As a part of the Woolworths Limited, Woolworths is Australia’s largest and most popular retailer with 3199 stores throughout Australia and New Zealand. The purpose of this report is to introduce Woolworths and how it deals with its suppliers, inventory management and quality. This report draws attention to one of the Porters’ competitive forces, namely “bargaining power of input suppliers”, and determines the extent to which the organisation’s suppliers have the ability to influence Woolworths. Further evaluation reveals how Woolworths manages its inventory and the effectiveness of its inventory management practices. Moreover, this report describes the management on quality and the effectiveness thereof. Lastly, there are comments on the relevance and usefulness of the information found in relation to theoretical knowledge on suppliers, inventory management and quality.
Total Words: 1498
As a great retailer brand, Woolworths is successful for a number of reasons. Not only by strictly controlling the quality, but also takes its inventory management very seriously. Effectively manages its inventories such as launching project Refresh in 1999 saves over $7 billion until now on a $1 billion investment. Better management on inventory and quality has absolutely made enormous contributions to Woolworths’ success today.
Powerful suppliers will result in higher priced inputs. To a company, the larger a supplier is, the higher the dependency on the particular supplier, and leads higher bargaining power of supplier. For a famous company like Coca-Cola, there is no reason for a retailer like Woolworths to refuse its products, which makes Cola Company the strong bargaining power to Woolworths. The degree of differentiation of inputs and presence of substitute inputs can determine the ability of suppliers’ bargaining power and thus the influence on the company. Coke is a very popular Cola product. It is unique and irreplaceable to many consumers throughout the world, which determines Coca-Cola’s strong bargaining power and heavy influence on Woolworths as a supplier. Cost of inputs from suppliers has a close nexus to the selling price of products. Hence suppliers switching costs relative to firm switching cost. Woolworths Home Brand is concentrated on providing the best quality at the lowest price, and since it is manufactured by Woolworths, there is always a better control on lowering the cost which then brings a lower price and higher profit margin. Thus, in order to confront against the bargaining power of suppliers and minimize the influence from them. Woolworths needs to increase the competition between suppliers, improve integration with suppliers and manage its inventories better.
Effective inventory management is one key that will increase net income for Woolworths. Under contemporary inventory managing approach, the appliance of Radio Frequency Identification which is a type of technology enables electronic tag to communicate with reader through radio waves for purpose of identification and tracking. Apparently the use of RFID technology can effectively reduce the loss from theft caused by customers and employees. Hence, the reduction of shrinkage cost can cause a dramatic percentage increase in net income. Contrasting with conventional approach, every item needed to be scanned under the bar code technology consumed more time and required specific positioning of label increases labour cost. Woolworth worked “closely” with its suppliers to introduce more flexibility into its system. And no matter if it is conventional or contemporary approach, Woolworth effectively learns...
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