Supply Chain Management at Loblaw Company Limited - Case Study Example

The paper “Supply Chain Management at Loblaw Company Limited" is an affecting example of a case study on management. Loblaw Company Limited is one of the key players in the Canadian retail market chain, which specializes in groceries and general merchandise. In order to compete with market leaders like Wal-Mart, it undertook to advance its supply chain system in 2005 due to the realization that its goods were delaying to reach the stores from the warehouses.

To maintain its market share, Loblaw invested $62 million in a restructuring program that involved advancing the supply chain network, reorganizing grocery merchandising, procurement and operations groups, modernizing its information technology systems, consolidating regional offices into the new headquarters in Ontario, and cutting warehouses from 32 to 26. Despite these giant and costly investments, Loblaw continued to experience problems in the market.

Background and statement of problems
The ambitious strategy by the company did not bear the results that it wanted. The profits of the company did not improve for the past 12 quarters, the implementation of the new restructuring program was one year behind schedule and Wal-mart was continuously eating into its market share.

Challenges cropped up due to the fast pace of implementing the new programs, which did not provide a transition period from old to new. It resulted in shelves lacking the goods that were being advertised, leading to a waste of advertisement money. Other challenges that the company was facing include inability to attract customers to its non-grocery section, transferring its employees to headquarters without fallouts, keeping goods in demand on the shelves, marching  the competition posed by Wal-mart, rising labor costs, and diminishing discounts from suppliers due to the weakening of the Canadian dollar, which made importing goods from the United States expensive.

The internal limitations the company is facing include integrating the old system with the new system in order to provide a smooth transition period that is devoid of inconveniencies like suppliers being denied clearance and payments. Other internal limitations include advertising non-grocery merchandise in order to attract more customers, handling the transition from regional offices to the new headquarters without disrupting the company’s suppliers and buyers and fast-tracking its implementation of the new programs.

External constraints include fierce competition from rivals like Wal-mart, resistance from the workers union to propose pay cuts and fluctuations in the financial markets that made imports expensive hence, eating onto the discounts from suppliers.

The company must undertake measures aimed at regaining its market position, increasing profit margins, lowering operating costs, and selling both grocery and non-grocery merchandise in order to complete with Wal-Mart and retaining its buyers.

Situation analysis
The best technique to analyze the situation of Loblaw is by using the S.W.O.T method. This technique looks at the strengths, weaknesses, opportunities, and threats to a business venture (Griffin 67). The strengths of the company include the existence of a retail chain, market base, and customer loyalty. The weaknesses include a weak supply chain system, outdated information technology system and pro-union attitude. The opportunities available to the company include the market for non-food commodities, potential in the food business and lowering of prices. The company faces external threats, which include competition and fluctuating foreign currency markets.

Analysis of alternatives
The company can apply several solutions to its challenges. They include implementing changes at a slower pace to allow the new system to adjust to the demands of the work, marketing non-grocery goods in order to inform customers of the full range of goods the stores offer and compete fully with Wal-mart, developing a supply chain management system that ensures availability of in-demand of goods, removing the demand on suppliers to purchase one percent of sales, and negotiating with the employees union on the best way forward on wages that suits both parties.

Recommendation and implementation
The main challenge of Loblaw is its supply chain system. Getting implementation programs of new strategies back on track immediately will allow the company to put in place a system that ensures goods are availed on demand and that those in demand are constantly on the shelves. These strategies will aid in the reduction in prices of commodities, which is the main determining factor as customers become more price-conscious, hence enabling it to retain its market and compete with Wal-mart on level ground.