1.

Introduction
Woolworths is the largest supermarket chain in Australia offering a wide range of products
including mainly groceries but is not limited to household equipments, devices, and seasonal
goods. The supermarket chain’s competitive advantages are gained from lower pricing due to
low costs. Moreover, in order to attract the consumers to its retail stores, Woolworths attempts
to bring fresh groceries. That is the reason why Woolworths is switching from selling in volume
or variety to empowering the supplier’s logistics management. The company has established
strategically placed distribution centres that allows for the delivery of products to the stores
fast and smoothly. This report, therefore, aims to develop understanding of Woolworth’s
supply chain development as a success factor of its large market share in Australian
supermarkets.

2. Brief history of Woolworths

Woolworths, as known as "Woolies", was founded in 1924 and is owned by Woolworths Group.
The second store was opened three years later in 1927 while the first store in New Zealand was
opened in 1929. In 1940, with the opening of Hobart, Wooworths reached every state in
Australia. These are the major milestones in the formation of the largest supermarket chain
taking up nearly 80% of Australian market share. As of 2019, the organization had 43 metros
convince stores and 981 supermarkets in different Australia regions.

When Woolworths was first opened, it sold a variety of goods at a low price with money
guarantees. As the business expanded to more locations with the development of logistics, the
chain focused more on the fresh grocery range. Woolworths also strove to adapt innovation
into its stores. The receipt printing cash machines in 1926 were the first to be installed in a
variety store. In 1955, the first self-service in Australia was introduced at the Sydney store.

3. Scope of operations
Woolworths specialises in groceries such as vegetables, fruit, meat, as well as packaged foods.
It also sells magazines, DVDs, health and beauty products, household products, pet and baby
supplies, and stationery.

Woolworths has grown considerably large in terms of scale and scope along with vastness of
overall operations. The organization operates across 1024 stores in Australia and relies on more
than 115,000 team members who support different business operations in distribution centers,
support offices, and stores. In 2019, the organization had 43 metros convince stores and 981
supermarkets in different Australia regions.
Further, the organization has obtained potential control over a large number of stores that are
located in two different countries – Australia and New Zealand. Woolworths Supermarket
operates within the same domain between both countries and has grown significantly large in
the context of overall operations (Woolworths Group, 2019). Thus, the organization operates
internationally and has obtained a considerable fraction of the marketspace.

For managing large scale of operations, the organization has a well-established Board of
Directors, Group Executive Committee, and Board Committee that looks forward towards
seamless management of various key operations in a coordinated manner. Necessary policies,
procedures, and operating standards are set up by various board members which are then
communicated forward to be adhered to by all team members. Operations of the company and
the value chain that the operations are guided towards can be studied here deeply

4. Woolworth’s supply chain, logistical and operational activities

In July of 2012 analyst firm Gartner, rated Woolworths as one of the top 15supply chains in Asia
Pacific with rival Coles unable to gain enough votes.Woolworths was ranked 6th in the top ten
best by Gartner (Ferrari 2014). Woolworths is likely to adopt direct supply chain since it
will minimize cost and maintain its own control over supply chain. Woolworths connects
vendor and stores through distribution centre. Moreover Woolworths has been managing
Direct Store Delivery (DSD). DSD enables vendor to deliver products directly from
vendor’s warehouses to Woolworths’ stores. Woolworths supply chain system through
distribution centre and DSD can be seen in Figure 1.
 Figure 1. Woolworths Supply Chain System (Source : Woolworths, 2003:7)

Woolworths is mainly running its own logistics services to handle both primary transport
services to deliver stocks from vendor to nearest RDC/NDC and secondary transport
services to deliver stocks from RDC to stores.. By independently controlling its own logistics,
Woolworths is able to manage delivery time and improve safety. Moreover it will consequently
minimize delivery cost and give more bargaining power to reduce cost of inventory.

For supporting its redesigned supply chain system, Woolworths has applied integrated IT
system that is based on Electronic Data Interchange (EDI) model. Woolworths (2006)
acknowledges that “The technology and systems are critical in achieving synergies in any
supply chain transformation”. Having succeeded in passing those critical steps, Woolworths
expects to gain cost savings. IT system can be used to accomplish synergies by sharing useful
information, knowledge and experiences between customer, company, and suppliers. IT
applications in Woolworths supply chain are implemented for Vendor, Distribution Centre, and
Stores.

5. Activities to develop sustainable supply chain

In line with the implementation of project refresh, Woolworths has reduced and merged its
distribution centre from 31 to 9 regional distribution centre (RDC) and manage 2 national
distribution centre (NDC). This is one of Woolworths Project Refresh strategy to redesign its
organization to be more effective and efficient since more distribution centre might cause
excess capacity that lead to excess cost. RDCs are located across Australia such as Perth,
Adelaide, Wyong, Wodonga, Townsville, and Brisbane. Two NDCs are located in Mulgrave
(Victoria) and Yennora (New South Wales) (Woolworths, 2006). The decision to run two NDC in
Victoria and New South Wales is Woolworths’ strategic decision to minimize freight cost
from supplier to distribution centre since 80% of products are produced in Eastern Australia
(Woolworths, 2003). The reduction of distribution number centre will cut warehousing cost
such as site lease cost and stock handling cost. Moreover, it will also reduce the cost of
inbound freight.

Every Day Low Prices (EDLP) is the pricing strategy that is adopted from Wal Mart and BIG W.
Woolworths is creating cooperation with vendors to reduce supply chain cost to be able
to maintain low steady price. Woolworths argues that EDLP is to “smooth demand pattern” in
order to make supply chain more efficient (Woolworths, 2003). EDLP will provide useful
information for optimum inventory replenishment

“AutoStockR” (ASR) is computerized inventory replenishment system for stores. It is aimed

to ensure whether the right products in the optimum amount are displayed in shelf. ASR will
prevent excessive amount of products in the shelf. Electronic re-order will minimize order
lead time between stores and RDC/NDC. For products that are directly delivered by vendors,
electronic direct store delivery (eDSD) is utilized to connect stores inventory
replenishment system with supplier. Moreover, eDSD will cut freight cost to and from
RDC/NDC. • “StockSmart” is computerized inventory replenishment and forecasting system
for distribution centre (RDC and NDC) that is connected to stores ASR system.

6. Collaboration
The collaboration of Woolworths and Walmart is among the successful cases in the
supermarket industry. The success of building the collaboration in terms of supply chain is
described through the observation and analyses on the journey undertaken by both Walmart
US, and Woolworths Australia. This is said to have enabled the retailers to achieve greater
organizational performance through driving common objectives in partnership with their supply
network. For examples there some empirical successes as achieved by Woolworths such as
saving of approximately AUD$75M within the first two years of project commencement,
reduction in lead time of getting point-of-sale information from two weeks to every Monday
morning for the previous week, integration of information technology into supply chain
management, and improvement in sales by AUD$7 billion. It can be generalized that through
the sharing of knowledge, resources, information, profits and risks, the companies are able to
position themselves in an advantageous spot, where operational efficiencies and financial cost
savings are paramount.
 References
Ferrari, B (2014) Gartner Announces Top Ten Best Supply Chains in Asia PacificRegion,
http://www.theferrarigroup.com/supply-chain-matters/2014/09/08/gartner-
announces-top-ten-best-supply-chains-in-asia-pacific-region/
Kumar, S (2008) A study of the supermarket industry and its growing logisticscapabilities,
International Journal of Retail & Distribution Management, Vol. 36 No.3, Emerald Group
Publishing Limited
Lee, H (2004) The Triple-A Supply Chain, Harvard Business Review, HBR OnPoint8096, 102-112
Woolworths. (2003). Supply Chain: Day in the Marketplace. 1 Mei: 1-34.
Woolworths. (2006). Annual Report.
http://library.corporate-ir.net/library/14/144/144044/items/236944/AR2006.pdf
Woolworths. (2007). Annual Report.
http://library.corporate-ir.net/library/14/144/144044/items/268152/
wol137+ar07_fa_r.pdf