Kmart supply chain analysis
Supply Chain Analysis of KMart
Kmart is a famous retail company in Australia that started operating in the year 1968 and is a subsidiary of Wesfarmers. The headquarter of the organisation is at Mulgrave, Melbourne and have its more than 200 stores in Australia as well as New Zealand to provide various retail goods to the customers. G.J Coles and Coy Limited firstly incorporated this store along with S.S. Kresge Company in America. The organisation was an individual and independent body till the year 2007 when the company incurred huge losses. In this year, Wesfarmers acquire the Kmart retailing business that also helped to increase the earnings of Wesfarmers. Now a day, the stores are known for their excellent supply chain system, which is a vital function of every business organisation.
This article elaborates the concept of supply chain analysis for Kmart, which is a famous retail organization in Australia. The supply chain model used by the organization is also elaborated, including other important information such as design and order administration, sourcing and manufacturing, suppliers of Kmart, retailing, distribution, merchandising etc. The main risks that can be faced in Kmart with supply chain are also elaborated in the article.
KMART supply chain model of KMART:
Supply chain management is the submission of all the activities performed by the business members to procure raw material form the suppliers to provide the final goods to the consumers. Thus, it involves all the steps of movement of material to the stores, then transferring to the manufacturing plants for production and then to the warehouses for distribution. Kmart has effective supply chain system and has also received “The storage and handling of material” award for its supply chain system in Australia by “Australian supply chain and logistics Awards” in the year 2013. This supply chain also helps the company to increase its productivity as well as sales with decreasing cost.
Design and Order Administration
Kmart used inclined supply chain management model under which there is direct sourcing of material that facilitated timely delivery and also cost savings. The organisation also have shipping consolidations where standardised shipping cartons are used for effective delivery of materials. The supply chain depends on two elements strategic sourcing and strategic logistics, which ensures the effective flow in deciding the sequencing, identifying, planning, and delivering products to final customers. The cost of the supply chain of the company constitutes 55-85 per cent of the sales. Further, under SCM, there is planning related to business procedures, cost life cycles and other such elements. There is a dedicated team of employees and a management team that contributes to the maintenance of the supply chain. Thus, the success of Kmart wholly depends on its supply chain system that helps it to adjust in a complex and dynamic environment.
Sourcing and Manufacturing:
The company have “enterprise resource planning system” under which it takes all the decisions related to the supply chain. Under this system, the organisation have tight control over the merchant choice, ethical actions and export licensing etc. for supplying material.
Suppliers of Kmart
There are more than one thousand suppliers of the business which supply various commodities to the company for its retail stores. Michael Fagan is the head of the sourcing department of Kmart Australia, who is responsible for maintaining the relationships with suppliers. The suppliers of the company include: IRIS fabric limited, Miami fashions, Zenith baby care company limited, Vietnam housewares limited, bismillah textiles limited, Yuyao Jiacheng electric appliances company limited etc. which supplies various products for retail stores of organisation. Further, there are many farmers over the countries who are suppliers of the company and provides fresh products to it.
The company distributes its products to customers through retail stores at various locations. There are more than 200 hundred stores at multiple locations that help to provide various retail goods. Further, the company also have shipment consolidation that allows distributing its products to customers in other countries.
Retailing is the main business of organisation under which it provides various products such as confectionery items, sports products, toys, magazines, cosmetic products, clothing’s, photographic equipment, stationery products, footwear and other hardware as well as entertainment products to the customers.
Merchandising is the process followed by retail outlets in order to promote their products by presenting them at the stores. The merchandiser ensures that there is a certain amount of products present in the store or at the online platform so as to make timely delivery to the customers (Careerexplorer.com, 2019). They work closely with the purchasing department so that effective planning and forecasting of products will be done. In Kmart, the organisation efforts to provide a better shopping experience to the visitors at the store or online website. Kmart has hired merchandisers with significant experience in planning and solid knowledge base. In order to provide an attractive look to the store outlets, they are decorated with plants and pots. Further, the stores also attract customers through its concept of “buying cheap” for the customers (Satgunaseelan, 2017).
Further, it also has adopted the strategy of “discount store” where products at lower cost are provided to the customers. It has ELPD “everyday low pricing” under which the average sale price of products is $7.
In order to keep the inventory update, the organisations have lean methodology where it has active processes of picking up inventory, packing in cartons and shipping it to various stores. Talking about the store experience, there is clean up space, widened shelves. The employees are responsible for maintaining the lightening at the store and keeping it neat and clean. The given figure shows represent the store operations at the Kmart where the main functions are store management, inventory management, administration etc. There are various employees at different levels of stores that have the responsibility to carry on these operations. To illustrate, the cashier has the obligation to collect the cash and provide billing service to the customers. The HR manager is responsible for managing human resources at the store. Further, there are store auditors, planners and project managers who are responsible for various functions.
As the organisation provides most of the readymade products to the end consumers, it has contracts with many manufacturers. Under these retail contractors, Kmart is in agreement with the manufacturers to buy their goods for its retail stores and to provide them to end consumers. Further, Kmart has a contract with suppliers to offer products in an ethical manner. The company have Ethical Sourcing Program, under which there is moral code of conduct followed by the company so that it can fulfil the requirements of the suppliers and also get the sustainable products from them (Kmart.com.au, 2019). Further, it has also contracted with CSC for information technology outsourcing under a five-year contract and worth 36.4 million Australian dollars (Edwards, 2019).
Unethical Risk Management in supply chain
As supply chain management, a company has to execute and control various operation on a daily basis so that any kind of risk can be measured and mitigated.
4.1 Ethical sourcing under Kmart Supply Chain:
Kmart highlighted that it has a sustainable supply chain management system under which the company cares about the planet and lives on it (Kmart.com.au, 2019). It has been analysed that the company works under development programs where it has a partnership with suppliers to work together for achieving better outcomes for tomorrow. The company strive to minimise the environmental footprint so as to protect the planet. It also focused on using natural resources carefully with zero wastage under its circular economy.
Unethical activities in supply chain management:
It has been analysed that the standard pricing policy of the company is not ethical enough as it costs terribly to the producers in the third world countries such as Bangladesh and Pakistan. Australia is the major country that used more than 92 per cent outsources clothing to sell in the country. Kmart also outsources clothing products from Bangladesh, where the wages are remarkably lower than required to live a decent life. The lower rates of the company may affect the salaries to these exporters.
Tools for dishonest risk management in supply chain
In Kmart, the SCRM (supply chain resource management system) is responsible for applying various tools for risk measurement and controlling. Under this system, it has the following tools to manages the supply chain risk to the organisation:
There is up to date map to maintain the supplier relations where the suppliers are provided with professional insights so as to monitor any kind of risk and eliminate it. There is an online platform where all the data related to suppliers are collected, and points of failures are analysed.
Environmental risk solutions:
In Kmart, there is the use of virtual networking such as artificial intelligence and big data for forecasting the weather conditions and other real-time data or factors that may pose any kind of risk to the supply chain (Johnson, 2019).
It is the first company to have this tool under which there is an analysis of equipment usage decision. This technology ensures alignment with the structure so that there will be no unethical operation carried on by any party out of the scope of code of conducts of company.
Supply chain analysis is a crucial task for the managers as the efficient and ethical supply chains are the need of the hour for the business houses. Supply chain analysis requires managerial skills for drilling down the data and comparing and founding the gap. in the world of Robust CSR mechanisms, Managers need to ensure Ethical practices while sourcing materials and analysis like this need experts. We are Assignmenthelp4me, have a team of 5000+ experts ensuring high-quality assignment help services. As, Kmart is an Australian company and many times been selected by students for their assignments. thus students in Australia can go for the best assignment help in australiafor case studies like this. In Australia, our company has been trusted by more than 54000 students and we have delivered more than 600000 assignments as of this day. Owing to this we have been Australia most trusted assignment brand for the last 5 years.
- Kmart.com.au. (2019). Retrieved 31 December 2019, from https://www.kmart.com.au/ethical-sourcing
- Careerexplorer.com. (2019). What does a merchandiser do" - CareerExplorer. Retrieved 31 December 2019, from https://www.careerexplorer.com/careers/merchandiser/
- Satgunaseelan, A. (2017). How Kmart made ‘cheap’ fresh - Inside Retail. Retrieved 31 December 2019, from https://www.insideretail.com.au/news/how-kmart-made-cheap-cool-201703
- Edwards, K. (2019). Kmart Extends Outsourcing Contract with CSC. Retrieved 31 December 2019, from https://www.cio.com/article/2429659/kmart-extends-outsourcing-contract-with-csc.html
- Kmart.com.au. (2019). Retrieved 31 December 2019, from https://www.kmart.com.au/ethical-factories
- Johnson, K. (2019). 5 Essential Tools for Supply Chain Risk Management. Retrieved 31 December 2019, from https://www.bitsight.com/blog/5-essential-tools-for-supply-chain-risk-management
What is the KMart strategy?
Kmart has implemented various strategies such as product innovation, low pricing strategies, integrated marketing strategies, lean methodology, etc. to raise its brand image. The company also has adopted a direct-sourcing model by establishing low-cost sourcing relationships with various manufacturers in China, Bangladesh, India, etc.
Is Kmart Australia the same as Kmart USA?
The popular retail chain of Australia is unrelated to the American company despite the same name and branding. The Kmart Australia is owned by Wesfarmers that has no affiliation with the Kmart American brand and the Kmart America is owned by Sears Holdings Corporation that was declared bankrupt in 2018.