DBN509 Operations Management: Coles Supermarkets Australia

Reflecting on the operations performance objectives (quality, speed, dependability, flexibility, cost), the priority objective for your chosen organisation (Coles Supermarkets Australia), and drawing on the insights from the article provided below (Iansiti and Lakhani 2017).

The Digital Business Divide: Analyzing the operating impact of digital transformation.

Write a report that critically evaluates the process design or the supply network design of an organisation with which you are familiar, and propose recommendations for further improvement.

You need to choose between one of the following levels for your analysis:

Operations level
Supply network level

Describe the organisation so that the reader can clearly understand what the organisation does and the organisational context.

Describe the process flow (or the supply network flow) of the organisation and define the key performance objectives and their relative importance for the business.

Organization description

Coles supermarkets in Australia is a consumer and retail services chain of supermarkets owned by Westfarmers, their parent company, and their headquarters are in Melbourne. These supermarkets provide Australian families with quality products at affordable prices. They sell packaged food products which they source from Australian manufacturers, growers, and farmers. And if they import products, they make sure that the products meet quality and safety standards required before they sell them to their customers. The supermarket is also committed to form lasting relationships with the farmers in Australia, and to make sure that the dream of a sustainable future to Australian families is realized and to also support jobs in the food industry boosting Australian economy in the process. They are also partnering with other companies to provide food to the needy people in a program called the Coles Community Food Program.

Supply network flows

Product flow which is the movement products from the retailer, the supermarket, to the customers, which also involves the supermarket dealing with customer needs. This flow is generally downstream, from the point of origin to the point of consumption. Secondly, financial flow where revenues flow from the customers who are the source of the funds in a chain of supply, to the other party in the supply chain, the retailer. Integrated management of financial flow is a crucial activity in the supply network flow of Coles Supermarket as it impacts the cash flow and the profitability of the supermarket directly (Nagurney 2013, p. 668). Thirdly, information flow: supply network flow involves a lot of diverse information like descriptions and pricing, product data and current cash flow which requires a lot of coordination and communication from the parties involved. Better and faster flow of information enhances the effectiveness of the supply network which transforms performance greatly.

Key performance objectives

One of the most important objectives of the supermarket is cost-effectiveness. Supply chain design is a crucial factor in the supermarket’s outbound logistics and their superior inbound capability. They control the distribution of their products via sophisticated logistics and procurement networks. Management and ownership of the network of distribution enable, optimum distribution efficiency, superior product quality and enhances the delivery of goods that is cost effective. Also, through its use of advanced technology, economies of scale and efficient capabilities of the supply network, Coles Supermarket offers high quality products at affordable prices ensuring the perception of the customer value exceeds all cost activities and to also create a margin of profit.

Improving their products is another objective where high quality products mean higher accuracy meaning applicable standards must be complied with in order to meet higher consumer satisfaction (Markgraf 2018 p. 27. The importance of these objectives is that they help the supermarket improve their productivity and increase financial returns. They can also be used as a benchmark to gauge the success of the business as the more objectives met, the more successful the business is.

Supply network design concepts

Value chain concept is developed as a competitive strategy and analysis tool. It is consists of primary activities like outbound logistics, inbound logistics, operations, and sales and marketing and support activities like technology development, infrastructure, management of human resources and procurement which work together for the benefit of Coles Supermarket customers and also to generate revenue for them (Network 2010 p. 23). Supply network and value chain are extended enterprise’s complementary views, with supply network processes enabling products and services flow in one direction. And value chain generates cash flows and demand from the customers. Also in Coles Supermarket, management of supply chain plays a crucial role in operations management. It involves managing information and materials from retailers and suppliers of raw materials to the final customer. Aimed at reducing overall cost and also improve delivery and quality of services. The operations design of Coles Supermarket decides whether products should be tailored so as to meet customer needs, how to manage their suppliers and also how to meet the standards set by the local government (Chain 2016 p. 69). The supermarket has been compelled to reach higher excellence levels in the services and products they offer. Hence supply chain management should be used better in supermarkets like Coles for excellent operations management.

In order for Coles Supermarket to meet the requirements from customers, they must do everything correctly in the supply chain. The Australian landscape in retail is very competitive, with competitors sharing the market share aggressively. The consumers want to embrace the new technology where Coles Supermarket reduces operating costs and the consumer satisfaction levels are improved (Management 2010, p. 96). Both are key drivers in boosting the supermarket’s profitability and turnover. Coles Supermarket also faces some problems due to the vast size of the country in delivering supply chain systems of high quality while also ensuring that cost fulfillments are maintained at a minimum level. Communication between data centers and the stores is very critical (Hess 2012, p. 78). This provides greater efficiencies and also boosts productivity in the operation of the Supermarket. Also for Coles Supermarket to meet strategic objectives which are long-term, they must design a supply network that is optimal.

Recommendations

There are several recommendations on how Coles Supermarket may reduce costs and increase their business efficiency. One of them is to create competition between their suppliers, where, if the Supermarket obtains new bids from the current suppliers who know that the bids may be submitted by competitors, then they might extract lower pricing of products. This is because some suppliers might be complacent when motivation from other competitors is not there. Secondly, the Supermarket should change suppliers every now and then because changing of suppliers is proven to reduce costs (Melanie 2017, p. 11). When Coles Supermarket is choosing new suppliers, they should ensure that they are safety nets that are in place to ensure that prices are not increased that means checking their new supplier’s background carefully until they are satisfied that they will meet their needs. Thirdly, the Supermarket should ensure that inventory management systems put in place are efficient as they affect cost directly. When the amount of inventory is reduced by ordering in time or when they hold safety stocks in minimal reserves saves cash flow. Inventory management reduces overstocking which reduces any obsolete stock that can’t be sold easily.

Fourth, Coles Supermarket should eliminate the sources of suppliers that they may have. This will reduce cost by ensuring that they choose single sources for products that are absolutely necessary (Effect 2009, p. 78). This creates economies of scale as they are ordering from a single supplier at a reduced cost generally. This also reduces administrative costs, therefore, lowering overheads due to clearing multiple transactions from the financial statements. But they should always ensure that they have back up suppliers for cases where their supplier fails. Fifth, the Supermarket should also make sure that they consolidate their administrative activities. Internet use directly impacts the costs of the business as it unlocks greater opportunities when they have systems in the cloud where they will be easily accessible anytime (Sage, 2011 p. 67). By having a central processing hub and automated practices, the internet consolidates administrative activities, therefore, reducing transaction costs, impacting overheads directly. All these contribute to direct reduction of cost and greater efficiency.

How digital technologies are improving the business

Leading organizations has a comprehensive strategy of data acquisition and usually distinguish themselves from their competitors on the basis of the data platform (Marco & Brenda 2014, p. 67). The difference in this strategy shows that business people are likely to access consistent metrics for making decisions giving the organization the ability to generate their business predictions from the collected data.

Digitization is changing the nature, speed, and locus of operating decisions made by managers, also the services, technology, and systems that are enabling efficient and effective operating performance. Digital technologies are changing, fundamentally, the way organizations capture and create value for its customers by unlocking new value through new services and efficiencies (Lankani 2017, p. 5). Secondly, capturing opportunities of the values created by the organization expands greatly with business instrumentation, ubiquitous sensors and pricing technology offering new ways of driving efficiency, accuracy and price differentiation. Also, this technology may be used by automobile insurance companies to collect key metrics such as unsafe driving behaviors like rapid acceleration and hard braking which will enable them to understand their customers better and to also price the policies taken accordingly.

Delivering new models of business isn’t easy and it requires new operating models being adopted (Petra 2010, p. 35). Therefore, if a digital approach to operations is adopted, the foundations of the organization changes. Both locus and timescale of the organization are changed by digitization, the way it delivers products to customers, experiments new concept and explores new ground. Also, digital transformation provides opportunities to leverage assets that are old so as to capture and create value in new ways.

Conclusion

Effective, impartial and consistent way to benchmark Coles Supermarket’s services levels should be in place as the business environment today is very competitive, operations management’s role has been the focal point to increase competitiveness through improving efficiency and value added. The only way this is possible is by employing new technology, training employees and also new methods. By strategically behaving, Coles Supermarket can achieve efficiency, prosperity, effectiveness, and productivity. Also, resource management is important as the efficient management of resources will lead to the success of the supermarket. The recommendations made on how to improve cost-effectiveness of the Coles Supermarket requires attention and adequate action so as to deal with any issues arising. Their implementation will definitely improve their efficiency and also cut on cost. Also, the supermarket is notably growing with the supply chain management method put in place which will highly facilitate the sector.

References

Chain, S. 2016. Supermarkets and the Meat Supply Chain. 59-90. doi:10.1787/9789264028883-en

Effective, C. 2009. Cost-Effective Management. Management of International Networks, 79-86. doi:10.1201/9781420074444.ch5

Lankani, L. 2017. The Digital business Divide. Encyclopedia of Business in Todays World, 40-57. doi:10.4135/9781412964289.n443

Management, O. 2010. Technology Operation Management. Technology Operation Management, 91-99. doi:10.1007/13727.2249-2364

Markgraf, B. 2018. Quality Management System Goals & Objectives. Retrieved from https://smallbusiness.chron.com/quality-management-system-goals-objectives-58994.html

Melanie, T. 2017. Five Measures to Increase Efficiency and Reduce Cost in ... Retrieved from https://www.unleashedsoftware.com//five-measures-increase-efficiency-reduce-cost-business

Nagurney, A. 2013. Supply Chain Network Economics: Dynamics of Prices, Flows, and Profits, by Anna Nagurney. Journal of Regional Science, vol 48, no.3 pp. 663-664. doi:10.1111/j.1467-9787.2008.00567_4.x

Network, S. 2010. Conceptual Frameworks for Supply Chain Management. Adaptive Supply Chain Management, 19-33. doi:10.1007/978-1-84882-952-7_2

Sage, E. 2011. Goals and Objectives. The SAGE Encyclopedia of Educational Research, Measurement, and Evaluation, 60-73. doi:10.4135/9781506326139.n289

Petra, H. 2010. The Use of Operations Management Procedures in Order to Increase Organizations Competitiveness under the Conditions of Growing Pressures of Globalization, Global Business and Management Research: An International Journal, Vol. 2, No. 1, pp. 32-54.

Marco, L & Brenda, A. 2014, Utilizing Industry Contacts to Enhance Student Learning in the Core Operations Management Course, Academy of Educational Leadership Journal, Vol. 18, No. 1, pp. 65-67.

Hess, E. D. 2012, Grow to Greatness: Smart Growth for Entrepreneurial Businesses, Stanford, CA, Stanford Business Books