Section One – Introduction and Concept
1.0 Organizational Introduction
1.1 Organizational Background
The undertaken case is of the organization that belongs to the farming industry of Australia that is Wesfarmers. The company had its origin in 1914 from Western Australia that is the reason it is named Wesfarmers. The company is one of the largest listed companies in Australia and has diverse business operations apart from farming. As per the official website, Wesfarmers have businesses in different industries including liquor, office supplies, home improvement, convenience stores, hotels, and supermarkets. The company is famous to supply its products to Coles supermarket that include pork, the variety of chicken, eggs, and seafood. Wesfarmers employ approximately 220,000 employees which makes it the largest private sector employer in Australia (Wesfarmers, 2018a). The shareholder base of the company is about 530,000 and the company has a primary objective to ensure the satisfactory return of its shareholders.
1.2 Purpose of Report
The purpose of the report is to evaluate the sustainability in the supply chain operations of the company that is Wesfarmers. The report would highlight the important procedures in the supply chain processes including procurement, production and supplier selection for chicken that would be evaluated as a commodity. In addition, the report would evaluate the procurement decisions with respect to its impact on the environment and organization. The CSR policy of the Wesfarmers to determine the measures they have taken with respect to the environment and community. On the basis of the analysis, the recommendations would be proposed to address the issues with CSR policy and TBL approach.
1.3 Limitations
The limitations of the report are that there is the limited scope of the research as it is based only on one company to evaluate its supply chain operations for a particular commodity. Due to the limited availability of secondary data, the results cannot be generalized to a broad perspective. Another limitation is that only secondary data is considered and the results would be based on the information provided on the official website and authentic secondary sources.
2.0 Examining and Defining Key Concepts of Sustainable Procurement
2.1 Procurement
The Coles Supermarket in Australia procure the food and vegetable commodities from Wesfarmers who supply fresh products to the supermarket. Besides, Wesfarmers and Coles focus on ethical sourcing of food and animal welfare for its poultry products. As per the official website of Wesfarmers, the Coles and Wesfarmers work in accordance with the animal welfare policy that covers five freedoms that is freedom from thirst, discomfort, pain, injury and distress (Wesfarmers, 2018f). The Coles procures chicken and other meat from Wesfarmers ethically while focusing on the animal welfare policy. It is further stated on the website that the treatment of animals and aquaculture species is ensured at all the levels to offer fresh meat and poultry products to supermarkets. For ethical procurement, Coles has committed to the policy for sourcing animal and aquaculture products from Wesfarmers. The procurement in accordance with RSPCA policy for farming to ensure that the farming products offered to customers are humanely farmed including the products like fresh pork, turkey and chicken.
2.2 Corporate Social Responsibility
A number of CSR measures have been undertaken by Wesfarmers for the environment, community and the employees of the organization. The company has its policy for an ethical code of conduct to maintain the human rights that protect the employees, suppliers, and customers. Wesfarmers have also inclined to community contributions as part of its CSR initiatives where the company invests for farmer communities including the donations that are also facilitated by customers. The company also pays taxes and royalties and paid $2.1 billion which led it to become in top ten taxpayers (Wesfarmers, 2018c). Wesfarmers believe that a strong business environment is underpinned by an inclusive and cohesive community and environment. Another CSR initiative is to control the water waste and use to address the climate change concerns.
2.3 Supply Chain Management
The supply chain management operations of Wesfarmers are very broad as they have a number of businesses. For supermarket division, they supply their products in over 787 stores for different businesses that include liquor, hotels, financial services, auto parts, home improvement, office supplies, chemicals, and other industrial goods apart from grocery items (Wesfarmers, 2018a). The major supplier of Wesfarmers is Coles as it is the superstore that has the products from the Wesfarmers. Apart from the Coles supermarket, the Wesfarmers is the supplier of Coles liquor, Coles online, Coles financial services and Coles Express that is a fuel service. Regarding the suppliers of Wesfarmers, the official website claims that the Wesfarmers Group is associated with 18,000 suppliers for different products and they had paid about $47 billion to the suppliers for the procurement (Wesfarmers, 2018d). The Wesfarmers support and value their suppliers because they are the reason that their businesses like Coles have been creating value for the customers while ensuring continued competitiveness.
Wesfarmers have developed an effective relationship with their suppliers with a belief that suppliers are a key to source responsibly and deliver products responsibly and ensuring ethical standards in procurement with minimal environmental impact. The countries from where Wesfarmers get supplies for its products include New Zealand, Australia, China, Vietnam, India, Bangladesh, Thailand, and other countries (Wesfarmers, 2018e). The Wesfarmers claim that they have a complex supply chain but they ensure that the human rights are preserved, respected and upheld. The company also ensures that the interests of the partners and stakeholders are consistent with the company’s working that is to achieve sustainable performance. The company has developed sustainable sourcing policy in order to source products ethically and fairly while also has a sustainability report to illustrate the commitment to strong supplier relationships.
2.4 Supplier Selection
Wesfarmers select the suppliers according to a criterion that includes the ethical and fair practices for farming and sourcing. Particularly, for fruits and vegetables, Wesfarmers select the suppliers who produce organic products and ethical farming of the products. As also illustrated that the company prevents unfair practices including forced labour, child labour, bad working conditions and other unfair practices (Wesfarmers, 2018e). In addition, the company evaluates its suppliers to support them where Wesfarmers financially support the suppliers to produce more. For example, Wesfarmers has offered a grant worth $400,000 from its Nurture Fund to its animal farmer to manufacture highly nutritious animal fodder. Wesfarmers have also have offered a loan of $365,000 to its potato supplier in Australia to introduce new technology and $134,000 to improve irrigation system in farms. Therefore, the company selects the suppliers that offer the quality of organic products and also support them to develop relationships and improve the quality of production.
2.5 Triple Bottom Line (TBL)
Wesfarmers effectively implement TBL approach in its supply chain operations.
For community and society, the Wesfarmers Group had a number of initiatives that include supporting suppliers; young people with scholarships; support for women in need; Nurture Fund for suppliers; and donations worth $1 million.
For the environment, the Wesfarmers Group has committed to source sustainable products; using reusable bags; planted 200,000 trees; using solar energy for energy preservation; and focusing on recycling (Wesfarmers, 2018d).
For financial sustainability, the Wesfarmers have used the alternative energy to save the costs of energy; providing a safe workplace which reduced the costs of injuries; promotes recycling which saves the cost of manufacture.
2.6 Commodity Group Terminology and Definitions
Hatchery: It is a facility where fish and poultry are placed under artificial conditions where eggs can be hatched.
Housing: In the commodity production of chicken, housing is referred to as barns or sheds where chicken is reared.
Harvesting: It can either be referred to harvesting of eggs from poultry after incubation or slaughtering of the chickens for meat production.
RSPCA: It stands for Royal Society for the Prevention of Cruelty to Animals and it is different for different commodities. For chickens, it is required to be approved as per RSPCA standards that require chicken to be housed in indoor environments with free-range outdoor access (ACMF, 2018).