Case Study on Wesfarmers
Discuss about the supply Chain Issue of Wesfarmers.
In the current business scenario, the importance of supply chain management has increased in order to increase the value of the customer (Chang, Yeh & Liu, 2015). This is also very important in the case of increasing competitive advantages in the market. As stated by Christopher (2016), demands of raw materials are being fulfilled through proper management practices in the supply chain. Therefore, this can be said that through the proper management in supply chain process, the organization will be able to achieve its goal and objectives by fulfilling the demands of the customers. In this study, the importance of supply chain management will be focused on highlighting the theories. In order to discuss about the importance of supply chain management practices, the study has highlighted the company named Wesfarmers. The supply chain process of Wesfarmers has been focused in this study. The issues regarding supply chain management and its impact on business have been out in this study. At the end of this study, needed recommendations for dealing with the challenges have been provided.
In order to highlight the importance of supply chain management in business, the study has highlighted Wesfarmers, which is the famous retail organization in Australia. In the year 1914 the company was founded, and within few years it has established its large customer base (Wesfarmers.com.au, 2018). The company also has the huge contribution to the Australian economy. In the year 2016, the business revenue of the company was AU$65.98 billion (Wesfarmers.com.au, 2018). Wesfarmers is considered as the largest private organization in Australia. The company is surveying with the total number of 220000 employees. Recently the company is providing service in Bangladesh, Australia, Ireland, New Zealand and the UK. Head quarter of Wesfarmers is in Perth. The company is famous for providing good quality of the product in lower ranges. If the profitability age of Wesfarmers is being analysed, it will be identified that within few years it will rule in the large portion of the global retail industry. On the other hand, from the company analysis, this can be said that the target customer of the company is middle class and lower middle class (Wesfarmers.com.au, 2018).
The significance of supply chain management it has been identified that it needs to be done properly because supply chain has the higher level of impact on the organizational productivity (Stevens & Johnson, 2016). Therefore, this can be said that supply chain management is very influencing in manufacturing to delivery process. In this study, main elements of the supply chain have been discussed. Operation, integration, purchasing, distribution are the main elements in supply chain management. Integration is considered as the important part in the supply chain. This can be said that through proper integration the effectiveness of supply chain management is being maintained. On the other hand, the study has highlighted on operation, by which the input and output functions of the company is being managed. The input and output functions are very important to be maintained for managing the process of supply chain. As stated by Ralston et al., (2015), this can be said that total inventory procedure of the company is being influenced through the supply chain management because the rate of production is being affected.
Key Elements of Supply Chain Management
As opined by Qrunfleh & Tarafdar (2014), the supply chain controls the raw material, product, goods and service of the company. Therefore this can be said by maintaining proper supply chain management, the organization will be able to achieve its goals and objectives. After the completion of operation process, the process of purchasing started. Another way Wu, Chuang & Hsu (2014) stated that, this process involved in marketing, store management and customer service. After purchasing the products from stakeholders, the products are being distributed by following the transport and communication process of the country. On the other hand, it has also been mentioned in this study that financial plan of an organization plays an important role to influence the supply chain management plan. It can be said that depending on the financial situation of an organization the strategic management practices are being done.
In the words of Camerinelli (2016), not only the financial condition of the company impacts on the supply chain management, but also the business strategy innovation plans of the company impacts on process of supply chain management. It has been identified that technological development in the organization impacts on the process and implementation of supply chain strategy. Efficient employees play an important role in the case of implementing the process properly (Handfield et al., 2015). It has been mentioned in this study that aim of adopting supply chain strategy is to increase the market base as well as the rate of profitability. As transportation is an important part of supply chain management, therefore this can be said that depending on the transportation and communication facility of a country the process of supply chain is being developed.
It has also been identified that in the year 2017 the supply chain growth rate of the company has increased near about 11 percent. From the article of 2012, it has been identified that the net profit of the company was $2126 million (Wesfarmers.com.au, 2018). In the same year, the company named Wesfarmers has improved its supply chain process in order to deliver higher customer value and has introduced merchandise offers for the consumers. It has also invested huge amount on the improving its supply chain and store networks. As its result, the company has grabbed the attention of a large number of customers. Therefore, this can be said that by implementing these strategies the organization has got the chance to increase its rate of profitability.
Impact of Financial and Strategic Management Practices
In the same year, the financial report of the company has published, where it has been mentioned that the company has taken an initiative towards transforming Coles. On the other hand, this has also been identified that it has also invested $40 million for restructuring the targeted supply chain (Wesfarmers.com.au, 2018). It can be said that this was the smartest strategy adopted by Wesfarmers for increasing its rate of profitability. From a recent supply chain report of Wesfarmers, this has been identified that the company has taken the initiatives towards the transformation of Coles. This has made the delivery process easier and has played an important role to improve the efficiency in for the suppliers and both Coles (Mangan, Lalwani & Lalwani, 2016). After completion of this strategy, the company has earned $1356 million, where the estimated target was $244 million (Wesfarmers.com.au, 2018). The growth rate was 16.3 percent compared to previous years.
On the other hand, it has also identified that at the end of the year the company has taken initiative to improve he sore network for providing better service to the customers. It has also decided to provide better training to its employees. After adopting these strategies, the covered supermarket area of the company has increased 1.9 percent (Mitra & Datta, 2014). This can be considered as the biggest achievement of the company. In the same year, the operating revenue of the company was $58.1 billion, which is 5.8 % higher than the previous year (Laari et al., 2016). Another way the study has highlighted the cash flow of the company, which is very influencing part in supply chain management. It has been identified in this study that the cash flow of the company in this same year was $3641 million, which is 24.8% of the total business revenue (Wesfarmers.com.au, 2018).
After analysing the supply chain process of the company, it has been identified that although it has faced various development after introducing the supply chain strategy, there are few challenges which are affecting the overall performance of the company. The company has grabbed the attention of a large number of customers by providing good quality of products in lower ranges (Singla, 2015). However, the company is facing the challenges regarding its poor quality of raw material. The study has highlighted the supply chain of Wesfarmers, where it has identified the rate of child labour in this organization has increased. Therefore this can be said that due to increasing rate of child labour in the company, overall performance is being hampered. Due to lack of professionally skilled employee, the supply chain management practices got hampered (Monczka et al., 2015). Transportation is an important part of supply chain management. Therefore, due to lack of proper maintenance of transportation tools, the company is facing the issues.
Challenges Faced by Wesfarmers in its Supply Chain Process
As stated by Wisner, Tan & Leong (2014), the company has tried to increase its customer base. Therefore it has tried to grab the attention of a large number of customers. As its result, by developing its business in the urban areas, it has also tried to develop its business in rural areas (Mangan, Lalwani & Lalwani, 2016). This has become an important challenge for the company because in every places the transportation charges are not same. As its result, the prices of the products get changed. As its result, the company faces the issues for providing its products in same ranges. It can be said that the company has also faced the problem due to delivering the goods in large volume. Although the company has introduced effective supply chain strategies, but due to lack of proper monitoring, it is facing many challenges.
In this study, it has been identified that the company named Wesfarmers has faced the challenges due to improper communication in the workplace. It has been identified that the store network systems are not being maintained in this organization. On the other hand, the company has also introduced various technology in the organization. In order to bring the changes in organization, the company has recruited new employees, with IT knowledge (Brandenburg et al., 2014). This has created the conflict in the organization. The old employees who were using traditional technologies are not being able to deal with this situation (Wisner, Tan & Leong, 2014). As its result, employee conflicts are affecting the overall supply chain process in the organization (Mangan, Lalwani & Lalwani, 2016).
Conclusion and recommendation
In this study, it has been identified that supply chain management has the higher level of impact on organizational development. This can be said that by following this process, the organization will be able to manage the rate of profitability by increasing its customer base. The supply chain elements have been highlighted in this study which is the main influencing factor. In the case of analysing the supply chain issue of Wesfarmers, this has been identified that the company is facing the issue regarding transportation cost and improper management of the plan. It has also been mentioned in this study that due to lack of skilled employees, the initiatives of the company are getting hampered. Therefore, this can be suggested that if the organization can provide training to its employees, it will be able to train its employees with modern technologies. This will also help the old employees to co-operate with the new employees. As its result, the overall performance of the company gets influenced.
On the other hand, the major issue which has been in this study is, the company named Wesfarmers have appointed child labour in the workplace. The higher authority is not even aware of this situation. Therefore the HR department of the company needs to be more effective in the case monitoring these types of situations. As the transportation cost of the company is different in different places, therefore it needs to manage the manufacturing cost or should focus on establishing the outlets of those areas, where the transportation cost is high. This will help the organization in order to reduce the pressure of excessive tax. By following these, the organization will be able to manage the difficult situation faced by it regarding supply chain management.
References
Brandenburg, M., Govindan, K., Sarkis, J., & Seuring, S. (2014). Quantitative models for sustainable supply chain management: Developments and directions. European Journal of Operational Research, 233(2), 299-312.
Camerinelli, E. (2016). Measuring the value of the supply chain: linking financial performance and supply chain decisions. Routledge.
Chang, D. S., Yeh, L. T., & Liu, W. (2015). Incorporating the carbon footprint to measure industry context and energy consumption effect on the environmental performance of business operations. Clean Technologies and Environmental Policy, 17(2), 359-371.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Handfield, R. B., Cousins, P. D., Lawson, B., & Petersen, K. J. (2015). How can supply management improve performance? A knowledge?based model of alignment capabilities. Journal of Supply Chain Management, 51(3), 3-17.
Laari, S., Töyli, J., Solakivi, T., & Ojala, L. (2016). Firm performance and customer-driven green supply chain management. Journal of cleaner production, 112, 1960-1970.
Mangan, J., Lalwani, C., & Lalwani, C. L. (2016). Global logistics and supply chain management. John Wiley & Sons.
Mitra, S., & Datta, P. P. (2014). Adoption of green supply chain management practices and their impact on performance: an exploratory study of Indian manufacturing firms. International Journal of Production Research, 52(7), 2085-2107.
Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and supply chain management. Cengage Learning.
Qrunfleh, S., & Tarafdar, M. (2014). Supply chain information systems strategy: Impacts on supply chain performance and firm performance. International Journal of Production Economics, 147, 340-350.
Ralston, P. M., Blackhurst, J., Cantor, D. E., & Crum, M. R. (2015). A structure–conduct–performance perspective of how strategic supply chain integration affects firm performance. Journal of Supply Chain Management, 51(2), 47-64.
Singla, A. K. (2015). Issues in supply chain management. International Journal In Applied Studies And Production Management, 2(1).
Stevens, G. C., & Johnson, M. (2016). Integrating the supply chain… 25 years on. International Journal of Physical Distribution & Logistics Management, 46(1), 19-42.
Wesfarmers.com.au. (2018), from https://www.wesfarmers.com.au/
Wisner, J. D., Tan, K. C., & Leong, G. K. (2014). Principles of supply chain management: A balanced approach. Cengage Learning.
Wu, L., Chuang, C. H., & Hsu, C. H. (2014). Information sharing and collaborative behaviors in enabling supply chain performance: A social exchange perspective. International Journal of Production Economics, 148, 122-132.
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