Work Integrated Learning Report: Woolworths 2013

INTRODUCTION
Napoleon Bonaparte once said: I only see the objectives; the obstacles must give a
way.
Sticking to the above principle, the aim in the compilation of this report is to
demonstrate how, despite many tribulations, we arrived at a meaningful conciliation of
sound and grounded knowledge of Operations Management philosophy learnt
throughout the duration of our first degree of studies with the practical implication
thereof in a workplace situation.
BACKGROUND OF EXPERIENTIAL TRAINING
At the beginning of this year, a booklet named: Operations Engineering PNP31-1
Experiential Learner Guide compiled by Mr. A. Vermeulen was handed in to students
to constitute a guide on how to conduct the entire process of work integrated learning,
how to compile the report that will accompany the whole body of evidence that the
said training effectively took place and the feedback from the employer and/or the
supervisor where the student conducted his/her training.
To accomplish this endeavor, some prerequisites had to be fulfilled such as a place to
conduct the said practice. The University, through Mr. Vermeulen had prearranged a
letter (see Annexure) to present to potential employer willing to help students in this
regard. In our case, we have been gladly accepted by the Woolworths Restaurant at
Cresta Mall, Randburg.
METHODOLOGY
Arriving at findings and a conclusion that satisfy the intended objectives of a study is
always a daunting task. Choosing the appropriate techniques of data collection and
analysis is therefore the essential tool to unlock the mysteries that surrounds such a
challenge.
Page | 1

Work Integrated Learning Report: Woolworths 2013

Hence, the following techniques were used:

Library and Internet consultation

We believe that there is no meaningful research without the help of traditional means
of data collection such as consulting the library: we used several books to gather
information that helped us in the compilation of this report. In addition to that, the
importance of Internet cannot be forgotten: tools such online journals and e-books
contributed significantly to the realization of this extract.

Interviews

We made several interviews with both the supervisor and the workers where we
conducted our practice to help us get a close understanding of how operations are
managed at Woolworths in general and the Restaurant in particular.
LITTERATURE REVIEW
Before understanding the theoretical concepts that kept our attention during our work
integrated learning we should first familiarize with the notion of Operations
Management.
According to Heizer J. and Render B. (2008), Operations Management is the set of
activities that creates value in the form of goods and services by transforming inputs
into outputs. Activities creating goods and services take place in all organizations. In
manufacturing firms, the production activities that create goods are usually quite
obvious. In them, we can see the creation of a tangible product such as a Sony TV or a
Harley-Davidson motorcycle. In an organization that does not create a tangible good
or product, the production function may be less obvious. We often call these activities
services. The services may be hidden from the public and even from the customer.
The product may take such forms as the transfer of funds from a saving account to a
Page | 2

Work Integrated Learning Report: Woolworths 2013

checking account, the transplant of a liver, the filling of an empty seat on an airplane,
or the education of a student. Regardless of whether the end product is a good or a
service, the production activities that go on in the organization are often referred to as
operations, or Operations Management.
What Operations Managers do?
All good managers perform the basic functions of the management process. The
management process consists of planning, organizing, staffing, leading, and controlling.
Operations managers apply this management process to the decisions they make in
the Operations Management function. The ten (10) major decisions Operations
Managers are shown the following table:

Ten decision areas

Designing of goods and services

Managing quality

Issues
What good or service should we offer?
How should we design these products?
How do we define quality?
Who is responsible for quality?
What process and what capacity will these

Process and capacity design

products require?
What equipment and technology is necessary
for these processes?
Where should we put the facility?

Location strategy

On what criteria should we base the location

decision?
How should we arrange the facility?

Layout strategy

How large must the facility be to meet our

plan?
How do we provide a reasonable work

Human resources and job design

environment?
How much can we expect our employees to
produce?

Supply chain management

Should we make or buy this component?

Who are our suppliers and who can integrate
Page | 3

Work Integrated Learning Report: Woolworths 2013

into our e-commerce program?

Inventory, material requirements planning, and
JIT (Just-In-Time)

How much inventory of each item should we

have?
When do we reorder?
Are we better off keeping people on the

Intermediate and short-term scheduling

payroll during slowdowns?

Which job do we perform next?

Maintenance

Who is responsible for maintenance?

When do we do maintenance?

Why choose a career in Operations Management?

Operations management is exciting. It is at the centre of so many of the changes
affecting the business world changes in customer preference, changes in supply
networks brought about by internet-based technologies, changes in what we want to
do at work, how we want to work, where we want to work, and so on. There has rarely
been a time when operations management was more topical or more at the heart of
business and cultural shifts.
Operations management is also challenging. Promoting the creativity which will allow
organizations to respond to so many changes is becoming the prime task of operations
managers. It is they who must find the solutions to technological and environmental
challenges, the pressures to be socially responsible, the increasing globalization of
markets and the difficult-to-define areas of knowledge management.

Page | 4

Work Integrated Learning Report: Woolworths 2013

Quality
Slack N. et al (2010) defines Quality as a consistent conformance to customers
expectations, in other words, doing things right, but the things which the operation
needs to do right will vary according to the kind of operation. All operations regard
quality as a particularly important objective. In some ways quality is the most visible part
of what an operation does. Furthermore, it is something that a customer finds relatively
easy to judge about the operation. Is the product or service as it is supposed to be? Is it
right or is it wrong? There is something fundamental about quality. Because of this, it is
clearly a major influence on customer satisfaction or dissatisfaction. A customer
perception of high-quality products and services means customer satisfaction and
therefore the likelihood that the customer will return.
When quality means consistently producing services and products to specification it not
only leads to external customer satisfaction, but makes life easier inside the operation
as well.
Quality reduces costs. The fewer mistakes made by each process in the operation, the
less time will be needed to correct the mistakes and the less confusion and irritation will
be spread. For example, if a supermarkets regional warehouse sends the wrong goods
to the supermarket it will mean staff time, and therefore cost, being used to sort out the
problem.
Quality increases dependability. Increased costs are not the only consequence of poor
quality. At the supermarket it could also mean that goods run out on the supermarket
shelves with a resulting loss of revenue to the operation and irritation to the external
customers. Sorting the problem out could also distract the supermarket management
from giving attention to the other parts of the supermarket operation. This in turn could
result in further mistakes being made. So, quality has both an external impact which
influences customer satisfaction and an internal impact which leads to stable and
efficient processes.

Page | 5

Work Integrated Learning Report: Woolworths 2013

Here are three other reasons why quality is important:

Company reputation An organization can expect its reputation for quality, be it good
or bad, to follow it. Quality will show up in perceptions about the firms new products,
employment practices, and supplier relations. Self promotion is not a substitute for
quality products.
Product liability The courts increasingly hold organizations that design, produce, or
distribute faulty products or services liable for damages or injuries resulting from their
use. Legislation such as the Consumer Act sets and enforces product standards by
banning products that do not reach those standards.
Global implications In this technological age, quality is an international, as well as
Operations Management, concern. For both a company and a country to compete
effectively in the global economy, products must meet global quality, design, and
price expectations. Inferior products harm a firms profitability and a nations balance
of payments.
For the above reason, the US for example, has established the Malcolm Baldrige
National Quality Award for quality achievement. The Japanese have a similar award,
the Deming Prize.
Furthermore, the world is merging into one quality standard, the ISO 9000, the focus of
which is to establish quality management procedures, through leadership, detailed
documentation, work instructions, and recordkeeping.

Page | 6

Work Integrated Learning Report: Woolworths 2013

Scheduling
Having determined the sequence that work is to be tackled in, some operations require
a detailed timetable showing at what time or date jobs should start and when they
should end this is scheduling. Schedules are familiar statements of volume and timing
in many consumer environments. For example, a bus schedule shows that more buses
are put on routes at more frequent intervals during rush-hour periods. The bus schedule
shows the time each bus is due to arrive at each stage of the route. Schedules of work
are used in operations where some planning is required to ensure that customer
demand is met. Other operations, such as rapid-response service operations where
customers arrive in an unplanned way, cannot schedule the operation in a short-term
sense. They can only respond at the time demand is placed upon them.
The scheduling activity is one of the most complex tasks in operations management.
First, schedulers must deal with several different types of resource simultaneously.
Machines will have different capabilities and capacities; staff will have different skills.
More importantly, the number of possible schedules increases rapidly as the number of
activities and processes increases.
Forward scheduling involves starting work as soon as it arrives. Backward scheduling
involves starting jobs at the last possible moment to prevent them from being late. The
choice of backward or forward scheduling depends largely upon the circumstances. In
theory, both materials requirements planning (MRP) and just-in-time planning (JIT) use
backward scheduling, only starting work when it is required. In practice, however, users
of MRP have tended to allow too long for each task to be completed, and therefore
each task is not started at the latest possible time. In comparison, JIT is started, as the
name suggests, just in time.

Page | 7

Work Integrated Learning Report: Woolworths 2013

The following tables illustrates the advantages of forward and backward scheduling

Advantages of forward scheduling

Advantage of backward scheduling

High labour utilization workers always start

Lower material costs materials are not used

work to keep busy

until they have to be, therefore delaying

added value until the last moment

Flexible the time slack in the system allows

Less exposed to risk in case of schedule

unexpected work to be loaded

change by the customer.

Tends to focus the operation on customer due
dates

The most common method of scheduling is the use of the Gantt chart. This is a simple
device which represents time as a bar, or channel, on a chart. Often the charts
themselves are made up of long plastic channels into which coloured pieces of paper
can be slotted to indicate what is happening with a job or a work centre. The start and
finish times for activities can be indicated on the chart and sometimes the actual
progress of the job is also indicated.
The advantages of Gantt charts are that they provide a simple visual representation
both of what should be happening and of what actually is happening in the operation.
Furthermore, they can be used to test out alternative schedules. It is a relatively simple
task to represent alternative schedules (even if it is a far from simple task to find a
schedule which fits all the resources satisfactorily).

Page | 8

Work Integrated Learning Report: Woolworths 2013

The above figure illustrates a Gantt chart for a specialist software developer. It indicates the progress of several jobs as
they are expected to progress through five stages of the process. Gantt charts are not an optimizing tool they merely
facilitate the development of alternative schedules by communicating them effectively.

Where the dominant resource in an operation is its staff, then the schedule of work
times effectively determines the capacity of the operation itself. The main task of
scheduling, therefore, is to make sure that sufficient numbers of people are working at
any point in time to provide a capacity appropriate for the level of demand at that
point in time. This is often called staff rostering. Operations such as call centres, postal
delivery, policing, holiday couriers, retail shops and hospitals will all need to schedule
the working hours of their staff with demand in mind. This is a direct consequence of
these operations having relatively high visibility.
Finally we should note that service systems generally differ from manufacturing systems.
This leads to the use of first-come, first-served rules and appointment and reservation
systems, as well as to heuristics and linear programming approaches for matching
capacity to demand in service environments.

Page | 9

Work Integrated Learning Report: Woolworths 2013

Capacity Planning
Providing the capability to satisfy current and future demand is a fundamental
responsibility of operations management. Get the balance between capacity and
demand right and the operation can satisfy its customers cost-effectively. Get it wrong
and it will fail to satisfy demand, and have excessive costs. Capacity planning and
control is also sometimes referred to as aggregate planning and control. This is
because, at this level of the planning and control, demand and capacity calculations
are usually performed on an aggregated basis which does not discriminate between
the different products and services that an operation might produce. The essence of
the task is to reconcile, at a general and aggregated level, the supply of capacity with
the level of demand which it must satisfy.
The most common use of the word capacity is in the static, physical sense of the fixed
volume of a container, or the space in a building. This meaning of the word is also
sometimes used by operations managers. The definition of the capacity of an
operation is the maximum level of value-added activity over a period of time that the
process can achieve under normal operating conditions.
Many organizations operate at below their maximum processing capacity, either
because there is insufficient demand completely to fill their capacity, or as a
deliberate policy, so that the operation can respond quickly to every new order. Often,
though, organizations find themselves with some parts of their operation operating
below their capacity while other parts are at their capacity ceiling. It is the parts of the
operation that are operating at their capacity ceiling which are the capacity
constraint for the whole operation. It is these parts of the operation that are pushed to
their capacity ceiling that act as the constraint on the whole operation.
Capacity planning and control is the task of setting the effective capacity of the
operation so that it can respond to the demands placed upon it. This usually means
deciding how the operation should react to fluctuations in demand.

Page | 10

Work Integrated Learning Report: Woolworths 2013

Managers tie equipment selection and capacity decisions to the organizations missions
and strategy. They design their equipment and processes to have capabilities beyond
the tolerance required by their customers while ensuring the flexibility needed for
adjustment in technology, features, and volumes.
Good forecasting, break-even analysis, decision trees, cash-flow, and net present value
(NPV) techniques are particularly useful to operations managers when making capacity
decisions.
Capacity investments are made effective by ensuring that the investments support a
long-term strategy. The criteria for investment decisions are contributions to the overall
strategic plan and winning profitable orders, not just return on investment. Efficient firms
select the correct process and the correct capacity that contribute to their long-term
strategy.
Productivity measurements
The measure that is most frequently used to indicate how successful an operation is at
doing this is productivity. Productivity is the ratio of what is produced by an operation to
what is required to produce it.

Productivity

Unit produced
Input used

Often partial measures of input or output are used so that comparisons can be made.
So, for example, in the automobile industry productivity is sometimes measured in terms
of the number of cars produced per year per employee. This is called a single-factor
measure of productivity.

Single - factor Productivity

Output from the operation

One input to the operation

Page | 11

Work Integrated Learning Report: Woolworths 2013

This allows different operations to be compared excluding the effects of input costs.
One operation may have high total costs per car but high productivity in terms of
number of cars per employee per year. The difference between the two measures is
explained in terms of the distinction between the cost of the inputs to the operation
and the way the operation is managed to convert inputs into outputs. Input costs may
be high, but the operation itself is good at converting them to goods and services.
Single-factor productivity can include the effects of input costs if the single input factor
is expressed in cost terms, such as labour costs. Total factor productivity is the measure
that includes all input factors.

Multi - factor Productivity

Output from the operation

All input to the operation

The use of productivity measures aids managers in determining how well they are
doing. But results from the above measures can be expected to vary. If labour
productivity growth is entirely the result of capital spending, measuring just labour
distorts the results. Multifactor productivity is usually better, but more complicated.
Labour productivity is the more popular measure. The multifactor productivity measures
provide better information about the trade-offs among factors, but substantial
measurement problems remain such as quality, external elements and precise units of
measure.
Productivity increases are dependent on three productivity variables: labour, which
contributes about 10% of the annual increase; Capital which contributes about 38% of
the annual increase and Management which contributes about 52% of the annual
increase. These factors are critical to improved productivity. They represent the broad
areas in which managers can take action to improve productivity.
At the final analysis operations managers are key players in the battle for improved
productivity. However since societies become increasingly affluent, productivity
improvements are difficult to achieve, but operations managers should be the primary
vehicle for making improvement.
Page | 12

Work Integrated Learning Report: Woolworths 2013

Inventory
Operations managers often have an ambivalent attitude towards inventories. On the
one hand, they are costly, sometimes tying up considerable amounts of working
capital. They are also risky because items held in stock could deteriorate, become
obsolete or just get lost, and, furthermore, they take up valuable space in the
operation. On the other hand, they provide some security in an uncertain environment
that one can deliver items in stock should customers demand them. This is the dilemma
of inventory management: in spite of the cost and the other disadvantages associated
with holding stocks, they do facilitate the smoothing of supply and demand. In fact
they only exist because supply and demand are not exactly in harmony with each
other.
Inventory, or stock, is the stored accumulation of the transformed resources in an
operation. Sometimes the words stock and inventory are also used to describe
transforming resources, but the terms stock control and inventory control are nearly
always used in connection with transformed resources. Almost all operations keep some
kind of inventory, most usually of materials but also of information and customers
(customer inventories are normally called queues).
Inventory occurs in operations because the timing of supply and the timing of demand
do not always match. Inventories are needed, therefore, to smooth the differences
between supply and demand. There are five main reasons for keeping inventory:

To cope with random or unexpected interruptions in supply or demand (buffer

inventory);

To cope with an operations inability to make all products simultaneously (cycle

inventory);

To allow different stages of processing to operate at different speeds and with

different schedules (de-coupling inventory);

To cope with planned fluctuations in supply or demand (anticipation inventory);

To cope with transportation delays in the supply network (pipeline inventory).

Page | 13

Work Integrated Learning Report: Woolworths 2013

Inventory is often a major part of working capital, tying up money which could be used
more productively elsewhere. If inventory is not used quickly, there is an increasing risk
of damage, loss, deterioration, or obsolescence. Inventory invariably takes up space
(for example, in a warehouse), and has to be managed, stored in appropriate
conditions, insured and physically handled when transactions occur. It therefore
contributes to overhead costs.
Orders are usually timed to leave a certain level of average safety stock when the
order arrives. The level of safety stock is influenced by the variability of both demand
and the lead time of supply. These two variables are usually combined into a lead-time
usage distribution. Using re-order level as a trigger for placing replenishment orders
necessitates the continual review of inventory levels. This can be time-consuming and
expensive. An alternative approach is to make replenishment orders of varying size but
at fixed time periods.
Managers discriminate between the levels of control they apply to different stock items.
The most common way of doing this is by what is known as the ABC classification of
stock. This uses the Pareto principle to distinguish between the different values of, or
significance placed on, types of stock. Inventory is usually managed through
sophisticated computer-based information systems which have a number of functions:
the updating of stock records, the generation of orders, the generation of inventory
status reports and demand forecasts. These systems critically depend on maintaining
accurate inventory records.

Page | 14

Work Integrated Learning Report: Woolworths 2013

Project Management
The pioneers of planning and controlling project operations were the engineers and
planners who worked on complex defense and construction projects. Now their
methods are used on projects as diverse as new product launches, education projects
and movie making. Project planning and control is important because all managers
will, at some point, get involved with managing projects.
A project is a set of activities with a defined start point and a defined end state, which
pursues a defined goal and uses a defined set of resources. All projects can be
characterized by their degree of complexity and the inherent uncertainty in the
project. Project management has five stages, four of which are relevant to project
planning and control: understanding the project environments, defining the project,
planning the project, technical execution of the project (not part of project planning
and control) and project control.
It is important to understand the environment in which a project takes place for two
reasons. First, the environment influences the way a project is carried out, often through
stakeholder activity. Second, the nature of the environment in which a project takes
place is the main determinant of the uncertainty surrounding it.
Projects can be defined in terms of their objectives (the end state which project
management is trying to achieve), scope (the exact range of the responsibilities taken
on by project management), and strategy (how project management is going to meet
the project objectives).
Project planning involves five stages:
Identifying the activities within a project;
Estimating times and resources for the activities;
Identifying the relationship and dependencies between the activities;
Identifying the schedule constraints;
Fixing the schedule.
Page | 15

Work Integrated Learning Report: Woolworths 2013

Project planning is particularly important where complexity of the project is high. The
interrelationship between activities, resources and times in most projects, especially
complex ones, is such that unless they are carefully planned, resources can become
seriously overloaded at times during the project.
Network planning and Gantt charts are the most common techniques. The former
(using either the activity-on-arrow or activity-on-node format) is particularly useful for
assessing the total duration of a project and the degree of flexibility or float of the
individual activities within the project. The most common method of network planning is
called the critical path method (CPM). The logic inherent in a network diagram can be
changed by resource constraints. Network planning models can also be used to assess
the total cost of shortening a project where individual activities are shortened.
The process of project control involves three sets of decisions: how to monitor the
project in order to check its progress, how to assess the performance of the project by
comparing monitored observations to the project plan, and how to intervene in the
project in order to make the changes which will bring it back to plan. Enterprise Project
Management systems can be used to integrate all the information needed to plan and
control projects.
Maintenance
Even when an operation is designed and its activities planned and controlled, the
operations managers task is not finished. All operations, no matter how well managed,
are capable of improvement. In fact, in recent years the emphasis has shifted markedly
towards making improvement one of the main responsibilities of operations managers.
This brings us to the question of maintenance and reliability.
Maintenance includes all activities involved in keeping a systems equipment in working
order. Reliability is the probability that a machine part or product will function properly
for a specified time under stated conditions.

Page | 16

Work Integrated Learning Report: Woolworths 2013

There are four important tactics for improving the reliability and maintenance not only
of products and equipment but also of the systems that produce them. The four tactics
are organized around reliability and maintenance.
The reliability tactics are:

Improving individual components

Providing redundancy

The maintenance tactics are:

Implementing or improving preventive maintenance

Increasing repair capabilities or speed.

Operations managers focus on design improvements and backup components to

improve reliability. Reliability improvement can also be obtained through the use of
preventive maintenance and excellent repair facilities.
Some firms use automated sensors and other controls to warn when production
machinery is about to fail or is becoming damaged by heat, vibration, or fluid leaks. The
goal of such procedures is not only to avoid failure but also to perform preventive
maintenance before machines are damaged.
Finally, many firms give employees a sense of ownership of their equipment. When
workers repair or do preventive maintenance on their own machines, breakdowns are
less common. Well-trained and empowered employees ensure reliable systems through
preventive maintenance. In turn, reliable, well-maintained equipment not only provides
higher utilization but also improves quality and performance to schedule. Top firms build
and maintain systems so that customers can count on products and services that are
produced to specifications and on time.

Page | 17

Work Integrated Learning Report: Woolworths 2013

Design Processes
All operations managers are designers, because design is the process of satisfying
peoples requirements through the shaping or configuring products, services, and
processes.
Say you are a designer and most people will assume that you are someone who is
concerned with how a product looks. But the design activity is much broader than that
and while there is no universally recognized definition of design, we take it to mean
the process by which some functional requirement of people is satisfied through the
shaping or configuration of the resources and/or activities that compose a product, or
a service, or the transformation process that produces them. All operations managers
are designers. When they purchase or rearrange the position of a piece of equipment,
or when they change the way of working within a process, it is a design decision
because it affects the physical shape and nature of their processes.
Design is the activity which shapes the physical form and purpose of both products and
services and the processes that produce them. This design activity is more likely to be
successful if the complementary activities of product or service design and process
design are coordinated.
The overall purpose of process design is to meet the needs of customers through
achieving appropriate levels of quality, speed, dependability, flexibility and cost. The
design activity must also take account of environmental issues. These include
examination of the source and suitability of materials, the sources and quantities of
energy consumed, the amount and type of waste material, the life of the product itself,
and the end-of-life state of the product.
The general nature of any process is strongly influenced by the volume and variety of
what it has to process. The concept of process types summarizes how volume and
variety affect overall process design. In manufacturing, these process types are (in
order of increasing volume and decreasing variety) project, jobbing, batch, mass and
continuous processes. In service operations, although there is less consensus on the
Page | 18

Work Integrated Learning Report: Woolworths 2013

terminology, the terms often used (again in order of increasing volume and decreasing
variety) are professional services, service shops and mass services.
Processes are designed initially by breaking them down into their individual activities.
Often common symbols are used to represent types of activity. The sequence of
activities in a process is then indicated by the sequence of symbols representing
activities. This is called process mapping.
Alternative process designs can be compared using process maps and improved
processes considered in terms of their operations performance objectives.
Process performance in terms of throughput time, work-in-progress, and cycle time are
related by a formula known as Littles law: throughput time equals work-in-progress
multiplied by cycle time.
Variability has a significant effect on the performance of processes, particularly the
relationship between waiting time and utilization.
Finally, effective product strategy requires selecting, designing, and defining a product
and then transitioning that product to production. Only when this strategy is carried out
effectively can the production function contribute its maximum to the organization. The
operations manager must build a product development system that has the ability to
conceive, design, and produce products that will yield a competitive advantage for
the firm. As products move through their life cycle (introduction, growth, maturity, and
decline), the options that the operations manager should pursue change. Both
manufactured and service products have a variety of techniques available to aid in
the performing this activity efficiently.
Written specifications, bills of material, and engineering drawings are an aid in defining
products. Similarly, assembly drawings, assembly charts, route sheets, and work orders
are often used to assist in the actual production of the product. Once a product is in
production, value analysis is appropriate to ensure maximum product value.
Page | 19

Work Integrated Learning Report: Woolworths 2013

Engineering change notices and configuration management provide product

documentation,
Purchasing / Logistics (Supply Chain Management)
As operations outsource many of their activities and buy more of their services and
materials from outside specialists, the way they manage the supply of products and
services to their operations becomes increasingly important, as does the integration of
their distribution activities. Even beyond this immediate supply chain, there are benefits
from managing the flow between customers customers and suppliers suppliers. This
activity is now commonly termed supply chain management.
Supply chain management is a broad concept which includes the management of the
entire supply chain from the supplier of raw material to the end-customer. Its
component activities include purchasing, physical distribution management, logistics,
materials management and customer relationship management (CRM).
Procurement activities may be combined with various shipping, warehousing, and
inventory activities to form a logistics system. The purpose of a logistics management is
to obtain efficiency of operations through the integration of all material acquisition,
movement, and storage activities. When transportation and inventory costs are
substantial on both the input and the output sides of the production process, an
emphasis on logistics may be appropriate. When logistics issues are significant or
expensive, many firms opt for outsourcing the logistic function. Logistics specialists can
often bring expertise not available in-house. For instance, logistics companies often
have tracking technology that reduces transportation losses and supports delivery
schedules that adhere to precise delivery windows. The potential for competitive
advantage is found via both reduced costs and improved customer service.
Supply networks are made up of individual pairs of buyersupplier relationships. The use
of Internet technology in these relationships has led to a categorization based on a
distinction between business and consumer partners. Business-to-business (B2B)
Page | 20

Work Integrated Learning Report: Woolworths 2013

relationships are of the most interest in operations management terms. They can be
characterized on two dimensions what is outsourced to a supplier, and the number
and closeness of the relationships.
Traditional market supplier relationships are where a purchaser chooses suppliers on an
individual periodic basis. No long-term relationship is usually implied by such
transactional relationships, but it makes it difficult to build internal capabilities.
Virtual operations are an extreme form of outsourcing where an operation does
relatively little itself and subcontracts almost all its activities.
Partnership supplier relationships involve customers forming long-term relationships with
suppliers. In return for the stability of demand, suppliers are expected to commit to high
levels of service. True partnerships are difficult to sustain and rely heavily on the degree
of trust which is allowed to build up between partners.
Customer relationship management (CRM) is a method of learning more about
customers needs and behaviours in order to develop stronger relationships with them. It
brings together all information about customers to gain insight into their behaviour and
their value to the business.
Marshall Fisher distinguishes between functional markets and innovative markets. He
argues that functional markets, which are relatively predictable, require efficient supply
chains, whereas innovative markets, which are less predictable, require responsive
supply chains.
Supply chains exhibit a dynamic behaviour known as the bullwhip effect. This shows
how small changes at the demand end of a supply chain are progressively amplified
for operations further back in the chain.
The Supply Chain Operations Reference model (SCOR) is a highly structured framework
for supply chain improvement that has been developed by the Supply Chain Council
(SCC).
Page | 21

Work Integrated Learning Report: Woolworths 2013

The model uses three well-known individual techniques turned into an integrated
approach. These are:
Business process modelling
Benchmarking performance
Best practice analysis.
To reduce the bullwhip effect, operations can adopt some mixture of three
coordination strategies:
Information-sharing: the efficient distribution of information throughout the chain
can reduce demand fluctuations along the chain by linking all operations to the
source of demand;
Channel alignment: this means adopting the same or similar decision-making
processes throughout the chain to coordinate how and when decisions are
made;
Operational efficiency: this means eliminating sources of inefficiency or
ineffectiveness in the chain; of particular importance is time compression,
which attempts to increase the throughput speed of the operations in the chain.
Increasingly, supply risks are being managed as a countermeasure to their vulnerability.

Page | 22

Work Integrated Learning Report: Woolworths 2013

DISCUSSION
After an overview of the main theoretical concepts, we have had to establish a link
between them and their practical implications in an actual situation. As mentioned in
our introductory excerpt, our experimental laboratory was the Cresta Malls Woolworths
franchise.
Woolworths Holdings Limited is a South African chain of retail stores and one of the
largest in the country, modeled on Marks & Spencer of the United Kingdom. This
relationship with Britain's Marks and Spencer was formed after the Second World War,
which led to the retailer buying all of the unissued share capital of Woolworths in 1947.
These shares were later sold, but close ties still remain. The first Woolworths store opened
in The Old Royal Hotel in Cape Town in October 1931. It was founded by Max
Sonnenberg assisted by his son Richard and Fred Kossuth.
The Woolworths brand now incorporates a series of food stores, some of which are
attached to department stores, while others stand alone or are attached to Engen
petrol stations in prosperous urban areas. Some branches include an in-store restaurant,
branded as "Cafe W". Woolworths goods are sold at 149 corporate stores, 51
international franchise stores throughout the rest of Africa and the Middle East and 69
South African franchise stores nationwide.
The chain was named after the United States chain F. W. Woolworth Company but,
because of the contemporary trademark laws, the name was legally used without
permission. No financial connection ever existed between the companies.
Quality at Woolworths
Products and services rendered by this franchise have got a higher level of external
customer satisfaction and lead to make life easier inside the companys operations. This
is proven by the fact that there is almost not a single moment when the supermarket or
the restaurant is empty, coupled to this is a lower or non-existent percentage or refunds
or product replacement.
Page | 23

Work Integrated Learning Report: Woolworths 2013

Furthermore Woolworths core philosophy is underpinned by quality, offering customers

consistently high quality merchandise at affordable prices and incorporating innovative
developments across the business. Building lifetime relationships with customers remains
critical to the business success, ensuring that they understand their needs and meet
these needs with ever increasing consistency.
Woolworths has built a total quality management system in which their products identify
with customers needs and expectation. They have also adopted the ISO 9000
standard to establish good quality management procedures.
Schedule
Scheduling being the most complex activity within a firm, Woolworths have learnt to
plan ahead of seasons as well as occasions. Events that require rapid and consistent
scheduling are part of their life. Furthermore, they are using tools such as Gant Charts to
represent what should be happening and what is happening in the whole operation.
Besides the hassle of managing material resources, the scheduling of the dominant
resource which is human resource or staff Woolworths has established a schedule of
work times that suits its staff members, that is, to strike a balance between their wellbeing and the working hours with demand in mind, because its operations is relatively in
high visibility. For instance, they have established a system of shifts whereby a group
may start work from 9h00 to 16h00 and other one may take up until 21h00.
Capacity Planning
Woolworths has the balance between capacity and demand. Its facilities are
somewhat within its capacity ceiling to satisfy the demand placed upon it by its
customers. In addition to its premises being clean, this retail shop can accommodate
and entertain the need of more or less 500 people at a time. Also, they are investing in
effective capacity management in order to support a long-term strategy to contribute
to their overall strategic plan in order to win, at the same time, return on investment and
profitable business from their customers.

Page | 24

Work Integrated Learning Report: Woolworths 2013

Productivity measurement
Being a retailer (the supermarket) and service provider (restaurant) this company can
only determine its productivity in terms of revenue generated during a certain period of
time over the capital invested for the same time. At the time of going to the print, we
could unassumingly confirm that this franchise is doing well in terms of productivity
because they are not running at a loss. If the business is as usual, this means that they
are productive and making profit. Managers at Woolworths take action to improve
productivity by doing infinitesimal research on labour, Capital and Management.
Although this chain of stores was involved in controversies in recent years such as the
removal of Christian magazines in October 2010; the imitation of Frankies soft drinks
advertisement in early 2012, the affirmative action advertisement debacle in
September 2012, it has repositioned itself in the market in terms of productivity. The
groups Abridged Audited Results for the 53 weeks ended 30 June 2013 shows an
increase in turnover (+23.3%), profit before tax (+27.1%), headline earnings per share
(+27.3%), adjusted headline earnings per share (+30.0%) and return on equity which
remained stable at 49.7%.
Inventory
All organizations have some type of inventory planning and control system. A bank has
methods to control cash, a hospital to control blood supplies and pharmaceuticals. At
Woolworths, they have the type of inventory planning and control system of Clothing,
footwear, accessories, groceries, beauty products, homeware and florist stock.
Woolworths has its own warehouse to properly manage, keep stock in appropriate
conditions, insure and physically handle them when transactions occur. It uses bold
marketing strategies to liquidate them because if inventory is not used quickly, there is a
risk of damage, loss, deterioration, or obsolescence. To this end, its maintain accurate
inventory records that uses sophisticated computer-based system to classify stock,
upgrade stock records, generate orders and inventory status reports and demand
forecasts.
Page | 25

Work Integrated Learning Report: Woolworths 2013

Budget/Finances
Woolworths has a revenue of R21.922 Billion, an operating income of R163.7 Million and
a net income of R667.3 Million. To manage this big cash flow requires corporate
responsibility. Therefore, internal accountability is paramount in safeguarding the image
of the retailer.
An internal control system is put in place to accomplish same. The system of internal
control is designed to ensure that the significant risks are being appropriately managed
and provide reasonable assurance that:
Business objectives will be achieved in normal and adverse trading conditions;
Operations are efficient and effective;
Management of financial information is reliable;
Company assets and information are appropriately safeguarded; and
There is compliance with applicable laws and regulations.

Management is focused on continuous improvements to the system of internal control.

The newly implemented financial system has been bedded down during the course of
2013 2014 financial year and has further enhanced the end-to-end financial controls
and processes within the group.
A key element of the system of internal control is the review conducted by
independent assurance providers who assess the adequacy and effectiveness of the
controls.
The internal audit team has a combination of skills and expertise which include
operational, financial, accounting and information technology experience and
knowledge.

Page | 26

Work Integrated Learning Report: Woolworths 2013

Ernst & Young Inc and SAB&T Inc, the joint external auditors, provide stakeholders with
an independent opinion on whether the annual financial statements fairly present, in all
material respects, the financial position of the company and the group.
External audit regularly liaises with internal audit to understand the scope of their work
and the results of their audits. External audit has embarked on a programme to move to
a more control-based audit approach, thus reducing their substantive testing. Internal
audit performs the initial controls-based testing and once it has been successfully
bedded down, testing will alternate between internal and external audit on an annual
basis. Any control work performed by external audit is limited to the work necessary to
support their audit opinion.
Maintenance
In the retail world maintenance is most often associated with improvement of the
business operations. Although some maintenance work are to be done on a regular
basis (preventive maintenance) for instance routine checkups on essential cooking
machinery and refrigeration at the restaurant, air-conditioning and refrigeration system
at the shop, the IT system, etc. more emphasis is put on keeping the products up to the
customers expectations. This question will be discussed further when we will deal with
design processes.
Design processes
As said above, operations managers must build a product development system that
has the ability to conceive, design and produce products that will yield a competitive
advantage for the firm.
At Woolworths new initiatives to revitalize and grow the clothing business have been
launched across all their ranges. The aim for them has been to gain a better idea of the
kinds of products that appeal to customers tastes and to offer those more consistently.
Linking design with technology has helped to deliver greater product innovation and
newness whilst still providing a quality product. A more strategic approach to buying
Page | 27

Work Integrated Learning Report: Woolworths 2013

has also meant even better value for customers. The business is already beginning to
see the positive effects of these strategies.
Also, Woolworths is constantly assessing its food ranges and developing new ones, using
delicious, simple, healthy ingredients. Themes include traditional, authentic, handmade
or homemade and steam cuisine. They also look for ways of improving existing ranges,
making them more nutritious, tastier and with a wider array of choices. A recent
example of this was Woolworths improved ice cream range. They are aware of
convenience in cooking and strive to provide their customers with an increasing variety
of ready-made meals that are both nutritious and easy to prepare.
At the heart of Woolworths food business is the good food journey. It provides
customers with food that is safe and nutritious and has a particular emphasis on organic
food. It also keeps people as well informed as possible about the food they are eating
and how it impacts on health. Alongside this, the good food journey also focuses on
sustainability. Every part of Woolworths food production process from supply to
distribution to waste is constantly monitored in order to make sure that there is as little
impact on the surrounding environment and society as possible.
On the homeware side, Woolworths now offers a full range of home accessories and
soft furnishings. This includes kitchen and bathroomware, crockery and vases, sheeting,
curtaining and, in a limited number of stores, furniture.
Purchasing & Logistics
Woolworths continue to support its South African supplier base and to work with them,
as well as government and other retailers, to help develop a more competitive and
sustainable local clothing and textile industry. Woolworths has a responsibility to deliver
the best possible value to its customers and, where it is not possible to achieve this
locally, they do buy internationally. Woolworths has also reduced the number of
suppliers used on a regular basis this means larger volumes and improved value for
their customers.

Page | 28

Work Integrated Learning Report: Woolworths 2013

The objective is to obtain efficiency of operations though the integration of all material
acquisition, movement and storage activities. At Woolworths, they basically rely on
truck deliveries which transport the vast majority of goods. This is a global trend
because of the many advantages that the flexibility of this mode of transport provides.
Companies that have adopted JIT (Just-In-Time) programs in recent years have put
increased pressure on truckers to pick and deliver on time, with no damage, paper
work in order and at low cost. Trucking firms are using computers to monitor weather,
find the most effective routes, reduce fuel cost and analyze the most efficient way to
unload.
Furthermore, in 2008 Woolworths, with assistance from Volition and IMPERIAL Logistics
Refrigerated Services (ILRS), quantified the current logistics cost imbedded in COS. The
result was a business case for Woolworths. The result was a business case for Woolworths
to also own the primary leg of the supply chain.
During 2009 / 2010, the team modeled tactical scenarios to find ways to achieve the
necessary efficiencies. Integrating inbound / outbound distribution emerged as the
most promising alternative. It was agreed that a Logistics Integration Centre (LIC) should
be established to:
House the advanced planning capabilities required to integrate the SC;
Support reporting and provide granular visibility of operations;
Thus be the key enabler of the strategy.

Page | 29

Work Integrated Learning Report: Woolworths 2013

CONCLUSION & RECOMMENDATIONS

It is against the backdrop of a careful consideration of the above facts that we can
meekly conclude that we have achieved the objective of the task assigned to us by
literally touching, smelling and feeling what was merely concealed into literature in
terms of Operations Management.
At Woolworths we have realized that they have an efficient operations department
which key activities underpin their ability to deliver quality, value and service to their
customers. Management of their supply chains and distribution centres, investment in
and constant improvement of their information technology systems and strategies to
reduce shrinkage are all areas looked after by that division.
However, our recommendations will only come in suggestion format as we are only
novices on the path of becoming operations managers in a near future. The only thing
that we can therefore suggest is that operation managers at Woolworths should not
only focus on excellence but sustainable excellence which is the product of sound and
constructive improvement of operations that can adapt to the ever-evolving needs of
customers.
Finally, we would like to take this opportunity to extend our since acknowledgments to
all who have contributed to the successful completion of course and training,
especially our brave lecturers and our supervisor at Woolworths.

Page | 30

Work Integrated Learning Report: Woolworths 2013

REFERENCES
1. Heizer, J., Barry, R, Principles of Operations Management 7th ed., Pearson, 2008
2. N. Slack, et al., Operations Management 6th ed. Pearson, 2010
3. Chase, R.B., Jacobs, F.R. and Aquilano, N.J. (2004) Operations Management for
Competitive Advantage (10th edn), McGraw-Hill/Irwin, Boston.
4. Waddock, S. (2003) Stakeholder performance implications of corporate responsibility,
International Journal of BusinessPerformance Management, vol. 5, numbers 23, 114
24.
5. Boyer, K.K., Swink, M. and Rosenzweig, E.D. (2006) Operations strategy research in the
POMS Journal, Production and Operations Management, vol. 14, issue 4.
6. Chopra, S., Anupindi, R., Deshmukh, S.D., Van Mieghem, J.A. and Zemel, E. (2006)
Managing Business Process Flows, Prentice-Hall, Upper Saddle River NJ.
7. Christopher, M. (2004) Logistics and Supply Chain Management: Creating Valueadding Networks, Financial Times. Prentice Hall, Harlow.
8. http://www.woolworthsholdings.co.za/ (accessed on 26/09/2013)

9. http://www.imperial.co.za/.../Logistics/WoolworthsCaseStudies (accessed on
27/09/2013)

Page | 31

Work Integrated Learning Report: Woolworths 2013

ANNEXURES

Page | 32