Supply Chain Management - Woolworths and Nike

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Supply Chain Management

Supply Chain Management (SCM) is a systematic integration of suppliers, Original Equipment Manufacturer (OEM), distributors and customers in order to produce and distribute the right quantities, to the right time, and at the cheaper cost, while satisfying the entire supply chain partners (Balsubramanium & Roosebelt). In simple words, it is a process of moving goods from manufacturers to a consumer. Today successful companies, uses softwares or web based application service provider (ASPs) to provide them a better supply chain solutions. Technology has been the life and blood in all the fields since many years but in supply chain, it is playing an extraordinary role. Not only by cutting the cost, enhancing efficiency and optimizing the entire supply chain network, Technology is also playing its role in satisfying the customer demand and thereby maximizing the revenues for the company.

A key barrier to full supply chain management was the cost of communicating with and organizing among the various independent suppliers in each supply chain (Fredendall & Hill 2001). Another barrier to successfully managing a supply chain is possibly the issues of lack of trust and communication. When there is a lack of trust and communication the members within the organisation will feel suspicious which results in delays and inefficiency within the organisation. When the communication is insufficient between the levels of organisations, the supply chain will not improve its response enough to increase profits which results in loosing competitive advantage. But the art of technology has changed these barriers into opportunity by inventing tools (softwares) like Just-in-Time (JIT), Materials Requirement Planning (MRP), Materials logistic Management (MLM), Total Quality Management (TQM), Agile Manufacturing, Enterprise Resource Planning (ERP) system, Time Based Competition (TBC), Customer Relationship Management (CRM) and many more. These software applications are not the strategy, rather they are tools to implement a firm’s strategy.

Below you will find an example of Woolworths Limited (AUS) who gained benefits by using extensive softwares and application in their SCM.

Woolworths claim that they have the largest and the most complex retail distribution network in the southern hemisphere where the company is awarded ‘2006 vendor of the year’ for its contribution to a three year multi-million dollar national distribution project. Woolworths Limited is major publicly listed company with over 3000 store and 180,000 employees together in Australia and New Zealand (The ECN Group 2009). At the end of financial year (2008), Woolworths ltd obtains a net profit of $1626.8 million after tax, an increase of 25.7% from 2007. Woolworths' current CEO, Michael Luscombe, comment "Our focus on the customer, the quality of our people and the successful execution of our business strategies, highlighted by the supply chain transformation in our Supermarket Group, have all contributed to this result (Woolworths Annual Report 2008). IT offers many opportunities for companies like Woolworths, to cut cost and improve responsiveness to customer’s needs. Woolworths’ Project Refresh strategy (apparently a cost-reduction exercise) started in 1999 when Roger Corbett became the CEO of the company. Out of which the company had made cost saving of $2.5 billion in five year duration by their supply chain initiative of bringing new IT methods (Howard 2004). Corbett believed that Woolworths’ supply chain initiatives were well advanced in terms of technology, and he was right. Information is one of the most crucial element of supply chain management. Without information, managers will not know the demand of the customers, the stock of inventory available with him and when to order, how much to order and when they need the shipping. To make life easier Woolworths uses “StockSmart” software application for stock replacement distribution system...
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