Woolworth

1. Woolworth Supply Chain Management

2. Table of Content • About Woolworths Group • Business portfolio • Key Performance Indicators • Strategy of doing business • How do they do business? • Market Analysis • Marketing Mix • SWOT analysis • Supply chain Analysis • References

3. About Woolworths Group • Type of company- Public (listed with ASX) • Nature of business- Retailing • Founded- 1924 • Headquarter- Bella Vista, New South Wales (NSW) Australia • 2nd largest Australian company in terms of revenue • Largest takeaway liquor retailer in Australia also the largest gaming and poker machine operator in Australia. • No. of employees- 202000+ • Area of operation- Australia and New Zealand

4. Woolworths Group Business Portfolio Supermarkets (Woolworths Countdown, Thomas Dugs Grocer, Food for Less, Flemings) Petrol (Caltex Woolworths) Liquor (BWS, Dan Murphy’s, Woolworths liquor) General merchandise (Big W, Dick Smith and Tandy) Home improvement (Masters) Hotel and Gambling (AHL Group)

5. Key Performance Indicators • Overall customer satisfaction level- 78% (up by 3% from 2016.) • Earning per share (EPS)- $110.8 ( down by 5.1% from 2016) • EBIT - $2326 million (Down by 4.9% from 2016) • Sales growth- 3.6% from 2016 • Net cash provided from operation- $3.1 billion (32.4% up from 2016) • Voice of team engagement- 82% score • Net financing cost- 21.2% down from 2016 due to lower average debt and borrowing rates

6. Strategy of doing business

7. How do they do business? • Solid Foundation- The growth takes place from shop level whether a senior leader or an apprentice, the growth pattern is same. • Led by customers- Customer at first place- open, honest, fair and transparent dealing with customers. • Employee as face of organization • Strategic partnership agreement with suppliers- 80% of suppliers are having long term partnerships • Freedom to speak for change- 1st company to introduced 3rd party managed complaint lines especially for dealing with vendor management. • Quality of product is the most important thing • Division of product into 3 categories- Essential, micro and Gold

8. Marketing Analysis of Woolworths Segment Australian and New Zealand food, Endeavour drinks and Hotels Target Group Middle and upper middle class people Positioning High Quality-Low pricing with focused group customers under one roof

9. Marketing Mix Product- It offers wide range of product under its different brands. From food and grocery items to bags, jewellery, furniture, bedding and other houseware items, all it sales. Apart from these, it sales beverage, gaming and accommodation service to customers. Price- Most of product are priced from medium to high to maintain competitiveness and variety. Essential and macro brands are low to medium priced while gold brands are high priced for premium customers. Place- It has more than 1000 stores across Australian region. Majority of market place are in shape of super markets. It works like retail chain for the private brands. It has now presence on digital platform as well to provide home delivery. Promotion- It offers discounts and loyalty schemes in order to attract more customers and also to retain them. It has presence in both traditional and digital media platforms. Time by time, it brings exclusive offers at stores to enhance attention of customers.

10. Marketing Mix- (cont.) People- It has more than 70000 frontline staffs to deal with customers directly in Australia stores. Employees are trained to meet customer expectation who works as a team. The company works with zero harm policies for the employees and allow employees to lead from front. Process- It operates with technological solution such as ERP and CRM thus works get done with quickest possible time. Billing service or delivery or order taking, all are done through computers to minimize manual errors. Feedbacks are regularly taken from customers. Physical evidence- They apply ergonomics to the retail chains and super markets to allow customers to move freely to buy the products. Signboards, billboard and hoardings are used in order to guide people. Electronic generated bills are provided to customers as transaction evidence. Financial and corporate governance reports are published offline and online in order to show transparency of business.

11. SWOT Analysis of Woolworths • Strength • 2nd largest retail chain in Australia. • Diverse business- helps to balance business segments profit • All category product and service offering • Presence of brick and mortar and online selling • Sustainability and corporate governance reporting at regular interval • Weakness • Low inter-personal presence • 2016 faced a huge decline in sales and market share due to other competitors strong presence • Late entry to online marketing • Threats • Strong Presence of international super marketers and other local players • Rising organic product pricing • Economic recession • Opportunity • Promising growth in hotel and super market sector • Loyalty programs can win back customers • Social media usage for CRM.

12. Supply Chain Management of Woolworths Woolworths Supply Chain is an example of integrated supply chain model. It is following TradeStone’s merchandise lifecycle to manage suppliers and orders. Whole supply chain is managed with use of latest technology such as RFID and GPS.

13. Supply Chain process Vendor Management- Woolworths is essentially a retailing business thus its supply chain starts with vendor management or procurement. The organization is having more than 6000 suppliers. They all have 5-year strategic contractual agreement with Woolworths thus it is able to follow lean system in supply chain to procure material as per demand.

14. Supply Chain Process (cont.) • Procurement- All goods are procured from the registered suppliers (both local and overseas) only. These goods are carried either by cold storage trucks or by ships which Woolworths takes care of. The procurement process is carried on B2B network basis. • The following activities are done in procurement process- • Vendor capability analysis from both financial and sustainability ground • Packaging and barcoding of the supplied items –Use of RFID technology with GPS to track each and every movement. • Transport Management System for all three means rail, road and sea. • Confirm pickups • Tax invoicing • Load reporting • Alternative pickup location • Shipment creation manual vendor

15. Supply Chain Process (cont.) Operation- As it is a retail chain industry thus it doesn’t involve any manufacturing of items. The operation of Woolworths starts with Quality Checking (QC) of the procured items. It has established Quality Assurance (QA) standards which help the Quality Team to detect and remove the defective items from the procured items. It follows the guidelines of Material Safety Data Sheet (MSDS) in order to ensure all procured items are safe to use. After the Quality Team conducted audit and gave clearance for the material, then it is taken to cold storage for storing of the item. The defective pieces are reported to vendor and also disposed using environmental and disposal standards prescribed by the organization. Inventory Management- After all quality checking and storage, the procured items are kept in a cold storage (food items) which follows JIT system. Here POS and EDI technology is used in order to inform the inventory manager regarding stock level on real time basis. It also follows Kanban system in order to replenish stock before it goes to minimum level. A daily inspection is done for the food quality checking in order to ensure the freshness. Normally for 2-3 days each food items is kept in warehouse prior to delivery to supermarkets. Advanced forecasting method is applied to estimate probable demand.

16. Supply Chain Process (cont.) Outbound logistics- This starts with the order placing of the respective centres with inventory manager. Once the order is placed, the Quality Team at first goes for inspection of the food items before it sets out for the transportation. At the same time, the Packaging Team performs their function such as compliance measurement of packaging, bar coding, RFID tags and other documentations that are necessary for the delivery of goods. For the local supply, cold storage trucks are used as transportation mean and if it is long distance supply or supply to outside region, then train and ships are used as transport means. Lead time- Normally, it takes 2-3 hours for local delivery but for long distance it may take up to 10-15 days through sea ways. The rest process of outbound logistics are same as the case of procured items arrival at central warehouse.

17. Supply Chain Process (cont.) Marketing and selling- The major focus of supply chain of Woolworths is on this phase. This phase is divided into 3 parts such as- In-store layout and order taking Organizational dynamism Billing and product delivery to customer In-store layout and order taking- Woolworths keep all the product in racks which are distinguished with usage of billboard or template. It follows an ergonomics structure where consumer can easily move inside stores and can find items quickly. The orders are taken over phone or over merchandised site where the customers give specification of items needed. Organizational dynamism- It is the work of R&D department to do continues research and staying aware of changes in consumer taste and preferences. The in-store promotion takes place with various discount and weekly special schemes to give short term boost for sales. It organizes loyalty program and cash back offers to increase the customer value.

18. An image of store outlet Billing and product delivery- All billings are done through Woolworths technology solution thus each customer is given a computer generated invoice where all the product details are mentioned alongside the pricing structure and taxation. The same information is forwarded to accounts department, sales department and inventory department to know about the sales and stock status. It accepts both cash and card transactions. Normally customer carries the goods with themselves but Woolworths is also having home-delivery provision for local supplies.

19. After-sales services- The supply chain doesn’t ends on sale of the product as Woolworths give specific attention on after-sales services. It follows the CRM techniques in order to connect with the customers. Here are the ways- • At the time of billing or before leaving, the customers are greeted and asked about the shopping experience personally. • At each stores, there is a suggestion board is kept where the customers are free to write their suggestions. Every week the suggestions go to R&D department and operation management department in order to review the process. • All complaints are registered over phone or over the company’s network. Within 8 hours responses are given to customers regarding the complaints. • Any product if customer finds defective then immediately replacement is done. • If any durable products such as any home appliances are bought, then installation and free servicing is given as per the condition. • Customer loyalty card, cash back offers, lucky customers etc. schemes are introduced in order to retain customers.

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