Q1. Describe the retail trade market in Australia.

You should consider private and

business customers, and how they purchase now and how it may change in future.
Support your answer using publicly available data/statistics. Ensure your answer include
recent actions that have taken place by various stakeholders as set out in the current news
and explain how this could influence buyer actions in future. 


The retail industry of Australia is one of the largest industries of Australian contributing
over 50% to GDP. Retailing showed a comparatively low output in Australia in 2018. In
both 2017 and the review period CAGR, growth in total retailing present value sales
increased only marginally, while total retail outlets in the nation decreased at a quicker
pace than in the past three years. While retailing in Australia is anticipated to evolve
favourably over the forecast period, financial slowdown is likely to limit development in
total current value sales and outlet numbers.
Another significant trend that is emerging is the growing numbers of online shoppers. As
of February 2019, an approximate over 80% of Australians are shopping online for goods
and services. This could lead Australia’s ecommerce industry to have a 15.1% revenue
growth in 2019. According to forecasts with the rate of growth of ecommerce industry in
Australia, by 2021 there would be 22 million Australians buying products online.

Source: Statista

The future of the retail sector in Australia depends on disruptive elements, such as
altering consumer spending patterns and overseas businesses that concentrate on
developing new retail strategies. Changing age and population demographics not only
affect location decisions to set up new supermarkets, but also affect the product range
offered between supermarkets. In addition, demographic growth will drive fresh
supermarkets as increasing foot traffic for current shops becomes unsustainable.

Q2. Outline possible sustainable procurement practices for Coles. You should consider its
approach to capital, maintenance and operating activities. You should also consider
project versus operating activities. 


Sustainable procurement is an increasingly widespread phenomenon driven by

organizations ' increasing participation in the management and sustainability programs.
SP can be considered as environmentally and socially responsible buying in its easiest
form (Brammer and Walker 2011; Walker and Phillips 2006)

Sustainable development requires businesses to assess the sustainability of their

behaviour, which requires them to use sustainability indicators and identify important
indicators, including water consumption, power consumption, product and packaging
restoration, client complaints, occupational health and safety, and more.
Coles Supermarkets reduced its costs of doing business by around $400 million in 2011-
12 through a number of supply chain improvements... For example, Coles Supermarkets
are now buying grocery and dairy products through an automated sales-based system that
forecasts demand for a particular store and makes orders based on a just-in-time approach
(Deloitte in Verghese et al, 2015). In 2014-15, diverted 20,953 tonnes of organics - this
includes redistribution to food rescue organisations SecondBite and Foodbank as noted
above (Wesfarmers, 2016b) 


Initiated a program in 2016 in selected NSW supermarkets where more than 3,000
additional tonnes of organic material were converted to energy’ (Wesfarmers, 2016a). 


In 2016, Coles Supermarkets increased their total food donations by 50% to more than
7,800 tonnes through a partnership with SecondBite and Foodbank (Wesfarmers, 2016b).

In 2014-15, Coles expanded donations to SecondBite to include frozen meat at more
than 200 stores (Wesfarmers, 2016a). 


Anecdotal evidence suggests that the major impact of logistics on food waste at the
wholesale/retail level occurs in transporting fresh produce (fruit and vegetables, meat and
dairy, etc) from agricultural production direct to wholesale/retail distribution, due to the
long distances travelled, the poor state of many of the roads and the amount of fuel that
can be saved by turning off refrigeration for some or all of the trip. 
 (Lewis,
Downes,Verghese, & Young, 2017)
According to Procurement and Supply Australasia (PASA), Coles will be implementing
SAP Ariba, which will enable Coles to achieve cost and efficiency savings in
procurement through improved supplier management, risk management and cost
management. It will deliver greater transparency for Coles and its suppliers by digitising
and automating invoices and payments and building stronger relationships through
automation, network connections and data-driven insights.

Hewlett-Packard (HP) had implemented the SAP Ariba as their procurement strategy in
1998 which lead to over $1.8 billion total negotiated savings and spend reduction in
2005, reduced operation costs and increased contract compliance to 80%. 


Q3. Consider new technologies and the impact they are having on procurement, both for
end customers and for producers in the supply chain. Using material from current
business literature or journal articles, describe what the future might look like for an
organization such as Coles. 


With the age of technology that we are living in, the heavy dependence on IT has enabled
many industries to be reshaped especially the retail industry where online shopping has
become a big platform. Since 2015, Coles has been venturing the online shopping
platform with the use of software “Rover Power Rick” to improve staff access to stores.
For a retail giant such as Coles they have decided to invest on integrating artificial
intelligence and digital systems in its supply chain, product range, customer engagement
and workforce. The software is designed to assist store managers with forecasting and
accessibility on-shelf, as well as enable them to tailor ranges to suit consumer
preferences, and enhance range reviews by better comprehension which products are
dispensable and which are not.

For example, Walmart has extended its use of autonomous robots to search for missing or
out-of-stock products and labels. Food Lion, Giant and Martin's are also testing robots
that they're hoping to deploy later this year to more shops. Farmstead, which bills itself as
the first sustainable digital grocer in the nation, utilizes artificial intelligence to calculate
and predict how much food can be ordered from its local sources to avoid waste in the
supply chain. British online retailer Ocado also uses artificial intelligence and machine
learning to better comprehend which client communication requires instant attention and
to avoid fraud. Delivery services such as Instacart also take advantage of information
technology to assist them do their employment better. Snowflake Computing, which
offers Instacart data and cloud services, helps guarantee that the business has real-time
information to improve its back-end activities and helps technicians create fresh
instruments to improve customer service. (Corwe, 2018)

Physical shops are increasingly going to go digital, using consumer-facing technology to

create finding, researching food and buying food easier for shoppers. For instance,
searching the aisle for particular products is going to be a thing of the past with the
growth of applications that guide shoppers through their experience in shop.
Technology innovations in the food supply chain allow process lines to understand in
detail what comes from the field and what is stored in order to satisfy demand. And
standards of quality and safety must be greater than ever before. Consumers may have
ignored minor shortcomings in the past or made a compliant seen by the grocery chain or
manufacturer, but that has now changed in social media.

The demand for freshness and the pressure to reduce food waste will imply that
supermarkets will need to enhance inventory delivery efficiency through live information
feeds.With the need for food safety awareness, technology can assist provide data about
how food is being produced and the product's nutritional value.

Coles is buying an expected 121 million recyclable meat and poultry trays in 2018 from
bioplastics manufacturer Plantic Technologies. This is a new approach for a more
sustainable method to combat waste generation and reduce cost of production involved in
procuring packaging material for the products. It may cost a lot in the initial stages, in the
long run Coles will be able to profit from this venture.

Recent retail customer feedback has shown that energy costs continue to be a top
concern. With the use of the Internet of Things (IoT) and connecting coolers, freezers,
HVAC units and others power-using equipment to a centralized program, retailers can
get an accurate picture of their energy use. The information allows them to manage
equipment performance and utilize settings for optimum temperatures and lighting.

Data insights from continuous remote monitoring help identify problem areas and
opportunities for efficiencies, which can ultimately reduce costs. A solid IoT plan is
critical to meeting customer expectations and building a positive brand
Q4. Develop a project integration management plan that emphasizes the procurement
aspects, and that could allow other supermarkets to transition from traditional approaches
to sustainable procurement strategies. See the sample Procurement Management Plan
template as a guide. 


Procurement Approach and Contract Type.

The fixed-price contract is a legal agreement between the organisation of the project and
an entity (individual or business) to provide the project with products or services at an
agreed price. Usually the agreement details the quality of the products or services, the
timing required to help the project, and the cost of products or services being delivered.
The set cost agreement has several variants. The fixed price contract provides predictable
costs for commodities and products and services where the scope of job is very evident
and unlikely to alter. The contractor is responsible for handling the job to satisfy the
requirements of the project. The project team is monitoring the quality and schedule. A
fixed price incentive fee agreement offers a further economic incentive for contractors
upon completion of a project. The incentive can not be increased or reduced under
ordinary conditions once the fee has been decided and the agreement is signed which is
the only drawback in this type of contract. This sort of agreement can give important
rewards to contractors when they take measures to regulate a project's expenses.
However, in terms of negotiation and execution, this is one of the most complicated kinds
of agreements (Upcounsel).
Such a contract should also indicate the maximum cost, but in terms of profit there should
be no maximum or minimum.
This is the highest sum to be received by the contractor upon completion of the project. It
excludes any permissible changes, which may be described in the agreement in other
provisions.
A target contract for a fixed price incentive company also describes a particular formula
for calculating profit changes.

Cost determination
A "Point of Total Assumption" or PTA should also be included in fixed price incentive
company targets. This contract component will outline the point where the contractor is
supposed to assume full cost overrun danger.
The prices calculated using the price adjustment formula described previously in the
agreement should be equal to the ceiling price in this provision. The share line cost is
higher than the highest cost, moving beyond the Total Assumption Point. The maximum
cost should therefore override the share line.
Before the contract is actually awarded, all contract components should be negotiated in
advance.

Procurement Risk

In some situations, if a project is underrun according to the requirements outlined in the

price adjustment formula, the contractor may potentially earn all the target profit as well
as the "contractor share." In circumstances up to the Total Assumption Point, the
contractor may be needed to withdraw the "contractor share" part of its income from the
complete target profit of the project.
Procurement Risk Management
Moving beyond the Total Assumption point, the cost of the stock line will exceed the
maximum cost defined. When that happens, the PTA is overruled by the maximum price.
For each dollar that the project is overrun, the complete profit of the contractor is
decreased by one dollar. This fundamentally transforms the contract into a company
agreement for set prices.
Unless other conditions specified otherwise in the agreement, the client will never pay
more than the ceiling price established.
References

Brammer, S., and H. Walker. 2011. “Sustainable Procurement in the Public Sector: An
International Comparative Study.” International Journal of Operations &
Production Management 31 (4): 452–476. doi:10.1108/01443571111119551.

Crowe, E. 2018 “How Technology is shaping the future of Food Retail” Retrieved from
https://www.smartbrief.com/original/2018/04/how-technology-shaping-future-
food-retail?

Deloitte, 2015. Analysis of the Grocery industry; Cole Supermarkets Australia, Sydney,
Australia: Deloitte Access Economics Pty Ltd.

Fifth Estate (2012) Metcash galvanizes IGA operators into reducing power (webpage). 6
August 2012. http://www.thefifthestate.com.au/articles/metcash-galvanizes-iga-
operators-into-reducing-power/36968

Lewis, H., Downes, J. Verghese, K., & Young, G. (2017) Food waste opportunities
within the food wholesale and retail sectors. Prepared for the NSW Environment
Protection Authority by the Institute for Sustainable Futures at the University of
Technology Sydney.

PASA, (2019,Feb 15th ) Coles optimise Operations with SAP. PASA Procurement and
Supply Australasia

Walker, H., and W. Phillips. 2006. “Sustainable Procurement: Emerging Issues.”

International Public Procurement Conference: Proceedings, Rome, September 21–
23.

Wesfarmers (2016a) APC Annual Report.

http://www.packagingcovenant.org.au/data/AnnualReports2016/Wesfarmers%20
Limited_AR_2016.pdf

Wesfarmers (2016b) Sustainability Report 2016: Our business – Coles (webpage).

http://sustainability.wesfarmers.com.au/our-businesses/coles/coles/

Upcounsel. Fixed Price Incentive Fee Contract: Everything You Need to Know.
Retrieved from https://www.upcounsel.com/fixed-price-incentive-fee-contract