In today’s day and age, organisations are facing large number of issues related to different operations. These issues may cause some serious consequences to the company and hence, they are required to be handled or managed as soon as possible. System thinking approach is one such approach that helps organisation in resolving the critical issues affecting them. In the following report, the case of Coles Supermarket is discussed in which the issues, such as changing customer preference and its consequences on inventory management are talked about. The system thinking approach is also demonstrated and tools, such as Rich Picture and CATWOE are also used in this. At last, certain suggestions are provided for Coles to employ in its current functioning to get over those issues.
The Coles Supermarket is one of the leading supermarket chains in Australia that deals in retail and consumer service sector. It was founded in the year 1990 and headquartered in Melbourne and currently has over 807 stores across Australia. At present, the organisation is failing in meeting its target and goals of expanding the organisation in the competitive market.
The primary problems currently faced by Coles is the fluctuations in the customers’ choice and preferences due to which the inventory management is not done properly. Sometime the decreasing demand and changing customer loyalty are resulting in wastage of stocks while other time, increased demand results in shortage of stock (Braue, 2019). This fluctuation can also be attributed to rising competition and discounts offered by competitors, changing technology and fashion sense of people. These issues are not only affecting the revenue of the company and its market share but also customer satisfaction and customer base of the company. These problems can be resolved by making use of system thinking approach and tools that characterise the method.
The primary focus of the Coles is to optimise the inventory of the organisation and make the goods and services available to the customers whenever they ask for them. However, for doing so, it is required to understand the issues the company faces (Arnold& Wade, 2015). This can be done by making use of system thinking tools, such as CATWOE and Rich Picture. These are utilised below:-
From the above problem analysis segment, it can be noticed that the issues are not only affecting the organisation but also all of its stakeholders. The primary stakeholder of the company are sales team, inventory team, customers, board of directors, media, government agencies, suppliers, distributors, and shareholders. The issue related to inventory management may have some consequences on the aforementioned stakeholders (Mjema, 2018). The Rich Picture would help in better understanding of their concerns. The diagram is presented below:-
It is required for Coles to have a detailed analysis of the challenges and issues currently it is having in its inventory management process. The CATWOE is one such tool that would assist in getting insight into the challenges and their likely consequences on the stakeholders (Terra&Passador, 2018). The illustration is provided below:-
Customers:The major customers include the grocery buyers, clothing and apparel, other products buyers. Also, the distributors or licensees can also be considered as secondary customers (Berman, 2015). Shortage of products or having products that do not match with the customer demand may result in customer dissatisfaction. They may switch from Coles to other organisations like Woolworths or ALDI. Therefore, fulfilment of their demands must be the primary concern of Coles.
Actors: The final decision-making powers lie within the hands of the board of directors. Hence, they are the top-most actor of Coles. In addition to this, there are other actors, such as inventory manager, sales manager, finance manager, R&D head, and employees. The final strategy would come from the board of director. For evaluating the success of the strategies, increasing customer satisfaction and revenue of the company should be considered (Peters, 2014).
Transformation Process:The sales team would get under the pressure due to decline in sales. The shortage of inventory would impact the sales and revenue of Coles. One can even expect the blame game can be played between sales and inventory management teams. Coles should establish the R&D team for better research of the market and collection of historic data and trends for forecasting the demands for the organisation (Business change, 2017).
Worldview:The issues can cause Coles a great fortune as they are directly associated with the stakeholders. Customer satisfaction may get affected if the products are out of stock. It would force the customer to purchase that product from the rival stores. The ultimate impact of poor inventory management and changing market trend would be seen on the revenue and market share of the company.
Owners:The board of director and senior management are primary owners of the consequences of issues identified in the inventory and changing customer preferences. If organisation does not perform well, then the impact can be seen on the profits of the shareholders and incentives of the senior manager (Business change, 2017).
Environment:The constraints in the following case may be due to lack of historic data and poor abilities of analysing the market trends. Also, the R&D team’s inexperience can be considered as major constraint. Also, budgetary constraints are present in the case (Gorgidze, 2012).
From the system analysis, the issues and their likely consequences are well-illustrated in the previous section. Here are some recommendations provided to the organisation to manage its inventory related issues in a better way:-
From the aforementioned solutions, Coles can be able to manage some of its inventory management issues and can improve its customer service in the peak demand period. This might help the organisation in regaining its growth momentum and meeting its goals.
Elabore. (2014). Rich Pictures and CATWOE: Simple yet Powerful Scope-Modelling Techniques. (Online) Elabore8. Available at: https://elabor8.com.au/rich-pictures-and-catwoe-simple-yet-powerful-scope-modelling-techniques/ [Accessed on: 6/11/2019]
Terra, L., &Passador, J. (2018). Strategic thinking in the context of complexity. Systems Research and Behavioral Science, 35(6), 869-883. DOI:10.1002/sres.2530
Gorgidze, I. (2012). System thinking in the control of organizational and technical problems (Management science - theory and applications). New York: Nova Science. (2012). Retrieved November 5, 2019, https://lesa.on.worldcat.org/oclc/852159082
Braue, D. (2019). Coles supply-chain revamp means stockouts are down (down, down). ZD net. Available on: https://www.zdnet.com/article/coles-supply-chain-revamp-means-stockouts-are-down-down-down/. https://businesschange.co.za/what-is-catwoe-analysis/. [Accessed on 6/11/2019].
Business change. (2017). Is the CATWOE Analysis? Business change. Available on: https://businesschange.co.za/what-is-catwoe-analysis/. [Accessed on 6/11/2019].
Mjema, E. A. (2018). A System Thinking Approaching Maintenance, Production and Quality. Tanzania Journal of Engineering and Technology, 26(2).
Ingram, H. (2000). Using soft systems methodology to manage hotels: a case study. Managing service Quality. Vol. 10, No. 1. Pp. 6-9
Arnold, RD., & Wade, J. (2015). A definition of systems thinking: A systems approach. Researchgate, Procedia Computer Science
Peters, D. (2014). The application of systems thinking in health: Why use systems thinking? Health Research Policy and Systems, 12(1). DOI:10.1186/1478-4505-12-51
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