Engineering the Value Chain

The competition experience in the world of business means that every firm must do all
that it can to attract and maintain it customers. Failure to do so would spell doom for the said
company, and the company may be driven out of business by its own making. One of the
methods of doing so is to apply Porters Five strategies of the value chain. The value chain is an
aspect used in organizations to ensure that it has products that meet the current demand of the
market. Once this is done, the firm can sit back and expect profits to start flying in. One such
firm that needs to do a bit of value chain in it products is Woolworth. Though it is presently
ahead of its competitors, doing something on areas that appear to be a let down to it would work
in its interest. It is on this basis that the inbound logistics, the outbound logistics and the
operation sections of this firm need to be redesigned to give this firm a competitive edge over its
clients. It, therefore, means that there is something more that needs to be done by this firm to
ensure that everything is okay and that it still retains the market segmentation it still has. The
paper looks at what the firm is currently doing and the areas it needs to be improved on so that it
continues with its competitive streak. The outcome of the specific areas are also highlighted. Not
to be left out are the risks that the firm may come across when dealing with some of these issues.
a) “As-is” value chain using Porters Value chain analysis descriptions
A value chain is a list of activities that are performed by an organization to ensure that it
provides quality services or products to the clients (Kuhn, 2011 pg 12). Using value chain in
organizations gives them the competitive advantage since the company is able to attract and
retain many clients (Porter, 1985 pg 34). In so doing, the profit margin of the firm will increase
as occasioned by high sales. It, therefore, means that value chain is something that is of

significance to any firm (Kuhn, 2011 pg 15). Looking at the as-is value chain of Woolworths
Limited, it can be seen that a lot has been done towards this end. Porter’s five value chain
objectives are inbound logistics, operations, outbound logistics, marketing and sales and service
(Kaplinsky & Morris, 2013 pg 23). The current state of as-is value chain at Woolworths tries to
meet the above objective without any problems. The recommendations that are postulated by
Porter have been applied in this firm to a greater extent.
Looking at inbound logistics, Woolworths is trying to put in place measures that are
directed at ensuring that its inbound logistics are in order (Martin, 2015 pg 12). The inbound
logistics are all those issues that are directed at the firm and they are meant to ensure that
activities of the firm have the best interest of the client in mind (Capgemini, 2011 pg 45).
Towards this end, Woolworths has approached some of the best suppliers in Australia and it
ensures that the raw materials used in this organization are of high quality and meet the
expectations of the clients. Woolworth has put in place measures that ensure that the raw
materials used in its firm are of high quality. Towards this end, it has contracted some farmers
who grow for it crops following the specifications that it has put in place. Animal products that it
buys are also from animals that are reared following the specifications of Woolworth.
Woolworths has ensured that it receives raw materials when they are fresh, stores them properly
and creates a summary of everything in a manner that is line with the demands of the industry.
Woolworth is aware of the importance of records. That is why it has in place a strong inventory
team that captures everything in the manner that is expected of it. Woolworths also ensures that
the manner in which it transports its products and scheduling of services is in tandem with the
best practices of the market.

Present operations at Woolworths ensure that there is value chain that is being
implemented in the manner in which operations are carried out. Towards this end, Woolworths
has ensured that it has competent staff that can deliver on time orders placed by the clients. They
do not want a situation where there are delays in attending to the clients. They know that once
the client is attended to promptly, there are chances that he would come back in the future. The
other strategy in this chain is the outbound logistics.
The outbound logistics will deal with the manner in which a firm moves its products to
the market where they will reach the client (Antonio & Levit, 2012 pg 67). Woolworths has an
efficient transportation mechanism that ensures that there is good transportation of the products
from the firm to the customers. They have enough fleet of vehicles that ensures they reach their
markets and clients within a very short time.
Looking at the sales and marketing framework, Woolworth has put in place an aggressive
marketing strategies that are meant to make them segment the Australian population for
themselves. They have a vibrant team that does all the marketing and sensitization of people as
far as their products are concerned. The fact that they deliver quality products is also another
marketing strategy that they have put in place that ensures that clients come back to them. The
word of mouth referral of this store has made Woolworth become a household name in many
parts of Australia. It is based on the fact that they have saturated the Australian market will one
say that the sales and marketing has been well handled by the conglomerate.
When it comes to service, Woolworth has ensured that it offers quality services to its
clients. The reason for emphasizing on quality service is that it wants to ensure that it maintains
its customers because service delivery is one of the key aspects of customer retention. What can

be seen is that Woolworths has put in place mechanisms that ensure that it follows Porters value
chain in their businesses.
b. Scenario where value chain can be optimized
In as much as Woolworths has done a lot in the value chain, some areas may need some
adjustments to give it a competitive edge over its competitors. It is a fact that when the value
chain is observed to the latter, there are higher chances of customer satisfaction that would lead
to higher sales hence higher profits (Champion, 2011 pg 90). Areas that Woolworths need to
look at critically would include operations. The reason for picking on this area is that operations
entail a lot. The success of the company is hinged on this aspect since it takes note of quality
products by the firm (Waters, 2012 pg 43). Part of operations includes machining. Machining
will entail the choice of quality machines that will ensure there are no delays in the production
system. Machines that break down regularly would be a disaster to the firm since the quality
aspects of the products would not be there (McNair, Polutrick & Silva, 2012 pg 76). Some of the
errors that may be brought about by poor quality machines would include poor packaging of the
products. Since most of the products that Woolworths deals in are food items, it means that poor
packaging and sealing may contaminate the food items, which may be passed onto the final
consumers. The end would be people who are affected after consuming contaminated food items.
Another aspect of not sealing the products well would be interferences in the quantity of the
packaged items. Some items may pour while on transit and in so doing, they may be reduced in
mass. In so doing, the customers may not be happy with the less quantity of products they get.
Once this happens, there are chances that many people will change their mind about buying the
products of the firm. It is, therefore, upon the management of the firm to ensure that its machine

are working in the best way and in the required manner. In so doing, it would be working
towards minimizing contamination of the food items that it sells.
Equipment servicing is another aspect that would lead to proper machining. When the
machines are serviced regularly, it would mean that they do not break down and that the delays
that would result from such aspects are minimized (McNair, et al. 2012 pg 87). It, therefore,
means that Woolworths has to invest in personnel that would ensure that there is proper servicing
of the machines. Properly serviced machines would work for the god of the firm in the sense that
there would be no breakages along the way. It is a fact that when the machines break regularly
many man-hours are lost. The lost man-hours would impact negatively on the profit margin of
the firm. Once the firm is unable to make profits, it becomes difficult to sustain employees and in
the end, the best employees may leave the firm and join better firms. In so doing, the
demoralized staff that is left behind cannot serve the clients in the best way possible (Heribert,
2011 pg 32). The result would be the loss of many clients, leading to a negative impact on the
firm. After some time, the firm may close shop since it has no products to sell and at the same
time, it has no people to help in the production.
The packaging aspect of the operations should also be taken into consideration. The
reason is that packaging says a lot about a firm. A properly packed product will appeal to the
eyes of the buyers and the buyers will be motivated to buy those products (Gart & Shepard, 2013
pg 67). Woolworth should, therefore, came up with attractive packages that will attract many
customers. It therefore means that some improvements must be done towards this end. The way
the company packages its products will also plays a significant role in attracting clients.
Woolworth s should come up with a better strategy towards this end that will make it assemble
its products in a manner that will make its products attractive. By assembling, it means the many

flavors that should be put together to ensure that a flavor that would appeal to many people is
produced are brought together. Presently, Woolworth has the traditional flavors of the products
that it sells. It should try coming up with numerous flavors that would be attractive to a host of
clients. To get the right flavors, Woolworths would be required to go back to the assembly aspect
and it is there that a good flavor will be brought together.
Value creating activities is another aspect that goes hand in hand with assembling. The
reason for saying so is that it is at the assembling stage where value additions to products are
designed and implemented Gart & shepard, 2013 pg 78). Once the right flavor s are assembled,
the value addition aspect will come naturally. Toward this end, Woolworths can come up with a
variety of methods that it can use to create value additions to its products. Many people would
like products whose value is slightly higher. Once clients realize that the products of Woolworth
have an extra value, they are likely to go for those products at the expense of those of the
competitors. Among the many methods that can be used towards this end is the fortification of
products. Fortified products have more nutrients than those that are not fortified. Therefore, a
good advice for Woolworths is to ensure that it has added some value to its products so that it
gives it a competitive edge over its clients.
The last bit of operations would be testing of the product developed. It is true that when
products are tested, there are chances of the weaknesses being indentified and corrective
measures put in place to ensure that the defective products do not reach customers (Champion,
2011 pg 89). It is a fact that when clients buy defective products, there are chances that they
many avoid the seller of those products. Testing would take many forms. Some of the forms may
include testing for the shelf life of the products. They should not just trust the given preservatives
without doing their own testing about the same. Once the aspect of shelf life is done and tested,

Woolworth will be sure of the duration of its products on the shelf. Another testing that
Woolworth should do on her products would deal with the quality of packaging materials. When
the quality of the packaging material is compromised, there are chances that the products would
not reach their destinations in the expected form or that the packaging material may contaminate
the products. Woolworths should be keen when packaging its products since research findings
have found that the material of the packaging material may tamper with the product that is
enclosed inside.
When the operations section sis looked at critically, it can be seen that Woolworths has to
improve on this segment since it is the core segment of its work. Any compromise on the
operations section can spell doom for this firm. The reason is that issues that deal with client
satisfaction are handled at this point. If they were not handled properly, many clients would not
be happy about the products they get from this firm. Consequently, they may opt to go for the
products of the competitors. The simplest way of ensuring that the clients do not go to her
competitors, Woolworth has to ensure that the operations functions is up to date and running
effectively.
Outbound logistics is another aspect of value chain that Woolworths is supposed to take
note of. The reason for this is that the outbound logistics are the ones that bring it to close
proximity and direct interaction with its clients (Heribert, 2014 pg 123). It means that the manner
in which it carries out itself before its clients will play a significant role in ensuring that it
portrays a picture that is appealing to masses that make up its client base. Among issues that are
dealt with under outbound and logistics are warehousing, filling out the order form, distribution
management and transportation of the products. When it comes to warehousing, Woolworths
should ensure that it has chosen warehouses that are likely to meet the conditions of its products.

The reason for this is that some warehouses are only appropriate for a particular type of goods.
Woolworths deals with farm products. It means that most of the products will require
refrigeration so that they do not get spoiled during the storage. It, therefore, means that
warehouses that have refrigeration services will be the most ideal for products of Woolworths.
Woolworths should, therefore, work toward choosing or coming up with warehouses that would
ensure that its products do not get spoiled as they await to be transported to the markets.
Order fulfillment is another aspect of outbound logistics that should be given the
necessary seriousness that it deserves. The reason for this is that any mistake that may happen
when filling out orders may impact negatively on the firm (Antonio & Levit, 2012 pg 45).
Wrong filing of order forms may make the company incur losses that would have been avoided if
people in charge of filling out these orders were serious. Some of the issues that may arise with
the wrong filing out of orders would include wrong products being sent to a wrong client. The
losses incurred in such a scenario would be met by the firm because of the negligence on the part
of its employees. Another issue that may come about due to filing the order wrongly would be
taking to a client goods that he did not order. When clients start getting goods that they did not
order for, they are likely to incur losses also (Antonio & Levit pg 50). The end would be a chain
of people who have incurred losses due to the negligence on wrong order form filling. It,
therefore, means that for Woolworth to avoid such a scenario, it should ensure that it has the
right people filling out order forms. To ensure that there is proper filling out of the order form;
Woolworth should ensure that it has deployed competent people to man this section.
Distribution management would ensure that there is an effective transport system
in place. An efficient transport system would ensure that clients get their orders on time and
when they need them. Once clients get their deliveries on time, there are possibilities that the

clients would be happy with the timely delivery of their orders. Happy clients are likely to talk
positively about an organization and it becomes easy to market the organization without any
problems (Kaplinsky & Morris, 2013 pg 143). Many clients would like situations where they
hear a former client talking positively about another organization. Woolworth should put in place
mechanisms that ensure it has a good range of vehicles that are up and running efficiently. It
should also put in place a fleet management system that would ensure that its fleet are managed
properly. The drivers of the transportation vehicles should be morally upright and licensed
drivers who do not have any issues with the law. The reason for choosing drivers who are clean
is to ensure that the police may not hold these drivers or arrest them when they are on transit
transporting an urgent order to clients. Once this is done, there are chances that the distribution
management would be effective and that things will flow in the expected manner. Distribution
management will work hand in hand with transportation. The two aspects do work that
complements each other. It, therefore, means that when the distribution management is taken
care of in the best manner, there are higher chances that the transportation would be okay. There
are no chances of there being issues when the distribution management is working efficiently.
What should be seen is that with outbound logistics, the firm presents itself before
the client. The manner of presentation may include how it delivers on the order, how it stores the
products to avoid contamination and how effective the transport and distribution management are
working (Porter, 1985 pg 67). When these aspects are working harmoniously, there are chances
that everything will work out well and that the clients will be happy. The many losses that would
have been incurred by both parties are prevented when the outbound logistics is working
efficiently. The manner in which the firm will deal with outbound logistics will also determine
how the clients perceive the given firm.

Inbound logistics is another area that needs to be taken care of. The reason is that the way
Woolworth receives and stores some of its aspect will play a significant role in determining the
quality of the products chosen. Inventory control, storing and receiving are some of the areas that
are of concern to inbound logistics (Martin, 2015 pg 71). When it comes to inventory, it will
refer to the manner in which records are kept by the firm. Proper recording keeping of all
receipts and issues will give a clear picture of where the firm could be headed. Personnel that are
qualified will do very well when it comes to the issue of inventory control. The firm should
know how much it has spent on buying raw materials and how much it gets after making sales.
Proper records will make this aspect be worked out better. Another area that would require
attention would be the proper storage of all the raw materials and anything that is used in the
running of the firm. Woolworth should ensure that all these activities are in order so that
anything that is wanted can be retrieved within the shortest time possible. Proper storage would
ensure there are no delays in case of archiving anything that is needed to be used in production in
any part of the firm.
What needs to be seen inbound logistics is the fact that it plays a significant role in how
the firm carries out its daily operations. When things are working out well in the inbound section,
records will be kept in the required manner. Anything that is archived will be easy to retrace and
there will be proper use of the available resources at the firm. The use of inbound logistic would
mean increased turnover at the firm due to easy access of every corner of the resources of the
firm.
C. Benefits and risks of the three scenarios above

When the above scenarios are looked at keenly, there are benefits that are likely to be
accrued though risks are also there. Among the benefits is the fact that there are chances of the
sales of this firm increasing (Martin, 2015 pg 62). The reason for this is that there would be a
better perception of the firm by the clients. When the client perceive a firm in a better manner,
the sales of that firm are likely to go up since everybody would be talking positively about the
given firm. When the outbound logistics are dealt with, the interactions with the clients would be
improved and everybody would be happy. It is the happy atmosphere that would make many
client go for the products of Woolworth. Outbound logistics are also meant to ensure that the
firm paints a positive picture about itself. Once this is done, there would be very little convincing
of people to come for the products that are sold by Woolworths. The clients would just be
coming for these products because of the confidence that the firm would have instilled in the
clients. The workers would know what is expected of them when dealing with the clients and this
would impact positively on the earnings of the firm
Among the risks that would be experiences when it comes to outbound logistics would be
the inability of the clients not to notice the changes in the way and manner that are handled. In so
doing, they may think that Woolworth is putting on a PR just to keep away competitors. It should
also be seen that another risk would be the competitors’ copying what Woolworth is doing. In
such a situation, there are higher chances of the status quo remaining , yet Woolworth would
have spent a lot of money in this campaign.
Since operations are the core areas that the firm should focus on, there are many benefits
that are associated with it. Once the operations are streamlined, the issue to do with value
additions would be addressed (Kaplinsky & Morris, 2013 pg 83). The outcome of value addition
is that many people are likely to go for products whose value is higher, compared to those of the

competitors, which could be low. The attractive packaging used will attract many clients who
will buy the products of the firm. In so doing, the sales of the firm would increase and the profit
margin would shoot. The workers would then benefit as their terms of service may be improved
by the management due to higher earnings. Quality products would mean quality of life of
people who are directly involved in the business of Woolworths.
The risk that would come with the operations would be the slow or negative reception
that some products may receive. The reason for this is that the value addition may backfire as
proper research is not done on what the clients really want. If the flavors that are introduced are
not what the clients want, they may not buy the products. It therefore means that some money
must be spent on carrying out a research that would show what the market wants. Another thing
that may become an issue with value addition may be the cost implication. The value addition
aspect would mean that some money is used in the upgrading of the products. Normally, the cost
is always pushed to the consumer. Many clients are very sensitive when it comes to issues to do
with changes in the cost of the commodity. Such clients may opt to go to the competitor who
would give them the same product at a cheaper price though without value additions.
When it comes to inbound logistics, they are likely to work for the good of the firm if
they are handled in the expected manner(Waters 2012 pg 79). The storing of products and
keeping of records is good for any organization. Woolworth will gain when it wants to make a
list of its clients and those whom it could be owing debts or those who could be owing it. The
records will, therefore, be crucial when it comes to the daily operations of the firm. Investing in
people who know what is expected of them will also be good since these are the people who are
the backbone of the firm. Records can also be used for future references.

The risk here is that the many people who are involved in keeping the records of the firm
may be the same people who may betray it to its competitors. When competitors become aware
of what one is doing, they are likely to emulate it and in the end, they produce similar work to
what had been done previously. The competitors would then mean that they are always on the
lookout for what Woolworth is doing and trying to outsmart it at every opportunity.
Conclusion
In conclusion, it can be seen that Woolworth is a firm that enjoys massive client base in
the whole of Australia. The reason for this is that it has tried, as much as possible to attend to
issues that would derail its march forwards. It has used the Porter value chain to ensure that the
client is satisfied at all times. However, a keen look at it shows a few areas where some emphasis
should be placed so that the sales of the firm can increase. The areas that have been indentified
include inbound logistics, outbound logistics and operations. Proper handling of these areas and
proper dealing with clients will ensure that Woolworth continues to be the dominant player in the
sector that it is working on. The management of Woolworth should, therefore, ensure that all is
well and that the issues that could be a hindrance to its success are eliminated. In so doing, the
success of the firm is likely to continue without much hindrances.

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