Many international businesses are undergoing a period of rapid transformations, the trends towards globalization, integrated logistics as well as development of communication technologies is continually reshaping the world trading patterns and physical trade flows (Bailey & Rabinovich, 2005). The restriction taking place in the global scene has resulted in changes which are evident in economic growth, resource allocation and provision of more freedom of choice for many consumers. To remain effective, many organizations across the world are organizing strategic worldwide networks that provide effective response to the demands that emanate from different segments of the world (Bernardes, 2010).
The effective organization of global trade is often characterized by global logistics as well as the supply chain management; these two aspects are intertwined and dominate as core global competitive elements (Bowersox, Closs, & Cooper, 2012). The global logistics are perceived as circulatory systems which help companies to correspond to global values. The trends towards the aspects of globalization and logistics have altered the nature of culture and operations in many companies; the strategic advantage of logistics is being felt in the areas of improved coordination and planning (Carter & Rogers, 2008). This paper will analyze how logistic changes can impact an enterprise with a special focus on Woolworths.
An overview of Woolworths
To effectively understand how changes in logistics can impact Woolworth, it is significant to carry out an assessment of the company in terms of its current supply chain management. Woolworths is the largest retail store in Australia. The giant organization also tops in the list of the world largest retail stores, Woolworth operates in more than 400 stores across the world. The company deals with various items which include food, home ware, beauty and financial services. The logistics integration center of the organization is responsible for housing advanced planning capabilities which are required to integrate the supply chain, support reporting as well as provision of granular visibility of operations (Woolworth, 2015).
Woolworths uses forecasting as well as allocation processes to take products to their retail stores, the main issue that affects the organization’s supply chain is the lack of efficient communication from management of other functions in the supply chain; this implies that it is possible for future deliveries at the company to be delayed. Woolworth’s stores do not have any influence as to the forecasting of inventory that they get. A majority of retail supermarkets, including Woolworth, are overwhelmed by a variety of products that are in their receiving areas (Woolworth, 2015).
Global Business logistics
The aspect of the supply chain management within globalization discourses has been actively investigated as a result of the challenges that are brought by the organizational setting as well as global freight flows (Bailey & Rabinovich, 2005). All aspects of supply chain management, from design of products; sourcing of parts; assembly as well as distribution are impacted by processes of outsourcing and global division of production (Carter & Rogers, 2008). Woolworths has been impacted in many ways, its logistics systems have experienced many changes that are not static and will continue to be observed in the coming days and years (Bernardes, 2010). The extensive and sophisticated supply chains have well planned outcomes; however, several adjustments are still being observed in many organizations including Woolworth which is currently experiencing adjustments in the structures of material flows. The aspect of global distribution space together with the concept of distance will continue to expand through the concept of logistics changing the need flow management through various components (Bowersox, Closs& Cooper, 2012).
In the next few years, warehousing at Woolworths will experience major transformations as a result of new technologies and new ways of thinking that will accommodate space and workflow (Coyle, Novack, Gibson, & Bardi, 2010). In today’s business world, many organizations face numerous challenges in regards to warehousing; the challenges are experienced even as larger facilities continue to be created (Daugherty, Ellinger& Gustin, 2012). The rapid growth of the web based technologies; social networking alongside mobile platforms, have created fundamental shifts in the way that business gets done at Woolworths. This growth will bring more revolutionary changes in how Woolworth connects to the customer’s experience and how it reacts to the market demands (Dicken, 2011).
In future, Woolworths will invest in technologies that increase the inventory returns. These technologies will help the organisation to face changes that will be prevalent in warehousing (Coyle, Novack, Gibson& Bardi, 2010). Woolworth will be required to use more resources in the implementation of different technological strategies. Today, many warehouses are experiencing the introduction of more regulations for accurate product tracing and tracking, warehouses are also getting closer to the customer (Hesse & J, 2004). In respect to the above aspects Woolworth will be required to become more efficient in order to meet the needs of the customer (Dicken, 2011).
In the future, many warehouses will be converted from distribution centres to assets for purposes of competitive differentiations (Coyle, Novack, Gibson& Bardi, 2010). The warehouse will no longer act as a cost centre where the operational focus is the determination as well as fixing of inaccuracies and inefficiencies. Warehouses will transition to become powerful assets that will create profits for the business through the improvement of outbound, inbound as well as storage material handling (Carter & Rogers, 2008).
Woolworth’s warehouse will consolidate and integrate the warehouse management systems which are complimented by yard management systems, enterprise resource planning and the transportation management system (Carter & Rogers, 2008). The linkage of these systems will remove the inefficient information at Woolworth supply chain management and promote recognition and promotion in the entire process. The anticipation as well as the issues across the board will help with facilitation of productivity and efficiency; this will help in the creation of a more agile and synchronized supply chain (Daugherty, Ellinger& Gustin, 2012).
With so many technologies being used, it is plausible that new technologies will be introduced in the warehouse, the RFID technology is the newest to be introduced. RFID are now moving from the retail application to the warehousing applications (Bowersox, Closs& Cooper, 2012). RFID will be utilized by Woolworth for the common distribution centres, inventory management and warehouse operations, which include way picking, receiving and shipping activities (Swink, Melnylk, Cooper, & Hartley, 2014). The use of wearable technologies is becoming common, wearable technologies use voice to allow workers to communicate with one another. It is probable that Woolworths will utilize these technologies to receive instruction by voice and confirm their actions back to the warehouse management systems (Bowersox, Closs& Cooper, 2012).
Since automation will play a major role in the warehouse of the futures, many processes in the warehouse will be mechanized (Sum & C B Teo, 2008). For this reason, it will be important for Woolworths to standardize its warehouse components, as the orders that will be taken to warehouses will grow immensely though the number of lines and items in each order will be small. Accurate methods for the purpose of order picking and dispatch will be needed. Woolworths will have to create value adding services, for example, gift wraps (Bailey & Rabinovich, 2005).
The global supply chain is advocating for sustainability in its operations due to the high demands in the global market. The future warehouse will have sustainability in mind as evidenced by the growing need to conform to best practises (Bowersox, Closs& Cooper, 2012). To be able to abide by the changes brought by sustainability, warehouses at Woolworths will be fully operational and may be fitted with solar panels and yards that will be characterised by wind turbines (Petit, Fiksel, & Croxton, 2010). The main aim for the generation of energy in the warehouse is to create energy for the purpose of operating the warehouse and charging electric vehicles, which will be making deliveries. All equipment in warehouses will be regenerative; operations will get many advantages from different operations (Bailey & Rabinovich, 2005).
Associated information management
The information technology in the supply chain has made it possible for organizations to gather, store and analyze unprecedented amounts of data (Daugherty, Ellinger, & Gustin, 2012). Information technology facilitates planning at all the levels through the data analysis and sharing, a process that enables planning to take place at the strategic, tactical and operational levels. Changes in information management will affect Woolworths significantly (Coyle, Novack, Gibson& Bardi, 2010).
a. The impact of the continuing IT revolution
With the rapid development of the IT infrastructure, Woolworths will develop a special relationship with the internet due to its online commercial services and e-commerce capabilities (Cousins, 2005). The internet will become a medium from which Woolworths will be able to trade, make contracts, exchange data and information, discuss different designs and locate useful components for use in the supply chain management (Hull, 2005).
IT factors will enable Woolworths to link their individual elements and combine them into a single system by using advanced strategies (Coyle, Novack, Gibson& Bardi, 2010). Through the intelligent transport systems, Woolworths will integrate various technologies and institution functions to help the company realize efficient, safe as well as environmental friendly transport systems, the systems will offer the retail store a chance to improve the efficiency of the use of transportation system by generating additional capacities from the existing physical infrastructures (Dablanc, 2009).
Woolworths still uses the traditional design approach for the transport infrastructure; this has made it difficult for the company to take the dynamic changes that are associated with logistics. In order to overcome this inherent gap, it will be important for the company to control its logistics operations (Daugherty, Ellinger& Gustin, 2012). The control of logistic operations will enable the company to realize certain benefits, for example, the use of innovative information like the global positioning systems, the electronic data interchange and electronic commerce. The presence of the high performance information infrastructure will dictate the logistics competence in the organization, the complex and sophisticated information infrastructures will help to induce the interactive processes in the logistics activities of the company (Dicken, 2011).
It is evident that the markets of the fast moving consumer goods with short product life cycles are creating many implications in the way that the companies are organized and function (Fisher, 2011). Many changes are taking place from the traditional mass production with the aim of counteracting uncertainties of the demand fluctuations to the markets of the high variability and the efficient customer response (Bowersox, Closs& Cooper, 2012). The field of supply chain management has achieved a critical point where the wide implementation of the sustainable business to business purchasing is set to become a dominant approach in the company strategies and tactics (Bowersox, Closs& Cooper, 2012).
The paradigm shifts that are being observed in the supply chain management towards a sustainable sourcing initiative will result in a consequent change of the business behaviour in regards to the purchasing strategies as well as the relationship with the different suppliers at Woolworths Company (Dicken, 2011). In the future, it will be evident that the supply chain management will take an additional strategic task, which will extend beyond the current operational scope of the activities (Pagell & Wu, 2009). In order to effectively respond to the changes and remain competitive, it will be important for the supply chain managers at Woolworths to identify and understand the new sustainability issues in their company and the business environment. Woolworths will have to hire supply chain managers who are highly skilled in networking (Daugherty, Ellinger& Gustin, 2012).
New sustainability initiatives as well as projects along supply chains will have a big impact on several operations, within Woolworth (Bowersox, Closs& Cooper, 2012). The changes experienced will result in additional complexities and inter-company tradeoffs especially as a result of the knowledge that is dispersed along the supply chains. Woolworths will have to train its personnel and develop tools and instruments for their day-to-day activities (Coyle, Novack, Gibson& Bardi, 2010). The effectiveness of the training process can be enhanced by using an incentive system. The incentive behind the sustainability factors can be in the form of money. Woolworths will need to push for research and development activities in regards to sustainability; this will involve a focus on the broader challenge and perceive environmental issues as providing opportunities for the purpose of cost reduction in the supply chain (Dablanc, 2009).
Woolworths will be required to put a very strong emphasis on sustainability in the executive and the senior management levels; this is because sustainability values are mostly passed from the top management down to the employees of the organization (Cousins, 2005). There is need for Woolworths to merge its sustainability with general company image. This can be through the adoption of a solid, sustainability culture, creation of sustainability knowledge as well as implementation of practical tools (Lee, 2004). The training and education in the organization will play a key role in the establishment of a value system and the incorporation of concrete competencies, actions as well as instruments (Bowersox, Closs& Cooper, 2012).
The activity of transportation motivates the efficiency of moving products (Shefi, 2010). The progress in techniques and management principle improves moving loads, delivery efficiency, service standard, costs, use of facilities and energy saving. Transportation occupies a significant position in manipulation of logistics (Bowersox, Closs& Cooper, 2012). Transportation process is dramatically affected by introduction as well as utilization of new technologies. The transformations in transport systems have impacted transport logistics at Woolworths immensely (Bernardes, 2010).
The main objective of transportation logistics is to compress time in the whole supply chain. This will involve not only the reduction of time in shipments from the supply of the raw materials, but also the distribution of the final products, shipments are now time dependent (Bailey & Rabinovich, 2005). Companies are able to gain value from the reduction of stock and by keeping units from being able to respond to the changes in the market. The information technology has motivated the logistics revolution by linking the shipper and the customer using information flows plus analysis. Logistics is significant because it reduces, overstocking, eliminate the costly shipment challenges and delays in delivery (Carter & Rogers, 2008).
The new development in the vehicle and handling technology will significantly reduce the operating costs of different modes of transport for Woolworths; it will bring a change in the pattern of the traffic flows (Fisher, 2011). The information on the transport orders and shipments will be made available at an early stage, which means that the transit times of the transport operations will be better managed. Therefore, creating new transport opportunities, including the intermodal transport that were not feasible before (Bowersox, Closs& Cooper, 2012).
Due to the changes being observed in the transport systems, it is important for Woolworths to increase its contribution as well as critical importance (Bowersox, Closs& Cooper, 2012). The diversity of systems will enable Woolworths not to limit transportation to movement of goods only. In the future, logistics will add more value in both pre-production and the post production stages-which are termed as inbound and outbound logistics. For this reason, Woolworths will harmonize its supply chains with the production needs so that the cost minimization in the procurement and the inventory management can be achieved (Bailey & Rabinovich, 2005).
Logistics to intermodal transport
Logistics is likely to impact the future developments of intermodal transport; this will present benefits as well as obstacles. The service needs will change to challenges and put more weight on the concept of intermodal transportation (Daugherty, Ellinger& Gustin, 2012). There will be stricter servicing requirements and an increasing number of small consignments. The increasing volumes of freight flows, which are transported over a long distance with better planning and use of ICT services will result in increased alignment of consignments as well as improvements in relative competitiveness of intermodal options. To be able to comply with the strict service demands, it will be important for Woolworths to use sophisticated logistics concepts, which will be implemented by advanced information systems (Coyle, Novack, Gibson& Bardi, 2010).
The changes in the intermodal transportation will impact Woolworths in many ways. One of the ways in which it will impact the organization is the fact that it will lower the cost of transportation (Bailey & Rabinovich, 2005). The shortage of the long haul truck drivers plus the introduction of rules and safety regulations will make it hard to find truck drivers who can pick loads at specific times. The improvement of intermodal transportation will offer another option that can be used by Woolworths to transport goods. With the intermodal transportation, it will be possible for the company to handle more goods than before (Bowersox, Closs& Cooper, 2012).
The logistic costs always consider the full array of the costs to create products that are available to the consumers, namely the transport warehousing and transhipments (Bernardes, 2010). With the growing need to lower the logistics costs, many changes will be experienced at Woolworths. It is evident that the supply chain manager will be highly sensitive to the stability of the cost structure in the company. The routes that have cost fluctuations are likely to be discarded in the future in favour to the routes of a higher costs, but that have less volatility (Carter & Rogers, 2008). Woolworths will seek the cheapest routing option, as the cost structure remains stable. Woolworths is unlikely to modify its supply chain if the cost advantage is only temporary. The aspect of cost can be said to be relative because its significance is in relation to the value of the cargo that is being carried. The aspect of cost consideration tends to concern more containerized goods that have a low value, for example papers, than the high value goods (Coyle, Novack, Gibson& Bardi, 2010).
The transformation of market structures has impacted designs of supply chains. With the immense changes that are being experienced, many organizations, for example, Woolworths want responsive supply chains that have the ability to react more quickly to the changes in the supply chain. Changes in the market have created sustainable and environmentally conscious supply chains. Woolworths is a leading retail store in Australia as well as the world. The company has experienced many changes that have been motivated by logistical changes in transport, warehouse and information management. The changes in logistics will impact the organization in many ways, for example, increase efficiency of the organization, drive profitable growth and eliminate some of the challenges in the supply chain management. In regards to warehousing, Woolworths will need to invest in technologies that increase the inventory returns if it is to efficiently face the changes that will be observed in warehousing. The organization will be required to invest more in technologies that involve receiving, picking as well as shipping. In transportation, new development in the vehicle, as well as handling technology, will significantly reduce operating costs of different types of transport for Woolworths. It will result in changes in the patterns of traffic flows. The information on the transport orders and shipments will be made available at an early stage, which means that the transit times of the transport operations will be better managed. This will create new transport opportunities including the intermodal transport that was not feasible before. In the future, it is likely that ICT will motivate the growth of the smart technologies, a factor that will enable Woolworths to link their individual elements and combine them into a single system by using advanced information technologies.
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