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Warehousing refers to the physical functions and administration of a business enterprise that is primarily concerned with the storage of commodities. Apart from supporting storage functions, warehouses normally serve as points of distribution for the business enterprise (Bunch 2007).
As such, it is imperative for the physical outlook of the warehouse to put into consideration the key factors that make it an effective distribution center.
There are various operations that must be put into consideration during the practical design of a warehouse and a distribution center in order to foster effective storage and distribution. The physical arrangement is also vital in determining the relationship between warehouse operations and the movement of goods and people within the warehouse supporting supermarkets.
As a result, it is essential that warehouses that serve as distribution centers implement an effective design that meets all the requirements posed by storage and distribution. The need to have an effective warehouse that serves as a distribution center imposes significant challenges during the physical arrangement of the warehouse (Clarkson 2009).
This paper provides an overview of the challenges faced by warehouse supporting supermarkets in Australia, with a principal focus on inventory management challenges and increased competition.
Inventory management Challenges
Inventory management is important for the success of any business enterprise. Conventionally inventory management entails almost every business operation that details precise record-keeping, delivery and distribution of commodities.
Warehousing supermarkets in Australia are faced with inventory management problems owing to the fact that the receiving, storage and distribution of commodities usually take place within the same business premise, making it extremely difficult to keep track of operations that involve the movement of goods in the warehousing supermarket.
The primary role of inventory management is to ensure that the supply chain of the warehousing supermarkets operates efficiently and smoothly (Clarkson 2009).
The operational context of the warehousing supermarkets in Australia is in itself a challenge to the design of an effective warehouse that ensures effective storage and distribution of commodities.
Inventory management difficulties are a threat to the continuity of the business owing to the fact that has a significant effect on the profitability and customer service satisfaction for the warehousing supermarkets in Australia.
A typical consequence of inventory management problem witnessed by Australian warehousing supermarkets is that they result to surplus of inventory stock, which may be very difficult to move; implying that it a constraint to the supply chain of the supermarkets.
This means that Australian retailing supermarkets must ensure that they deploy effective inventory management processes in order to curb problems associated with the integration of both storage and distribution of commodities within the same business premise.
One of the most common inventory management challenges faced by the Australian warehousing supermarkets is the lack of qualified staff to oversee the inventory operations in the supermarket.
It is evident that most of the Australian warehousing supermarkets do not have qualified inventory staffs that have adequate training and experience to address the core issues in inventory management (Clarkson 2009).
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Another current challenges imposed by inventory management in the Australian warehousing supermarkets is that there are no appropriate strategies that can be used to forecast shortages in a timely manner.
This is ordinarily evident when Australian supermarkets run short of commodity supplies due to improper inventory management practices that fail to predict shortages early enough.
This can significantly reduce the supply chain process, which in turn implies that the customer demands will not be met; as a result, it will have a significant effect in influencing the customer relations (Clarkson 2009).
The third inventory management challenge faced by Australian warehousing supermarkets is the failure of establishing a business plan that predicts the performance of the enterprise in future. Most of the Australian warehouse supermarkets fall victim to the challenge posed by lack of unrealistic analysis of the business growth in future.
This implies that Australian warehousing supermarkets are faced with the challenge of assessing the supply chain trends in future in order to facilitate the deployment of appropriate mechanism to address supply chain constraints that the business may experience in future.
The fundamental issue is that prediction of more business growth will result to surplus inventory, while prediction of a far much less growth will lead to a lesser inventory as described above.
Therefore, warehousing supermarkets in Australia must deploy precise prediction in order to avoid instances associated with overstock and under stock of the inventory, which may result to slow movement of commodities and lack of customer satisfaction respectively.
The fourth challenge associated with inventory management that currently faces Australian supermarkets is the presence of log jams and weak points in the inventory operations which may have a significant effect on the delivery of the commodities by the supermarkets.
The necessary implication posed by this challenge is that in case of excess orders for shipments that are to be delivered to their customers, they are not addressed in a useful and timely manner, which implies that orders pile up.
This plays a significant role in slowing down the delivery process and the supply chain management operations for the Australian warehousing supermarkets.
In addition, most of the inventory management systems used by the Australian warehousing supermarkets face the challenge of weak points, which poses the risk of slowing down the system or stopping the system completely; this has an effect on the supply chain process for the supermarkets.
The effect of this ineffective operational efficiency of the supply chain management by the supermarkets normally affects the profitability of the warehousing supermarkets in Australia (Clarkson 2009).
Another challenge that Australian warehousing supermarkets face is commodity theft. Commodity theft can be from within the employees or shoplifting by the customers. Lack of proper physical arrangement of the warehousing supermarkets predisposes the supermarkets to the risks of commodity theft by the customers.
In addition, lack of effective inventory reporting and management operations predisposes the Australian warehousing supermarkets to employee theft, which has a significant effect on the profitability of the business enterprise, which may, in turn, jeopardize business continuity.
In effective arrangement of the commodities in the physical warehouse space can result to the misplacement of some goods. In addition, it usually makes it difficult to trace such products, as a result slowing down the supply chain process.
Misplacement of items in the inventory means that there will be a decrease in the profits because of lost sales and increased inventory costs owing to the fact that such goods have to be re-ordered.
Furthermore, the employees spend a lot of time tracking misplaced commodities instead of conducting other productive activities that may increase the profitability of the supermarkets.
Therefore, Australian supermarkets must stand up challenges posed by inventory management problems in order to ensure profitability and customer satisfaction, which are core in ensuring business continuity (Bunch 2007).
Competition is inevitable in any business environment; as such, business enterprise must devise appropriate strategies in order to address the challenges imposed by intense competition from suppliers, manufacturers, distributors and other warehousing supermarkets that distribute the same commodity.
The effectiveness of addressing competition depends on the supply chain strategies implemented by the warehousing supermarkets.
This is due to the fact that competition primarily affects the supply side of business operations in the sense that Australian warehousing supermarkets target the same consumers within a particular region of their operation. Also, the number of warehousing supermarkets in Australia is increasing; this implies that despite the increase, they are all targeting the same consumers.
Therefore, Australian warehousing supermarkets have to deploy appropriate strategies in order to address the challenges imposed by intense competition (Clarkson, 2009).
Intense competition in Australia has raised the standards for warehousing supermarkets, implying that such supermarkets have the challenge of being up to date on the needs of the customers.
Furthermore, customers in the current times usually have little time for shopping and they are more intelligent compared to the past. As a result, warehousing supermarkets in Australia are experiencing intense survival pressures.
The basic argument is that the dynamics of the market space are bound to have an effect on the supply chain trends for supermarkets in Australia, whether they are operating on a large scale or small scale.
This means that top-tier warehousing supermarket chains in Australia will have to enlarge their storage space in order to facilitate the absorption of market from supermarkets that are operating in low costs.
This can be achieved through merger and acquisitions. Additionally, low-cost operators must have to stand up the challenge of market takeovers by the top-notch operators in the consolidated market space.
The implication of this phenomenon in the Australian supermarket industry is that only chains that would have reinvented the supply chain methodologies will upbeat the survival pressures. A significant challenge of this perspective is that supermarkets have the challenge of redefining the way they conduct business with the consumers (Clarkson 2009).
In order to upbeat the intense competition in the Australian supermarket industry, it is vital that for supermarkets to embark on specific target consumers within particular market segment.
This in itself is a challenge because it requires effective strategies in order to meet the demands of that specific market segment in the sense that it requires the deployment of more resources and effort for the plan to turn out to be effective for the supermarket chain.
As a result, warehousing supermarkets in Australia will face the challenge of developing new innovations and the creation of customer experiences that aims at the establishment of differentiation. Technology adaptation also plays an integral role in ensuring competitive advantage of the warehousing supermarkets in Australia (Bunch 2007).
It is arguably evident that Australian warehousing supermarkets face significant challenges that serve as barriers to effective supply chain operations.
The most notable challenges are inventory management problems and competition. As such, it is recommended that warehousing supermarkets in Australia must deploy appropriate strategies to address these challenges in order to ensure profitability and business continuity.
Bunch, D 2007, Supermarkets and agri-food supply chains: transformations in the production and consumption of foods, Edward Elgar Publishing, New York.
Clarkson, R 2009, ‘ Problems and prospects of supermarket development in Australia’, International Journal of Retail & Distribution Management, vol 12, no. 8, p. 50.