This report is focused on identifying and analyzing the operations process in Woolworth, which is one of the largest supermarket retail chains in Australia. Woolworth was founded in the year 1924 and sells a wide range of products ranging from groceries to sell house hold products, health and beauty products, DVD’s magazines, stationery items pet and baby products at cheaper price in order to attract more customers. However, in recent years, there is a significant decline in the profit earning capacity of the company, the major reason for which is considered to be the ineffectiveness in its operational process. In this regard, explanation has been provided in this report regarding how operations objectives and strategies fit within the organization. Various facets of the operations process of Woolworth such as design, planning/control and improvement have been considered. Shortcomings of the problem areas of Woolworth have also been identified that considers its Supply chain management, Service process design, Forecasting issues, Demand and Capacity management, Human resource issues and Job design. Effective strategies have also been proposed in order to address the shortcomings. Finally, required resources for successful implementation of proposed strategies have been mentioned at the end of report that would allow Woolworth to gain its lost popularity and operate profitably all across Australia.
With increasing globalization, it has become inherently necessary for the business establishments globally to adopt strategies and policies that would strengthen their operations process and thereby sustain profitably among its competitors. Operations management is considered to be the most significant for managing large organizations and operate them successfully (Stevenson, Hojati & Cao, 2007). It is mainly related with the production of products and services within an organization. Various facets of the operations process such as design, planning/control and improvement are usually required to be considered in order to ensure that business operations are running effectively, smoothly and successfully with the consumption of minimum resources and sufficing customer expectations (Prajogo, 2006). It plays a crucial role in enhancing the profit of an organization by producing professional managers who are capable of achieving the strategic goals of the organization within a considerable period of time (Krajewski, Ritzman & Malhotra, 2013).
In this report, Woolworths Supermarkets has been selected as the organization, whose operations management scenario has been discussed in details. Moreover, explanation has also been provided regarding how operations objectives and strategies fit within the organization. In addition to this, managing various facets of operations process such as design, planning/control and improvement have been described in the report, keeping a focus on Woolworths, Australia.
Woolworths Supermarket is one of the largest grocery/supermarket store chain which is owned by Woolworths Limited (Woolworths Group Limited, 2019). The company was founded in the year 1924 under the name of Wallworths Bazaar Ltd, later which was known by Woolworths Limited with its initial store opening in Sydney’s Imperial Arcade. Woolworth stores began to sell a wide range of products at cheaper price in order to attract more customers. The stores were first to install receipt printing cash register machines in the year 1926. However, by 1940, there was at least a store in every state of Australia (Keith, 2012). It started expanding its range of grocery along with stocking fresh fruits, vegetables and other processed food. By the year 2017, the Woolworths store along with Coles accounted to about 80 percent of the Australian supermarket (Nenycz-Thiel, 2011). The company ensures highest quality products and services to the customers that have allowed it to gain a significant position in the Australian market. Even though the stores are specialized for selling groceries, they also sell house hold products, health and beauty products, DVD’s magazines, stationery items pet and baby products. There are presently more than one thousand Woolworth stores operating all across Australia among which 976 are supermarkets and the rest 19 are convenience stores under the same brand name. They also provide online shopping and free home delivery (Keith, 2012). The customers can access Woolworth products and purchase from online which they have named it s “click and collect” service. The slogan of Woolworth is “Fresh food fresh people” that attract majority of the customers to purchase products from their stores with a belief to get fresh products (Woolworths Group Limited, 2019).
The company also offers loyalty and reward schemes in order to attract more customers and thereby maximize its revenue. Woolworth has launched shopping cards that tracks automatically the purchases from supermarkets based on which fuel discounts are calculated. The card also eliminates the retaining of paper coupons that were previously used for the purpose (Arli, Dylke, Burgess, Campus & Soldo, 2013). It also serves the company to understand the demography and provide promotions to the regular customers. There are five levels of private label or generic brands of Woolworth that include Woolworths home brand, Woolworths select, Woolworths gold, Woolworths fresh and Macro whole foods market. In all the Victorian locations, Woolworth used to trade its products as Safeway. However, since 2008 all the stores in the name Safeway were branded as Woolworth that took almost five years for the process of re-branding (Woolworths Group Limited, 2019). Woolworth also owns a discount supermarket chain in New South Whales and Queensland in the name of “Food for Less”. Similarly, in Central Coast and Sydney a chain of four supermarkets operates in the name of Flemings which is also owned by Woolworth. In the year 2008, the company launched Thomas Dux Grocer in two major locations of New South Whales. These stores offer larger quantity of fresh foods to the customers than the traditional Woolworth stores (Nenycz-Thiel, 2011).
The operations process of Woolworth has set standards that affect the customers, supply chain as well as the shareholders. The products and services of Woolworth are largely known for their quality and standards all over Australia. It ranks first among all other supermarket chains in the country for which its effective operations processes plays an effective role (Woolworth Group, 2018). As a part of its strategy for growth and development, the company invests in new stores and refurbishes the existing stores with the intention of providing best quality services to the customers. Woolworth has also been investing a huge amount for improving store operations stock availability, range and quality of customer service. The process or operations of the company comprises of supply chain, EDLP strategy, employees and customers (Woolworths Limited, 2010). Woolworth’s operations strategy is undertaken by the operational division and is focused on delivering superior quality products and services to the customers. This division is responsible to look after various areas of the company such as supply chain and distribution centre’s management, constant improvement in information technology and adopting strategies for the reduction of shrinkage (Woolworth Group, 2017).
Woolworth does not have its own manufacturing facility rather it subcontracts with its suppliers (Woolworths Limited, 2010). Thus, improving the selection process of its suppliers is inherently necessary for the company because the quality of products being acquired from its suppliers largely determines the customer satisfaction. The company focuses on developing long term relationship with its suppliers as it does not procure products from local market. The main operational strategy of Woolworth is to minimize the waste of materials, whereby the layout technology adopted by the company plays a significant role (Woolworth Group, 2016). For tracing and tracking of fresh products in the supply chain as well as distribution network, the company uses EPC GEN 2 tags at certain supplier distribution centre. It is evident that the main motive of Woolworth is to conserve money to utmost without compromising the quality of products or services that would further reduce the level of competition for Woolworth in the market (Nenycz-Thiel, 2011).
Reduction of cost is one of the prime operational objectives of Woolworth. The prime purpose of the business is to ensure quality products to the customers at an affordable price (Woolworth Group, 2014). This can be achieved only by regulating the cost of various operational activities. Moreover, minimization of waste can also help the company in achieving the cost control motto, which will further allow it in achieving the cost control motto. Another operational objective of the company is the ensuring of product’s quality. Whatever might be the category of products, the overall focus should be on quality as it would lead to profit maximization of the company (Stevenson, Hojati & Cao, 2007). Customers generally prefer to purchase products with competitive price structure and high quality. Speedy delivery of the products, which refers to the lead time in which delivery of a product is done, is also a major operational objective of Woolworth. Customers would be more likely to purchase products from Woolworth supermarket stores if it is able to deliver products to its customers in time. The company highly focuses on recognition and eradication of bottleneck in its operational strategy in order to enhance customer satisfaction and earn more profit (Woolworth Group, 2016).
Another operational objective of Woolworth is dependability, which is a quality aspect associated with certainty and reliability of services and products (Woolworths Limited, 2018). Dependability results in enhancing the company’s reputation. It is necessary for all the companies including Woolworth to focus on reputation that can be achieved by supplying best quality services and products in the market, which will ultimately result in the generation of maximum profit. Apart from these, flexibility is also one of the major operational objectives of Woolworth that determines how prompt the company is able to adapt changes as per the increase or decrease in demand for a specific product. It also represents the sufficing of product demand of customers. Flexibility is considered to be income generation and cash flow objective of a company. As per the demand of customers, Woolworth should be flexible in delivering products and services at the right time (Keith, 2012).
Analyzing the problems related to supply chain it can be stated that Woolworth has a large number of suppliers that are responsible to supply variety of products to its stores in Australia. These stores often face challenges with respect to supply chain management such as receiving of bulk orders at the dock and lack of storage space for such orders. In addition to this, the lack of appropriate tracking system for ordering and receiving goods leads to insufficient delivery of products and services from the suppliers. As a result of ineffective inventory and control system of Woolworth, the staff members of the stores fail to provide quality products to the customers (Keith, 2012).
Some of the major services that are provided by the staff members of Woolworth retail store include inventory handling, helping the customers to get with their products and displaying products on shelves. Thus, there is a low customer interaction from the staff members as the customers choose their required products from shelves and bring to the counter for payment. There are also some Woolworth stores in Australia that provide the facility of self checkout (Woolworths Limited, 2010). Even though, there are Woolworth staff members available at the time of checkout to help the customers, this cannot be termed as the pure form of service from the company’s end. As there includes the participation of customers, managing an effective service process design becomes difficult for the company. Thus, there is insufficiency found in the measurement of service quality performance that leads to poor quality of service and decreased customer satisfaction (Woolworths, 2018).
Some of the retail branches of Woolworth, Australia are struggling with forecasting issues as a result of incapability of store manager’s performance, which is probably due to lack of availability and interest in old procedures (Woolworths Limited, 2010). The recourses which are available to them are inadequate and the managers are dependent completely on quantitative approach that considers past historical data to forecast demand. However, forecasting the demand for sold goods requires the consideration of qualitative approach that involves incorporation of certain factors such as value system, personal experience and emotions (Woolworth Group, 2017).
In the operations process of Woolworth stores, demand management is referred to as the management of demand that has been created for services and products by the customers at the store, who are intending to purchase services and products according to their preferences and tastes (Nenycz-Thiel, 2011). Planning and providing the goods and services of customers they want during shopping is the capacity management. There are many customers who visit Woolworth stores on a daily basis to purchase their necessary products but there are some Woolworth staff members who are not able to handle such demands and deliver the services and products as per their capacity (Woolworths Limited, 2010). Understanding the demand along with the company’s capacity to fulfill the demand is very essential to understand the demand fluctuation. Thus, it is necessary for Woolworth to understand its constraints of capacity in terms of labor, facilities, equipment and time. One of the major challenges being faced by the company is the reduction of waiting time of customers at the purchasing counter (Keith, 2012).
The foremost objective of human resource is to design jobs and manage labor in order to ensure that the people are efficiently and effectively utilized along with maintaining a quality of work life in an environment of trust and mutual commitment. In context to the Woolworth, the human resource issues have led to the decline in staff performance, thereby hamper the profit earning capacity of the business (Woolworths, 2018).
An effective job design ensures smooth operation of business. In Woolworth, staff recruitment to different stores is done centrally that lacks in induction program to guide their duties and make use of their skills to provide better service to customers and ensure customer satisfaction (Keith, 2012). It is necessary for the store manager to develop employee centric programs in order to enhance the skills of staff members. It has been found through reviews that the store in charges of Woolworth get exhausted by doing repeated tasks everyday, which is affecting the store performance overall. Moreover, there is a lack of coordination between the stores and supply management that restrains designing better job for labor force. There is also found high absenteeism rate in Woolworth which is probably due to long working hours (Woolworth Group, 2017).
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