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Question: Discuss About The Journal Advanced Manufacturing Technology? Answer: Introduction Woolworths Limited is a major Australian organization with broad retail enthusiasm all through Australia and New Zealand. It is the second largest organization in Australia by income, after Perth based retail-engaged combination Wesfarmers Ltd. Furthermore, Woolworths Limited is the biggest takeaway alcohol retailer in Australia. Woolworths Limited was established in September 1924, initially under the name "Woolworths Bazaar Ltd.", a play on the globally famous F. W. Woolworth name. In the wake of finding the name had not been enlisted in Australia, and Woolworths had no plans for abroad extension, the organization progressed toward becoming "Woolworths Limited" on 22 September 1924. Following the organization's first "Bargain Basement" opening in the Imperial Arcade, on Sydney's Pitt Street, there was little enthusiasm for investors to quicken the brand's development. Be that as it may, as exchanging proceeded and investors brought more capital, the profits paid by the organization expanded from 5% to half after its third year of operation(Woolworthsgroup.com.au, 2017). Woolworths has ended year 2016 with $1.6 million loss, however in 2017, the organisation has shown a rapid development with $2.6 million profit before interest and tax(see Appendix A). With its 992 stores operating currently, Woolworths Supermarkets serve over 29 million customers across their brands every week, with more than 200,000 team members employed(Woolworthsgroup.com.au, 2017) Operations and Logistics Analysis Inventory Management at Woolworths supermarkets is currently achieved through an online system which is complemented by Radio Frequency Identification (RFID) guns to monitor stock counts and ensure the correct load is received and ordered. The inventory system automatically orders the load after approval by the duty manager based on sales and inventory data from previous day (see appendix C Load Forecasting) . Incorrect inventory data results in the incorrect load being ordered. This then leads to excess stock which is a contributor to holdings costs and order costs. The core problem in this system is the room for error which is determined by multiple factors. The grocery load among with other items such as seafood and meat is delivered to the store everyday. Each time a load is delivered a member of staff must receive the load which is done by entering the load serial number into an RFID gun and submitting this into the system. The load is then recognised by the system and the items received will be added to stock counts. After these items are filled by staff the left-overs or overs are tagged by the RFID gun and put into Long Term Overs (LTO). These items are then filled the next day whilst staff utilise the RFID guns by modifying the counts and changing stock locations. The current system harbours too much room for error (see appendix B Load Data).One element of the internal system affects another meaning the system as a whole is interdependent on its sub elements (Senge,1990) The issues in the inventory system include: Incorrect stock counts which lead to incorrect items in the next load. Stock location not synonymous with RFID location. This means either the previous load was not received correctly or the item was scanned into the wrong cage. This results again in the next load being incorrect. RFID count of Stock on Hand (SOH) not the same as actual stock on hand. Gap Scan: refers to scanning the gaps on the shelves where stock has been completely bought. The gap scan is performed every day to ensure the inventory system orders correct items; Gap scan completed incorrectly leads to minimal or excess stock, stock out or inventory block. Large quantity order- An example would be an individual buys 10 cans of dog food with multiple flavours, to save time the cashier only scans one can ten times. The result being the count is now wrong meaning the next load will then be wrong. Cost Benefit Analysis Solution/ Cost Benefit ABC Classification software system update Products further categorised by priority to account for demand Weekly Periodic system checks Common periodic inventory counts will contribute to the minimisation of incorrect stock Working closer with supply chain Reduced lead time for items in transit. Reduced chance of stock out. Increased logistical awareness. RFID holds information on product popularity, shelf life and product arrival date. Staff gain deeper product knowledge which contributes to customer satisfaction. Proper utilization of the LTO system Using weekly periodic counts along with ABC classification system will reduce LTO item count Specialised managerial and staff training on RFID Managers and staff have in depth RFID knowledge which will then minimise human error. Competitive Rivalry Within the Australian grocery industry there are various organisations such as Woolworths, Coles, IGA and Aldi who strive and compete within the intense industry to limit the amount of market share that other supermarkets acquire (Majumder, 2012). The intense rivalry that these competitors produce within the market force Woolworths to continually shape their strategy and value proposition to become more efficient and effective as an organization, by differentiating themselves from their competition, Woolworths will continue to develop as an organization to improve into the future (24sevenwritters, 2013). The Australian supermarket industry is currently controlled by Woolworths and Coles who remain the two dominant retailers holding a combined market share of 71%. Power of Suppliers The power that the suppliers of Woolworths have is seen as low, due to the fact that there is a large amount of products within Australia and New Zealand market who wish to enter the industry by gaining exposure and increasing their sales through a partnership with Woolworths. Therefore the dependence that Woolworths have over majority of their suppliers and their prices are low as there are a large amount of alternatives that could replace a greedy supplier to be apart of the largest supermarket in Australia (24sevenwritters, 2013). Power of Buyers Alternatively, the buyer power that the customers have over Woolworths is seen as extremely high due to the fact that Woolworths strives to give their consumers the best possible price to maintain their market share. Furthermore, if Woolworths decide to raise their prices they will lose customers to competitor supermarkets, which is the worst-case scenario. Therefore, Woolworths strive to keep the customers happy with the best possible prices to gain the most market share and sales within the industry (Majumder, 2012). Threat of Substitution Within the supermarket industry there are various alternatives for consumers to purchase their products. These include convenience stores, non supermarket affiliated petrol stations, pharmacies, fresh food markets and other competitor supermarket chains. Customers are willing to pay higher prices for the same products found in supermarkets, if it is seen as more convenient. This means convenience stores within a close vicinity that has no lines and easier parking. Therefore, the amount of substitutes in the supermarket industry is seen and moderately high as there is opportunity for some profit even though there is not a lot of market share to maintain (Majumder, 2012). Threat of new Entrants The Australian supermarket industry is seen as an unattractive market to enter. This is due to the low prices offered in australian retail stores that seem to produce a low potential profit. With the market dominated by two main organisations the threat of new entrants is seen as low with various barriers of entry, which act as obstacles for new competitors who wish to enter the industry. Recommendations The main issue that has been addressed with Woolworths inventory system is the room for error across a multitude of areas, with each element having an impact on the next. The introduction of automated identification (Auto-ID) technology such as RFID has enabled electronic labelling and wireless identification of objects, which facilitates real-time product visibility and data. However, it also presents many challenges due to lack of standards and roadmaps to transform Auto-ID technologies into Auto-ID solutions (Mills-Harris et al. 2006). The following solutions can set the standard for Woolworths inventory system and improve its accuracy, to be able to serve their customers better and save money. Solution 1: RFID Count of Stock of Hand (SOH) Woolworths sell a large range of different consumer products in all of their supermarkets, with some of them having shorter shelf lives than others. Therefore, higher tracking is needed for these types of inventory to ensure the SOH is at the right level every time to meet demand, while also avoiding the stock expiring on the shelves. Implementing the ABC classification system allows inventory to be categorised according to a measure of importance, to allocate control efforts from most important to least important (Stevenson 2017). Categorising items such as meat and milk as high priority Category A items is necessary, as these items have a short shelf life and need to be closely monitored to meet demand, while still moving quick enough that the product does not expire before it is purchased, which becomes another cost factor (Mills-Harris et al. 2006). Ordering priority items in smaller, more frequent quantities (with lead time factored) will reduce the holding costs of the inventor y in the supermarkets, however it will increase ordering costs as the number of orders needed to satisfy customer demand will increase. On the other hand, reducing the level of stock on hand will reduce the chance of product expiring and ensure the product is fresh and new. The ABC classification system can also be used to classify items based on demand, as well as seasonal periods. Including this information in the inventory system can go a long way to help inventory managers decide on when to order products and how much to order each time. Solution 2: Physical Stock Count Woolworths utilise both a periodic system and perpetual inventory system for inventory counting. The perpetual inventory system gives inventory managers a fairly accurate idea of stock levels for products in real time, where they will make orders once the stock levels have dropped to a predetermined minimum level (Stevenson 2017). To make sure this system is as accurate as possible, the periodic system needs to be performed more frequently to identify discrepancies quicker and reduce how many occur. Frequency of inventory review has been found to negatively correlate with inventory record inaccuracy, as discrepancies are easier to spot when inventory reorders are being placed, or when inventory is being physically replenished (Barratt et al. 2010). Doing a physical count of stock more often will help keep stock levels in the perpetual inventory system in check, which will contribute to the correct ordering sizes and will save Woolworths a lot of money in holding and ordering costs. Solution 3: Large Quantity Order Another way to keep stock levels in check is to properly train inventory managers and staff using RFID guns in the supermarkets. For example, staff scanning purchases at the checkout could be entering multiple quantities of one type of flavour of a product, when the customer has a few different flavours. This then throws out the stock levels of each flavoured product, as each flavour has either been entered too much or not entered at all. Correctly training staff with RFID in the beginning and then frequently reminding them of the importance of correct entry of sales is important. These reminders can be exercised with posters at register stations, trolley challenges and discussed at monthly staff meetings and stock takes. Highlighting the importance of keeping stock levels accurate to staff will go a long way to help maintain accurate stock levels in the perpetual inventory system that Woolworths have in place. Conclusion A strategic analysis shows that Woolworth growth is supported by its commitment towards its customers, leading to expansion of its operation. The internal environment has impacted the potential growth of Woolworth by the adaption of strategies such as fair price policy strategy and continuous innovation strategy and it should also adapt a strategy of training skilled employees. Australian industries face external environment conditions such as changing social patterns; political conditions i.e. government influence, technology and adverse economic conditions which affect Woolworth Limited negatively. With respect to market mix, quality of retail industry is a key factor and Woolworth promotes its brand on quality basis References 24sevenwriters (2013). Strategic Management analysis of Woolworth Supermarket. [online] 24SevenWriters. Available at: https://lastfreelance.wordpress.com/2013/11/23/strategic- management-analysis-of-woolworth-supermarketupd/, viewed on 3 October 2017. Barratt, M, Rabinovich, E Annibal, C 2010, Inventory accuracy: Essential, but often overlooked, Supply Chain Management Review, 14(2), 36. Majumder, N. (2012). Woolworths Ltd - A Case Study Report | Strategic Management | Retail. [online] Scribd. Available at: https://www.scribd.com/doc/99563233/Woolworths-Ltd-A-Case-Study-Report viewed on 1 October. 2017. 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