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Executive Summary of Woolworths Procurement Strategy

The report has illustrated the procurement strategy and its analysis of Woolworths. It has highlighted the optimization of business through supplier risk, e-procurement, and strategic sourcing. It is also mentioned that the business outlook can be improved through a change in sourcing approach to make, buy, and risk assessment by the supplier index for business functioning at Woolworths. This will enable cost-saving and business streamlining for competitive advantage.

Table of Contents

Introduction.

Woolworth’s procurement process.

E-procurement strengthening.

The future move.

Conclusion.

Introduction to Woolworths Procurement Strategy

The procurement strategy refers to a long term plan for acquiring necessary supplies cost-effectively from the vendors who deliver goods abiding the purchasing conditions and terms. Woolworths as a supermarket brand has multiple stores in Australia, the supply chain is the backbone of the business. This report highlights the procurement strategy and its risk incidence relating to market turbulence.

Woolworths is one of the largest supermarkets in Australia established in the year 1924 and has over 3000 stores across Australia (Woolworths 2020). Woolworths has a centralized procurement process. The head office decides the product to be sold and select the manufacturing supplier according to the specifications. This process helps Woolworths in maintaining its retail cycle and product quality in food, fashion, and home care products. Procurement is a key determinant in one-stop integration at the structural level. The cross-team function between partner and client by spent under contract and inventory accuracy is determinant to SKU (Darr 2019).

The mobility of firms working in internal e-procurement through web-based requisition by catalog management will update and provide guidance exclusively to buyers and suppliers via an interface. The supplier contract and transparency are maintained under procurement transaction management. This will create exploration through the virtual dashboard for client rejection and pricing concerns. The elimination of repetitive processes, and enhance secure payment will help in executing automated payments through the automated process.

Procurement- The process is quantified under the information through ERP and stock reconciliation system. The operations of logistics for front line delivery and secure relations through an encrypted interface cycle is maintained.

Buying – Woolworths work with supplier for delivery of product quality at affordable price

Planning- The team plans the number of products by estimating sales. The store stock is planned through requirements

Allocation and distribution- The distribution centers receive products from suppliers and distribute the product to stores. Quality control measures for cold chain and transportation is maintained.

Cost-saving can be captured in the medium term by combining procurement through cost-saving by adjusting volumes through performance tracking. It is using requirement analysis to order stock that may be further reduced by supplier price variance analysis. Woolworths ensure business internal strategy and ethical trade with monitoring work in business partner value. It works directly for reducing social, animal welfare, and impact on the environment with the supply chain.

Woolworth’s e-procurement

The auto stock option through an inventory replenishment system for stores aims to ensure stock availability with electronic re-order to minimize the lead time.

Woolworth’s Procurement Process

The sourcing strategy can be improved through the size and complexity of in-house expertise. The non-critical product can be outsourced where the company will be buying the product less or the resource are available in the house. The outsourcing can be done in the non-food component for establishing quality products for customer delight. Partnering with credible sustainability standards will increase sustainable farming practice and ethical working conditions for better pricing. Woolworth’s sourcing is done through local and global supply chains. Woolworths use a risk-based approach to due diligence for sustainability (Woolworths 2020).

The enhancement of Predictive Transactional Procurement will help the company in monitoring supplier risk in real-time to mitigate risk. This will help in the visualization of third party risk and supplier audits by the collaborative network. The use of advanced Optical Character Recognition will rapidly compile payment terms, a pricing table that usually takes days or weeks can be done in real-time (Mckinsey and Company 2015). Woolworths with the applicability of these solutions can improve by plug gaps.

  • The use of e-procurement at Woolworths-
  • The use of EDI has a significant impact on quality management and reduced turnaround time due to direct delivery (EY 2015). The robust culture set up is boosted for inclusion in product assembling and purchase to pay due to e-processing.
  • To ensure smooth supply chain network and inclusion of KPI in contract management and early intervention to resolve issues, the Woolworths follows:
    1. Mutual recognition by risk-based supplier segmentation and training capacity is followed by the firm. Macro environment risks such as globalization increase the incidence of labor availability. Advanced supply chain modeling and will help in quantify risk due to disruption in environmental change. The increase in raw material price, a trade war can be avoided through pre-defined contract and contingency plans for supply chain resilience. Strategic sourcing yields better cost benchmarking by reducing the purchase cost
  • Evaluation of outbound logistics-
  • Supplier risk has the potential to disrupt operations, Woolworth can use scenario planning to ensure stock storage and contract management to minimize the influence of supplier risk.
  • Buy-side solution for procurement -The buy-side procurement solution can be used centrally and with internal authorization and process, the turnaround time can be reduced.
  • Shift to contract-based sourcing- The technological advancement will create dynamic business requirements. Contract centric sourcing will power AI use to introduce contracts at their beginning of sourcing for contract compliance by the third party by vendors for commercial capabilities. The contract centric sourcing will be enabled through technology. The digitization of the contract will create online collaboration for vendors and buyers to work across for approvals for quick submissions.

E-Procurement Strengthening

E-procurement will automate and strengthen the inventory process and improve the supply cycle. The form can minimize its overall cost through the quality management process in e-procurement. The system is maintained for ERP planning done by buying records and contract at a single interface. The order requirement and fulfillment center are separate at Woolworths. The real-time planning process can be moved through category management for broader management and supply chain processes. The reinforcement matrix through Electronic Maintenance Repair Overall (EMRO) will reduce assembling and sourcing time (Khan 2019). The digitalization process for a web-based planning system is for customer-centric and buyer solution-based. The cost benchmark will help in comparing the unit. This will enhance visibility across the globe through web-based algorithms. 

The e-market site creation can be an extension for vendor management and workflow for line functioning for quick actions by inbuilt estimates for relative benchmarks (Andhov 2019). The structure for procurement is followed through provisions of law as per the Australian standard. The implementation of an adequate system will enhance business continuity and heterogeneous structure for a coordinated system. The arrangement of the business standard will create standardization for agility and business improvement with all stakeholders.

The Future Move

The new technologies reflect the need for Woolworths online expansion part from store base supply. Data communication and value chain network will create benefits for all operations of the company. Outbound logistics are the activities that are included in the delivery of the product. It can use the predictive data for competitive advantage as per purchasing patterns for sourcing. This measure by ERP solution will integrate buyers and suppliers in the virtual contract.

The global business scenario is dynamic that may affect the commodity pricing and unsettling impact on the labor force for business pricing due to input cost and fixed-term contract arrangement. The green business value chain has shown growth. Enabling touchpoints for assisting requisition as per compliance for digital assets to direct order system. Strategic sourcing is key to bottleneck products. The high-level product can be supplied for the cots improvement through local sourcing strategy. The company has its presence in Australia the technology and availability of suppliers are highly concentrated in the area. The total cost of ownership is assessed through the prime market and Woolworths presence in the grocery business with a high stake. The local partnership with Australia first will give it an advantage over other market players. 

Conclusion on Woolworths Procurement Strategy

From the above discussion and explanation, it can be concluded that procurement operations have a positive impact on business decision making and operational efficiency. Procurement stage through e-procurement for cross-functional integration, it will lead to growth in business competitive strength. The category management through centralized procurement can be used with a contract-based approach for supplier risk minimization by Woolworths. The green business growth has paved the way for sustainable procurement with supplier-partner relationship. The procurement solution can be used for Woolworths centrally with internal authorization and process turnaround for time efficiency and re-order accurately.

Reference List for Woolworths Procurement Strategy

Andhov, M., Caranta, R., and Weisbrock, A. 2019. Cost and EU public procurement law: Life cycle costing for sustainability. Springer publication

Darr, W.2019. Advanced issues of procurement management. Tredition publishing 

2015. Infinite possibilities: Procurement in 2025. [Online]. Available from https://www.ey.com/Publication/vwLUAssets/EY-infinite-possibilities-procurement-in-2025/$FILE/EY-infinite-possibilities-procurement-in-2025.pdf. [Accessed on July 9th, 2020]

Khan, N. 2019. Public procurement fundamentals: Lessons from and off the field. Emerald publishing 

Mckinsey and Company.2015. Creating value through procurement sourcing. [Online]. Available from https://www.mckinsey.com/business-functions/operations/our-insights/creating-value-through-procurement-outsourcing. [Accessed on July 9th, 2020]

Woolworths. 2020. Responsible sourcing policy. Available from https://www.woolworthsgroup.com.au/icms_docs/189697_responsible-sourcing-policy.pdf [Accessed on July 9th, 2020] 

Woolworths. 2020. About Woolworths Group. [Online]. Available from https://www.woolworthsgroup.com.au/page/about-us. [Accessed on July 9th, 2020].

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