill the demand, needs and requirements of customers. In the operations and activities of retail industry like Woolworths store, demand management is considered the management of demand which is generated products and services at the stores for the customers. In addition, Woolworths monitors and evaluates the choices, preferences and desires of customers to sell the products effectively. In today’s era, the employees at Woolworths have not been able to grip the requirements and deliver the products and services as per their ability. Considering the demand and requirement is not enough to handle and control demand fluctuation. The company’s capability is essential to accomplish the demand of consumers. Thus, it is important for the firm to know its capability in terms of worker, equipment, time and amenities. Woolworths uses effective and unique supply chain management to offer best goods and services to customers at suitable prices in the marketplace. The effective goals of the supply chain management is to minimize the inventory and with the assumptions that products are available when needed (Fernie and Sparks, 2014). Along with thus supply chain management includes transportation vendors, suppliers, operations and warehousing and stock. The company is being flourishing and rising super market company in Australia and they have several suppliers in the marker. However, the company faces enormous challenges in the marketplace.
Moreover, the organization uses effective strategies such as demand and capacity management, supply chain analysis to procure the resources. The evaluation of capacity is important to evaluate the capability of resources and benefits of the resources. It will also help to increase the revenue and profitability of the company in the market. In addition, Woolworths uses six sigma techniques to attain and achieve the business system. By initiating the six sigma model, the company has been able to identify the gap for improvement and the employees can evaluate the work and collect various types of data for the process that can assist to close up the gaps. This model also helps to improve the quality of goods and services in the competitive market (Nicoletti, 2013).
To achieve the efficient and effective operation system, Woolworths uses advance planning and scheduling system. The firm can use the linear programming methods and other algorithms with the help of planning and arrangement system. By using this system, the organization manages future demand efficiently and effectively. Labor planning is also done by the firm to satisfy the needs and requirements of the customers. Work schedule is fixed by top management to retain and manage the workers at the workplace (Jacobs, Chase and Lummus, 2014). In addition, managers and leaders should build commitment and loyalty in the organization and create a positive working environment in the workplace (Rushton, Croucher and Baker, 2014). It will motivate the workers for doing task and duties effectively. There are various strategies are used by Woolworths for better procurement and demand management that have been detailed below.
- The company adopts a demand driven planning and operating models based on the demand and needs of the customers. It will help to attract more and more customers in the rivalry market.
- Apart from this, the company builds and develops an agile and adaptive supply chain with rapid planning. It is an effective and unique strategy to obtain the resources effectively.
- After build and develop supply chain with rapid planning, Woolworths optimizes product management and products designs for manufacturing, supply and sustainability to attain long term profitability and innovation.
- At the end, the firm ensures reliable and predictable supply within the organization (Hines, 2012).
The consumer behavior is constantly changed in the organization thus the firm use procurement software. There are various factors influence the procurement management in the organization such as changes in technology, new innovation and changes in software (Azambuja, Ponticelli and O’Brien, 2014). Woolworths uses enormous strategies for better procurement management which are discussed below.
Keeping legacy systems in check: Under this strategy, the procurement team sets tabs on any outdated legacy systems that might not be well matched with new technologies. It will help in procurement of resources and capital (Masterman and Masterman, 2013).
A more joined up approach: A more joined up approach is used by Woolworths in which buying team needs to consider everything from logistics and implementation to products and services.
Maximizing return on investment: It is also an effective and unique strategy which used by the management of Woolworths.
Along with this, Woolworths initiates unique procurement management process in the organization. This procurement process is created to obtain a seller at appropriate prices. The process includes plan procurement, conduct procurement, administer procurement and close procurement (Becker, Kugeler and Rosemann, 2013). The procurement process has been stated below.
Plan procurement: Plan procurement is the process of deciding what to buy, when and from what source to buy the products and services. During the planning procurement process, the procurement method and technique is assigned to the workers to fulfill the procurement requirements and needs.
Conduct procurement: The conduct procurement includes selecting a seller, receiving seller responses, and awarding a contract. Under this process, proposals and bids from sellers are measured and one or more seller is appointed to initiate the work. It is an effective process of procurement which is used by Woolworths within the organization (Sanchez, 2013).
Administer procurement: This process helps to monitor the performance and effective measures can be taken for corrections. It helps to improve and enhance the performance and productivity of the organization.
Close procurement: The close procurement is also called the contract closure. Procurement is said to be finished when the contract reaches its deadline or when the contract is terminated without completing the task.
In this way, the Woolworths has been able to apply procurement and demand management in the marketplace. This management helps to increase and enhance demand volatility and it also improves value creation (Fernie, Fernie and Moore, 2013). Along with this, the company can focus on the profitability and returns as it also maximizes operational efficiency. Team empowerment and strategic resource allocation are other benefits of effective and unique procurement and demand management. Along with this, supply chain management also provides a supply chain networks to the customers and it also manages inventory level of the firm.
Supply chain management of Woolworths
(Source: pierce, 2009)
Supply chain map of Woolworths
On the above discussion, it can be concluded that Woolworths uses attractive and dynamic supply chain and logistics management to increase efficiency and minimize the cost of the firm. No company can survive its business activities and operations without effective supply chain and logistics management. Along with this, procurement, supply chain and demand management also play an empirical role in Woolworths Company in order to increase outputs and boost corporate level of the firm. Now it is recommended that the organization should use dynamic strategies to maintain effective procurement and supply chain management in the workplace.
Azambuja, M.M., Ponticelli, S. and O’Brien, W.J., 2014. Strategic procurement practices for the industrial supply chain. Journal of Construction Engineering and Management, 140(7), p.06014005.
Becker, J., Kugeler, M. and Rosemann, M. eds., 2013. Process management: a guide for the design of business processes. Springer Science & Business Media.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new challenges in the retail supply chain (4th ed., pp.1-28). Kogan page publishers.
Fernie, J., Fernie, S. and Moore, C., 2013. Principles of retailing. Routledge.
Hines, T., 2012. Supply chain strategies: Customer driven and customer focused. Routledge.
Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Masterman, J. and Masterman, J.W., 2013. An introduction to building procurement systems. Routledge.
Nicoletti, B., 2013. Lean Six Sigma and digitize procurement. International Journal of Lean Six Sigma, 4(2), pp.184-203.
Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution management: Understanding the supply chain (5th ed., pp. 16-32). Kogan Page Publishers.
Sanchez, A., 2013. The role of Procurement. In The International Handbook of Public Financial Management (pp. 312-335). Palgrave Macmillan, London.
Varley, R., 2014. Retail product management: buying and merchandising. Routledge.
Varley, R., 2014. Retail product management: buying and merchandising (3rd ed., pp.5-17). Routledge.
Woolworthsgroup, 2018. About us [Online]. Available at https://www.woolworthsgroup.com.au/page/community-and-responsibility/group-responsibility/. [Retrieved from 2nd April 2018]
Woolworthsgroup., 2018. Strategy and objectives [Online]. Available at https://www.woolworthsgroup.com.au/page/about-us/our-approach/strategy-and-objectives [Retrieved from 2nd April 2018].