Coles Supply Chain - Case Study Example

Coles Supply Chain By: Name: Institution: Index 1. Introduction……………………………………………………1 2. Problem statement……………………………………………2-3 3. History of the Company ………………………………………3-4 4. Business Culture………………………………………………4-6 5. Business Model…………………………………………………6-7 6. Branding and Marketing………………………………………7-9 7. Globalization…………………………………………………10-11 8. Operational procedures from Production…………….………12 9. Logistics………………………………………………………….12 10. E-commerce……………………………………………………..13 11. Analysis-Trends………………………………………………..13 12. Recommendation going foreword………………………….14-16 13. Strategic Foreword Thinking………………………………16-17 14. Current occurrence affecting the business………………18-19 15. Conclusion …………………………………………………19 Introduction This is a report on a business that has changed lives and made a difference on societies and traversed through different sectors and eventually offering the public quality and service. The business case study in focus is Coles supermarket owned by Wesfarmers and with a century of service to the public. The report shows how Coles Supermarket has performed over a period of time, and the different aspects of supply chain management play various roles in the running of the business and offering quality goods and services to society. The report also showcases an array of competitive ways that may be of use or may already be used by other businesses to improve their bottom line. Various authors have argued that capitalism is the future of various economies, and this report supports the idea. The report is a bit contradictory of some market forces that may want to influence the business into slower growth path. The facts collected and reviewed are from a secondary research based approach. This report highlights better ways of doing business and incorporates various improvements in practices that may lead to enhanced business efficiency. Problem Statement Coles is a supermarket with over seven hundred branches but has yet to establish a proper footing in production and international sales. This seems to be limiting the Supermarket’s ability to offer quality service and products to a larger market share. This is a comparison to other supermarket chain stores at the level of Coles. The issue is how to improve performance of Coles Supermarket. The report points out to various challenges that are hindering Coles to reach its potential. This may include inefficient management practices in areas such as logistics, warehousing and supplier’s redundancy. The risk measures in the Supply Chain business are also very high and may even be considered as taunting to business bottom lines. Other various challenges are gong to be highlighted in various sections of the business that may affect Coles and its Supply Chain. This is aimed simply at improving the efficiency of the business and its relations with stake holders for a better bottom line. History of the Company The Supermarket chain was founded by Wesfarmers in 1914 in Victoria Australia. The business has come a long way from pre world war one and two periods. Times when economies were not doing so well due to the situations back then. I would imagine that the business and its stake holders would have been affected in one way or another during such periods. Australia must have been under a threat being an ally to Britain, which was fully participating in the war. Businesses in such climate may suffer uncertainties of insufficient inventories, high transport and costs of production due to scarcity of raw materials. Wesfarmers must have been taking quite a high risk not knowing whether or not the business will pay off in the uncertainty of war. This goes to show that consistency and good business practices can give profitable results in business. The business paid off and a century latter there are over seven hundred branches. This means that for each year since its inception, Coles has opened seven supermarkets each year. The parent Company, Wesfarmers is a reputable business and is listed on the Australian Stock Exchange with a share value of $40 per share. Parent company owns a larger share of the Coles Supermarket chains. Consumer behavior over the years has contributed to the growth of the business. This means that the population increase has also contributed to the growth of Coles as a business. Business Culture Coles has been developing its culture since 1914 with a range of staff in stores to cater to client’s needs. This has been supported a chain of distributors that get the products right in time to the clients. The culture behind Coles is in line with quality service to customers. The produce that comes into the stores is managed by the Coles branch managers who maintain proper inventories at each store. Some of the products sold at the stores include; Grocery-A n array of vegetable products and farm produce. General merchandise-Clothes, household equipment, and tools for different sectors Liquor-Different brand of alcoholic beverages from different manufacturers Chilled/Chiller –Low temperature preservation foods –Different types of meat, dairy products, and cold beverages. Frozen/Freezer – Extremely low temperature food products, ice, and frozen foods Most of the products in these categories are consumables and are therefore sensitive to a given time frame after which they are considered unfit for consumption. The business culture behind Coles works best with such products and ensuring that consumption products are set out as early as possible. Thanks to the business model, the clients get quality products at low pricing and at the right time. The business culture rotates around low price and high quality products. This keeps the customer coming back for more and making the product available to the client’s proximity through variation in locality. The different stores offer clients in different regions options in satisfying their need. Business culture is developed overtime and can’t be bought. This is how you train your staff to operate with the resources available. It can determine whether a business will be successful or not. According to (Christopher, 2011) the culture in a business determines and dictates the operations of the business. Coles has established low pricing through stringent procurement practices which allow their supplier to offer quality goods at very low and competitive prices. This in turn gives Coles a chance to offer the same products to their clients at a much lower cost. The culture in Coles also encourages the clients to conserve the environment by recycling. Coles offers products that are in line with environmental conservation initiatives such as the Recycle-Reuse-Reduce brand. This assists the producers to save on cost of production and reduce the effect producers have directly on the environment. Operational expenses also seem to reduce with the right business culture. Coles just like any other business has expenses. The more the expenses incurred in the value chain, the higher the cost of the product or service offered. The Coles culture in order to reduce operational expenses has been; maintaining cheaper options in staffing by offering minimum wage. The business also has a culture of taking on high school and college graduates as their staff. This offers the business a chance to give the employees on the job training and influence practices that keep the business profitable. Coles also influence the way they relate with the suppliers in communications using synchronized systems to prevent low inventories or stock outs. Business culture offers Coles a chance to control the demand and supply of certain aspects such as labor as explained, consumer preferences through different forms of marketing and the profit margin in the long run. Culture has led to expansion into the following areas Business Model The business model used by Coles is based on Value chain. This is to say that value of the goods increases as they moves towards the clients. Coles has a business model that cuts through the supply chain from the producers to the consumers. The suppliers deliver ready products to the distribution centre and Coles management sort out the distribution in accordance with orders from the various location. The business model in retail stores allows Coles to expand market share and have a quicker turnover on consumer goods. According to Gorodkov, retail- supermarket business model means clients walk in and select what they need and buy and walk out. This can be influenced by proper marketing techniques. The Coles business model is one that cuts through the chain in harmony and allows the business to grow in different locations. The Coles business model incorporates local suppliers and international ones. Various other models used by Coles include; the pick and pack where clients get the product have it weighed and pay at the counters. It gives the client a chance to have preference at their own financial ability. This kind of a business model appeals to the psychological part of the client. Other models that Coles Supermarket use includes Pick to zero which involves sale of cold products. Cross docks which involve self sale machines which allow the clients to buy goods from an automated mach Branding and Marketing at Coles Coles is a company that takes pride in its products. Population increase and demand for consumer preference has lead to branding solutions. An example of product branding by Coles is of the Johnson and Johnson products. The birth of a new child in the family, there was a celebration that took place with the birth of my baby brother and therefore among the gifts was the Johnsons and Johnsons baby products that consist of soap, baby wet wipes, lotion and baby powder. These products are good for the skin of the baby and prevents rash to the baby. It is a product that is safe and can be easily used. Being a good product, mostly for the household use Johnson and Johnson products for patients and children in the nursery.The products are produced at different factories before being delivered to Coles distribution centers. Life cycle of products can be divided into four stages; these are the introduction stage, the growth stage, the maturity stage and the decline stage. In the introduction, stage is where a new product is launched and the beginning of the journey for the product. Marketing in launching a new product should be very high and requires a lot of concentration. It is a stage where the consumer market is tested to see if the public will embrace the product. Growth stage is where the product grows in terms of sales and also profits. More investment is required in this stage to ensure the growth of the product to greater heights (Adams, 2015). In the maturity stage, the product is already grown and requires sustenance within the market share. There should also be considerations on product modifications or improvement to ensure it beats the competitive market. And also retains the reputation within the local market to be able to withstand competition. And finally the decline stage is where the demand for the product becomes less once the market starts getting saturated with similar products. By companies opting to move to cheaper markets and using cheaper methods of production, the products could still manage to secure profits (Adams, 2015). Methods of marketing such as door to door promotion would help the introduction stage to show the client the product at a personal level and within their own comfort. This makes the product to be well known, the growth stage could use door to door marketing strategy and also the media could come in handy. The maturity stage be aided by social media marketing strategy and also all forms of media including the electrical media and also door to door promotions. In the decline stage, social media marketing comes most handy in order to be able to secure profits (Adams, 2015). There are different channels of distributing the products for sale. The best channels are through wholesale market or retail shops and in supermarkets. The other form of distribution is through promotions and other forms of marketing. In the whole sale channel, the distribution is faster and widespread in huge quantities within a fair perimeter. This enables the public within a limited location get access to the product from a reliable dealer and in huge quantities. The channel partner adds value to the product because they bring the products to the people close to them and sell at an affordable price that is friendly too the people (Adams, 2015). In the retail market, there are a high number of retail shops and supermarkets that people of the locality use to access products. Therefore, the retail markets bring the product closer to the people. Shops and supermarkets are the most local forms of retail. This is the direct link to the clients. The customers opt to buy in small quantities from shops and slightly bigger quantities from supermarkets. This channel though increased prices, is mostly preferred by people within a certain region to access their products (Adams, 2015). By use of promotions and other forms of marketing, there is a big way of distributing by Coles Suppliers products to the customers directly from the dealers of the product company. Street promotion is the best channel. This is because it involves sampling and the customers buy the product from the dealers themselves and can get the opportunity for feedback (Adams, 2015). Globalization Globalization is the practice of cutting across different countries. Coles Supermarkets have suppliers who transverse international boarders. The products that come in from different global regions include products that are not readily available in the country. The aforementioned Johnson and Johnson products are examples of products that Coles suppliers bring in to the Supermarket. Talking of supply chain in the Coles Supermarket context; this is basically a system of activities, organizations, resources, people, and information involved in moving services or products from supplier (producers) to customers (end-users) (Camarinha-Matos, Afsarmanesh and Ortiz, 2005). It involves the process of transforming raw materials, components, and natural resources into finished goods that are delivered to customers. Supply chain often links up value chain. Generally, one can argue that supply chain is a continuous process that starts right from obtaining of raw materials up to the point of delivering the finished products to end users. This brings in the need for SCM (supply chain management); this process involves the control of goods flow in a business. It includes the storage and movement of raw materials, supervision of production processes, and monitoring the movement of finished products from production zone to the consumption point. This is exactly what SCM entails, and it goes hand-in-hand with supply chain operations. The other element which basically is a tool for improving business performance in a business such as Coles supermarket is SCOR (Supply-chain operations reference) model is the new tool designed to help companies improve their performance levels. This model seeks to explore how globalization has helped Coles Supermarket and its suppliers. Organizations’ business activities have helped in improving the customer care service management of the Coles Supermarket. SCOR model was initially developed and initiated into use by supply chain council in collaboration with 70 of world’s best and leading manufacturing companies. This model is used as tool by the management in addressing, improving as well as communicating SCM decisions within an organization and with customers and suppliers of that particular organization (Finne, S. and Sivonen, H. 2009). SCOR model describes all the business processes needed to satisfy customers’ demands. This tool helps in explaining all the supply chain associated processes and even offering a basis on how to better those processes. SCOR model is purposely designed to ensure that supply chain processes run smoothly from production stage up to the last stage of products distribution to the end users. This is why this SCOR model has been often described as one of the “most promising model for supply chain strategic decision making”. This managerial tool focuses on various areas in a business, but the most general ones are process modeling, performance measurements and best practices. They all contribute to improving the performance yielded under the implementation of supply chain. Operational procedures from Production Coles Supermarket operates efficiently as a walk in retail centre. The suppliers both locals and international deliver various products to different distribution centers owned by Coles and then to the Supermarkets. The different brand of products sold in Coles supermarkets give diversity to the client’s preference. Coles also has its own brand of products which retail at a lower cost. This gives the supermarket brand products competitive advantage over other products in the supermarket. This is because of the lower pricing of the Coles Supermarket brand. The option of similar quality gives clients a better option. However, there are variation in preferences, and some clients will prefer foreign brands. The clients offer their feed back and it Coles improves on quality. Logistics Coles supermarket caters to the logistics of the products from the various distribution centers to the to the local outlets. This logistics department also makes sure local deliveries to clients who requests for shopping deliveries. Most of the logistics are done by road using the Coles trucks. International logistics only take place only when international suppliers are moving products to the distribution centers. This is usually by air or by shipping. The shipping cost is incurred by suppliers who then pass it on to the final customer. Production of the locally manufactured goods is facilitated by the logistics of raw materials to the production point. Coles invests in timely logistics solutions. This assists in the inventories and gets the goods to the clients on time. The suppliers use the just in time system of ordering when supplying the goods to Coles. Clients at Coles supermarket find their products readily available due to this system of ordering. E-commerce Information sharing systems at Coles Analysis of the Coles business set up Recommendation going foreword Source This phase of the supply chain processes requires that a company should meet the actual/planned demand. SCOR model comes in where the business is bound to induce processes that should help in formulating the methods necessary for making production levels meet the planned demand (Pita, Laric, Walters, and Rainbird, 2004). The Coles business has been able to retaliate and fulfill this planned demand by conducting what is referred to as market research, which basically is meant to help in establishing what brand the customers are in demand of across all the business environments that this business operates in. therefore, this company has been able to offer a good customer care service since they operate at the convenience of the customers as well as providing what is exactly needed. Through the SCOR model, the company can be able to what product brand is commonly demanded from the various regions it operates in and thus be able to check on its source in order to meet the actual demand. This establishes a positive customer care relation. Make The term “make” refers to the process of creating or the transition from one form to another. This is the production part, where raw materials are transformed into finished products. Therefore, relating the SCOR model to this make phase, Coles business can employ this tool in making the production process more considerate to customer preferences by ensuring that every detail of quality desire is included in the production of the goods (Walsh & Dowding, 2012). For example, it would be worth to respect the taste of customers by providing with the desired brand, take their orders and attend to them and make deliveries in time. This will basically help in satisfying customers’ desires and needs. Also, employing the SCOR model in this phase will help in putting consumers need at the frontline for every compliment they make upon sale of hold stock will help in improving the quality of the products. Attending to customers requests is one way of establishing good customer care service. (Pita, Laric, Walters, and Rainbird, 2004) has implemented this in every region they are based through producing outsourcing some of its production processes to other companies. The SCOR model helps in reducing the cost associated with production as well as making the making process efficient and reflective on customers needs. This is because it is assigned to professionals in that particular task. Deliver This is another phase under the supply chain that involves distribution of finished products to the end users based on the orders each customer has paced. SCOR model would help in formulating better ways or channels of distributing the finished goods to the customers in relation to quantity, quality and time when the order delivery is expected by the customer (Finne, S. and Sivonen, H. 2009).The Coles business can achieve success in this deliver phase of supply chain by ensuring that most of it supplies are provided in large amounts even if there will be surplus. This will in turn make sure that most of the local stores for their products do not run out of the products frequently. Hence, the customers demand will be met, and this acts as a form of good customer care service. Also, this company can still make the production processes be relocated to every locality in order to ensure that distribution of the finished goods is easier. This will facilitate easier access to their products. SCOR model would help in propagating other methods of transporting the products to the locals. For example, the company may use railway transport to those areas that require a lot of suppliers, which are often bulky. This caters for the demand presented from those regions completely. SCOR model will bring out new ideas on how to improve the existing methods of attending to customers orders placed. The company can set guidelines on how to place orders even if it’s on weekly basis. This improves the customer care services offered by the company (Rushton, Croucher, and Baker, 2010). Return This is the last phase that entails receiving returned products due to some reasons. Here the company is bound to formulate new methods and processes using the SCOR model, which will help in receiving any goods that may be faulty (Yadav, Stapleton & Van Wassenhove, 2013). The Coles business can be able to design a program that this specifically deals with returned products in order to ensure the customers gain the trust loyalty upon this company. If the terms and conditions or the guarantee is not void, then it will be good for the company to receive these returned goods and offer solution to customers if possible. This will help in boosting the customer care services for the customers will have loyalty in this company. Any damaged products have to be accepted back, and compensation offered to customers Strategic position and direction of Coles Coles strategy is to have global recognition of all their products and to be approved by all, in all regions in the world. The strategy is to renew the Coles brand which is represented by the products and manufacturing. This is signified by better products that are outstanding in the current market. To make products those are attractive and acceptable to the customers at all levels. Coles participates in a wide sphere of products; general products. Coles introduced new products in the market like disposable diapers and synthetic detergents and even fluoride toothpaste (Pita et al., 2004). These are products for everyday use that has to be used on a daily basis. This is their market strategy. The buyer’s purchase criterion is through online sale, wholesale or retail on the grounds level. For competition purposes, the position and location outplayed by Coles is good in terms of marketing in a global scope, and the target scope is fine. The direction should not be altered (Staff, 2014). Coles strategic fit to competition, suppliers and customers In order to curb competition, Coles uses the 5 porter’s factors to regulate their products in the market and to monitor the amount of competition in the market regarding products. Coles marketing strategy is beneficial and very good. The idea of distributing the products all over the world and investing in both media and other forms of marketing globally has helped to curb competition as a factor. By improving the product, they ensure relevance in the current market all the time and curb replacement of products. Suppliers are in both large scale, the whole sale to supermarkets and all large stores all over the world and distribution to small stores for retail for the lay person to get access to. This is an advantage to the company as it takes the product to the people. The consumers can easily access the product from their home region due to the distribution done by the Coles staff (Admin P.A, 2014) Organizational structure and management of Coles Due to diversification, the prices of the Coles products are standardized according to the locality and the region. In areas where there is inflation, the prices of the products inflate and in the areas where there is a change in currency, the company regulates the prices of the products to a favorably fair price affordable to the customers. The prices are standardized to benefit the consumer; however it does not reduce the prices too low to hurt the company and the manufacture of new products. Products are of high standards regardless of the pricings. The value of the product matters to Coles (Leavy, 2013). Current occurrence affecting the business Coles business is heavily invested in Supply Chain Management and in the SCOR model. The area under supply chain that SCOR model touches on is the value chain. Here the focus is all on supply and demand planning. Different companies that exercise the use of SCOR model upon supply chain in their day-to-day business activities, they often try to establish a balance between the aggregate supply and demand (Kumar, Teichman & Timpernagel, 2012). SCOR model is basically used here as a tool to help in formulating processes that aid in developing the best course of action. In this planning phase, the organization will try to regulate production activities to equate the demanded presented by the general public. The SCOR model will also help in ensuring the supply chain processes entailed for products delivery requirements are sufficiently polished. Therefore, relating this to the essay’s focus, Coles has employed SCOR model frequently in its business operation to make this planning phase a success. Based on the ever rising demand for this company’s brand, this has caused a very high demand level of their products. This calls for equivalent supply level for these products too. Coles has ensured this by embracing what is referred to as economies of scale in economics. The organization has decentralized its business operations to the respective countries in which it has business branches. This has made the business operations of every branch to secure for they operate as independent business entities. This creates room for acting in relation to preferences of the locals from that particular region (Bunting, J. W. 2015). Customer care services management is a very crucial department on it own when it comes to the success of a business. As the rule goes, “a customer is always right”. This phrase tries to inculcate some sense to all business people who serve customers. If one wants to make good sales in his/her business, then it is always advisable to play by the customer’s rules (Dickersbach, J. (2009). The customer relation has to be positive ever if at all any business wants to prosper. In maintaining this business motto, the Coles business has established various business branches to almost all the regions throughout the world, at the customers’ convenience. This has made the planning phase a success for customers demand is met in time, at the right time and with the preferred brands. Coles business has always customer care services are highly maintained for it provides surplus products in its supplies in order to be able to counter any emergency demand. Its products are delivered to the local vicinity in relation to the orders placed; customers do not have to struggle with getting the supplies from other countries, cities or towns for everything is locally available to satisfy their demand (Anderson, J. 2013). Recommendations Based on this case of Coles business, one would recommend that this company should highly employ the SCOR model I almost all its supply chain operations in order to be able to measure the exact direction towards which the company is propelling. Also, it is worth employing this model for the company to know where to correct and where to maximize (Shapiro, J.2001). Conclusion SCOR model is an essential tool for managerial purposes, especially to those leading manufacturing companies that operates within the global market. This is because it helps in linking all the production processes together, measuring company’s performance, establishing weaknesses, initiating corrective mechanisms and propelling steering a company forward. Customer care services management is a department that has to be always updated and attended with a lot of courtesy for it determines the survival of any company. Hence, this is why one would recommend that Coles business should employ SCOR model in their supply chain operations for them to be successful in their business activities. References Christopher, M 2011, Logistics & supply chain management, 4th edn, Person Education, UK. Coles 2015a, Annual & Industry Report, Coles , viewed 28 September 2015, . Coles 2015b, Coles Supply Standards, Coles, viewed 27 September 2015, . Coles 2015c, International supplier communication pack, Coles, viewed 5 October 2015, . Coles 2015d, Supplier Portal, Coles, viewed 8 October 2015, . Coles Myer Limited 1997, Company facts, Coles Myer Limited, viewed 10 October 2015, . Adams, m. (2015, August 21). Product Life Cycle Stages. Retrieved August 21, 2015, from Product Life Cycle Stages explained: http://productlifecyclestages.com/ Kumar, Teichman & Timpernagel,. Systems Analysis and Design. New York: Cengage Learning, 2012. Yadav, Stapleton & Van Wassenhove. Object-Oriented Analysis and Design. New Jersey: Springer Science & Business Media, 2013. Leavy, B. (2013). Where to play and how to win–strategy fundamentals the Procter & Gamble way. Strategy & Leadership, 41(5), 7-16. Anderson, J. (2013, May 14). Trends Affecting Logistics Professionals. Retrieved October 14, 2015, from material handling and logistics: http://mhlnews.com/global-supply- chain/trends-affecting-logistics-professionals Bunting, J. W. (2015, October 14). Supply chain management: A look back, a look ahead. Retrieved October 14, 2015, from Supply chain quarterly: http://www.supplychainquarterly.com/topics/Strategy/20130621-supply-chain- management-a-look-back-a-look-ahead/ Camarinha-Matos, L., Afsarmanesh, H. and Ortiz, A. (2005). Collaborative networks and their breeding environments. New York: Springer. Camerinelli, E. (2009). Measuring the value of the supply chain. Farnham: Gower. Grant, D. (2012). Logistics management. Harlow: Pearson Education Ltd. Rushton, A., Croucher, P. and Baker, P. (2010). The handbook of logistics & distribution management. London: Kogan Page. Shapiro, J. (2001). Modeling the supply chain. Pacific Grove, CA: Brooks/Cole-Thomson Learning. Dickersbach, J. (2009). Supply chain management with APO. Berlin: Springer. Pita, D., Laric, M., Walters, D. and Rainbird, M. (2004). The value chain and marketing. Bradford: Emerald Group Pub. Finne, S. and Sivonen, H. (2009). The retail value chain. London: Kogan Page. Read More