Efficiency and effectiveness in business operations can be maintained by a business organization if all of its function of management is performed properly. There are various categories of management that are performed by an organization to make its operations profitable and one of such function is Supply Chain Management function. Supply chain management can be defined as a process that shows the flow of goods and service from a supplier of raw material to the distribution of finished goods to the final consumer (Monczka et.al, 2015). In this report, various aspect of SCM has been evaluated from the perspective of Telstra Corporation which is involved in the Telecommunication market of Australia.
Background of the company
Telstra Corporation Limited is considered as largest communication company in Australia. The main operation of the company is to provide services of a telecommunication network, mobile, internet access, DTH services and other related services. Telstra is also one of the oldest companies in Australia as it was established as an Australian postal service Company under supervision of the government. As of today, it is fully privatized and has become a profit-making and customer focus company. Current CEO of the company is Andy Penn along with CFO Warwick Bray and COO Robyn Denholm. These three employees are considered as key management personnel of the company along with another member of the board of directors. As of 2017, the company has given employment to around 32000 people in Australia. In the last financial year that is 2017 has made a total revenue of 26 billion Australian dollars which indicates that this business is a high profit generating business. There are various offices of Telstra Corporation in Australia with the headquarter situated in Melbourne. As of 10th August 2018, the share price of the Companies listed at Australian dollar 2.84 (Telstra Corporation, 2018).
The current financial condition of companies is very strong and it is also listed under ASX-100 list. ASX-100 List is a list in which ranking is given to Australian companies according to the capital of the company. Telstra Corporation is one of such companies which indicate that the market capitalization of the company is very good and it is already discussed that the revenue generating a capacity of the company is very high.
All of the services provided by Telstra Corporation are divided into three major categories that are personal, small business and business & Enterprise. Services provided to each of these categories of customers varies from each other.
Personal- services of mobile, pre-paid mobiles, tablet, mobile broadband, broadband, smart home and TV, movies and music, etc.
Small business- Products and services related to mobile phone, bundles, tablet, broadband, landline phones, e-commerce, etc. (Telstra Corporation, 2018)
Business and Enterprise- production services related to mobility, cloud, collaboration, customer related services, network services, internet of things etc.
Major competitors of the company are Optus, Vodafone, , etc.
Please refer to this site for direct channel: https://smarterbusiness.telstra.com.au/growth/business-strategy/the-evolution-of-distribution
Please refer to this site for indirect channel: https://www.arnnet.com.au/article/597585/telstra-tiers-resellers-new-channel-program-structure/
Sales and distribution channel can be defined as a process through which an organization distributes its product and services to customers. Generally, this is a specified course that is used for distribution of product and services. It is important to set a specific distribution channel for each of the service so that product and services can reach to customers with effectiveness and efficiency (Jacobs, Chase and Lummus, 2014). There can be two type of distribution channels i.e. direct distribution and indirect distribution. Both of these distribution channels have their own advantages and disadvantages. Indirect distribution channels, there is no middleman and services are provided directly to the customer by the main organization. For this channel to be in effect an organization should have their own distribution channels but it will increase the overall cost of operations of the business. This type of distribution channel will also require a separate Department that should give an integral part of the organization. Generally, a direct distribution channel or not used by large organizations as they are more focused on their main operations of the business.
Indirect distribution channels distribution channel in which products and services are availability customer through various type of middleman such as a wholesaler, retailer, agent etc. In an indirect distribution channel business organizations outsources its distribution of products and services to various other companies. It is a better method of distribution of product and services as there are various services which could be performed only by a specialized organization (Mangan, Lalwani and Lalwani, 2016). For example, Cloud Computing services provided by a Telecom company are generally outsourced to IT organizations. This distribution channel is also adopted by Telstra Corporation. Business partner for distribution of cloud computing and other related services of Telstra Corporation is IBM cloud. Indirect distribution channels also help in providing Quality Services to its customer as such distribution companies are a specialized company that is working in a particular area of operation.
Distribution Chain of Telstra Corporation
Where is the reference for this diagram above?
Suppliers are people or organization that are providing the raw material for the production of goods and services to the organization. These are also called as component suppliers for the company as they provide components for product and services that are manufactured by the company. These organizations are not exclusive organizations as they provide services to various other telecommunication companies. Therefore it is very important to maintain a good relationship with the contract with suppliers so that raw material can be obtained at lower prices or discounted prices. The raw material is purchased from the suppliers and transferred to contractor manufacturer for production of goods and services. In case of Telstra Corporation manufacturing processes conducted within the organization. After production of goods and services hardware produced by the company are transferred to service providers or distributors of the company. After this step, the product and service reach to the final consumer which can be a particular organization, retailer or individual consumer.
Sourcing material and services by Telstra Corporation
Effective and efficient procurement of material and services by an organization is a very important function as it can have a vital impact on the Cost structure of the company. It is considered that stability in the supply of material for the production of goods and services can have a vital impact on financial as well as the operational performance of the company. Basic Data Services for providing services of calling are generally allotted by the government on the basis of bids made by each of the telecommunication company. Telstra Corporation is one of the oldest companies with a large amount of financial and capital support, therefore bids made by it are generally more as compared to other competitors in the market. The main competition in the market is for the supply of other services such as cloud computing, high-speed internet, mobile phones, and other products and services manufactured by the companies. Telstra Corporation has specific procurement procedures and policies that are published by them on their official website under the heading “Suppliers” (Wang et.al, 2015).
Telstra Corporation has been in business for around a hundred years and they consider their suppliers and partners very important resource for the business. In the year 2017, they purchased product and services from around 4800 suppliers that cost them around $6.5 billion (Telstra Corporation, 2018). This figure shows that company has various suppliers for their product and services and they do not depend on any particular group of suppliers. This is an advantageous situation for the company as they are not dependent for the production of their goods and services. Limitation of suppliers can affect overall cost structure of the company which will ultimately affect overall pricing of product and services. Telecommunication market in Australia is very competitive and each service provider is looking for a manner in which they can reduce their cost. As Telstra Corporation has a large number of suppliers then they have the power to negotiate with their suppliers and they can reduce their prices by getting discounts on their raw material. This will definitely give a competitive advantage to the company over its competitors.
Telstra Corporation has a separate Department for procurement of raw material whether such a material is direct or indirect to the process of production. The primary function of this department is to purchase a diversified different range of products which can vary from office uniforms to satellite infrastructure. Suppliers of the company also range from small Companies to very large companies in Australia so that the above-mentioned range of products can efficiently satisfied. Some of the biggest Corporation that are suppliers of the company are Sony Ericsson, Google, and IBM.
There are some specific steps that are followed by the organization and its purchase department before procurement of indirect or direct raw material. The steps are formulated so that the best quality raw material is purchased by the company and best possible services can be provided to the customer.
Steps followed by the purchasing department of the company are as follows-
- Identification of requirements essential for the production of goods and services.
- Internet step invitation is sent to the suppliers who produce a bid the company on their official website or through emails.
- Each of the suppliers is assessed on a variety of factors such as quality of product and services, the value of money, duration of the contract, technology and innovation, the risk involved in doing business with such supplier, health procedures to be followed, reliability, robustness, scalability etc.
- At last best supplier is selected for a particular contract and negotiation is done on price with such supplier (Telstra Corporation, 2018).
Another concert that was adopted by the company in relation to the procurement of supplies is sustainable procurement. Telstra Corporation is a member of the United Nations Global Compact which is an organization formed for insurance that all its member practice responsible business policies in the market (Telstra Corporation, 2018). There is another organization named “Joint audit Corporation” that is formed for verification, assessment, and development of Corporate Social Responsibility practices in suppliers. Telstra Corporation is also a member of this organization so that they can ensure that their suppliers are socially responsible. In addition to that Telstra Corporation has also formulated the supplier’s code of conduct that describes their expectation in relation to human rights, workplace safety, ethical business practices and supply chain management.
These code of conduct also help in ensuring that other factors such as social factors and environmental factors are also considered while selecting a particular supplier. Some of the important points that are included in the supplier’s code of conduct are as follows-
- Legal obligation- supplier should comply with all the legal requirements that our government of the country has imposed in which the supplier is operating along with regulations imposed by the government of Australia.
- Human rights- special consideration has been given to human rights and labor rights in this code of conduct formulated by the company. Some of the human right that should be followed by the supplier are as follows-
- There should not be any discrimination with regard to gender, age, sexual orientation, race, pregnancy, disability, financial income etc.
- There should be specific policies to deal with bullying and harassment at the workplace.
- All the laws and regulation in relation to wages and benefits applicable in the respective country should be strictly followed by the supplier. Payment to workers shall be made at the decided time.
- Working hours should also be in accordance with the workplace rules and regulations.
- Practices such as forced labor, compulsory labor, child labor, etc. should be identified by the supplier in their organization and strict action should be taken against if such practices are continued. (wheres the reference for this part above?)
- Suppliers of the company should identify and follow all the workplace health and safety consideration to ensure that a safe working environment is available to the employees.
- Environmental laws and regulation should also be followed by the supplier of the company. In addition to the legal obligations, they should also form their own practices for environmental protection.
- Being a supplier of Telstra Corporation, they might procure some operational confidential information that can be very useful for competitors. Therefore it is important that the supplier of the company maintain a certain level of privacy as desired by Telstra Corporation (Telstra Corporation, 2018).
While getting into a contract with Telstra Corporation, a supplier of the company agrees all the code of conduct formulated by the company. Any violation of such codes can result in the termination of the contract and it can also result in a heavy penalty on part of the supplier.
Suggestions for improvement
Efficiency and effectiveness of supplies procurement policies of a company can be evaluated with the fact that it has been in business for over a hundred years and it is still the largest telecom service provider in Australia. Therefore it can be said that supplies procurement policies of the company are very effective and they are performing in favor of the company. There is one deficiency that is identified during the process of evaluating the procurement of supplies. Limitation identifies in the process is that the company should have some fixed and regular supplier that give priority to the Telstra corporation over other telecom service providers.
The distribution system of Telstra Corporation-
The distribution system is a system through which services are provided from the organization to a potential customer of the company. The separate distribution system has been selected by Telstra Corporation for the urban and rural population. Management of both of these type of distribution system is different but the general process used in the distribution of product and services is similar to each other. Product and services of the company such as mobile phone, SIM card, routers, Cloud Computing services, internet of things etc. are given to the authorized distributors of the company. Once the product reached to the distributor following process is followed by the distribution as per the distribution system authorized by Telstra Corporation (Kummetz et.al, 2017).
All the sales field executives and retailers of the company are selected by the distributor of the company after getting permission from the management of Telstra Corporation. There is a specific code of conduct that all the organizations and individual involved in distribution system should follow while performing their functions on behalf of the company.
In addition to the above-mentioned distribution channels, there are two additional distribution channels that are used by Telstra Corporation for the distribution of their goods and services. These channels are-
Sale through official outlets- there are variously licensed and authorized Telstra outlets situated all over the Australian. The customer can locate the outlets an official website of the company and can purchase any of their product and services from such an outlet. These are very trusted outlets to purchase product and services as they are licensed and authorized by the pool (Karthikeyan and Nauck, 2017).
This has become one of the most popular modes of accessing product and services due to its simplicity and ease of access. The intended customer can search for product and service of the company on their official website and order desired product or service on such online platform. Product and service will be delivered to address mentioned by the customer (Ahmad and Saifudin, 2014). It also has various modes of payment mode through which payment can be made by the customer online.
Suggestions for improvement- (this improvement statement below does not carry any weight. Lecturer wants to see how advance and professional approach for improvements to the distribution system)
Telstra Corporation can get into a contract with its official partners such as IBM and other popular business partners who sell product and services at their stores.
*****I need you to revamp the areas needed that goes with the assignment guide here:****
Discuss the supply chain structure of Telstra (marks: 10%)
• map its distribution chain;
- contract (if possible) etc.
Discuss the sourcing materials and services; producing what type of goods/services
(marks: 20%) • discuss the existing system; • suggest improvement from reputable sites
Discuss the distribution system of the identified major customer
(transportation and warehousing system (marks: 25%)
- discuss the
- suggest improvement with good substance/info; and • use model where ever feasible (MS Excel) (optional)
Demand and inventory management
Assessment of demand of an organization is a very important function of the management. Assessment of demand help in taking various operational and strategic business decisions. Every organization has specific policies and procedures through which they can identify the demand for products and services offered by them. There is a basic four-step strategy that is followed by Telstra Corporation for assessing demand of its product and services in the market. Description of strategy has been provided as follows-
First of all management of the company identify all the potential end user that can be included in the target market of the company. The entire market is divided into various subdivisions as services provided in a particular market may not be needed in another market. For example services of large Cloud Computing storage facility will be more popular in the business organization as compared to individual customers. This categorization is done on the basis of various factors such as needs and requirement of the customer, value addition to business, the income-generating capacity of the population and other relevant factors.
Demand analysis and division into components
In this stage Telstra Corporation asses, the demand of their product and services among their customers. This demand is analyzed on the basis of various primary and secondary research. These researchers are conducted by specialized research organizations who are contacted by Telstra. It is essential to contact such an organization as they specialize in this kind of services. After an analysis of the demand, entire demand is divided into smaller components so that a separate analysis can be done in detailed form. For example, a man can be subdivided into the demand of additional features, the demand for current, feedback, demand for improvement etc.
Deciding and forecasting demand drivers
In this step, various factors will be analyzed on the basis of which such demand can be altered and customer satisfaction can be achieved.
In this last step, inventory is produced and management in accordance with the demand for specific product and services. Telecom industry has to manage two type of inventories that is logical inventory and physical inventory. Physical inventory that can be physically assessed by the organization such as mobile phone, switches, routers, network wires etc. on the other hand logical inventory is a combination of non-physical items such as IP addresses and Mac addresses.
Hence it can be said that inventory management and demand management are very important functions in a telecom company such as Telstra Corporation.
It can be concluded that management of the company has been very effective in the long run of the company. Special consideration has been given to Supply Chain management of the company so that quality services can be provided to its customers at lower costs as compared to other telecom service providers in the country. This report has evaluated various aspects of supply chain management of Telstra Corporation such as distribution chain, supplier’s management, demand management, inventory management, supply chain structure etc. after evaluation of all of these functions of SCM, it can be said that SCM of the company is very effective and efficient. It has been working for the company for the last 100 years and it is expected to give a positive response to the company in the coming future.
Ahmad, N. and Saifudin, A.M., 2014. Supply chain management in telecommunication industry: The mediating role of logistics integration.
Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Karthikeyan, V. and Nauck, D., British Telecommunications PLC, 2017. Content distribution system and method. U.S. Patent 9,674,245.
Kummetz, T., Ranson, C.G., Hanson, V.E. and Williamson, M.J., CommScope Technologies LLC, 2017. Optimized telecommunications distribution system. U.S. Patent Application 15/287,210.
Mangan, J., Lalwani, C. and Lalwani, C.L., 2016. Global logistics and supply chain management. John Wiley & Sons.
Monczka, R.M., Handfield, R.B., Giunipero, L.C. and Patterson, J.L., 2015. Purchasing and supply chain management. Cengage Learning.
Telstra Corporation, 2018. About Procurement. Telstra Corporation Limited. Retrieved from: https://www.telstra.com.au/aboutus/our-company/supplying-to-telstra/about-procurement
Telstra Corporation, 2018. About Procurement. Telstra Corporation Limited. Retrieved from: https://www.telstra.com.au/aboutus/our-company/supplying-to-telstra/working-with-telstra
Telstra Corporation, 2018. About Procurement. Telstra Corporation Limited. Retrieved from: https://www.telstra.com.au/aboutus/our-company/supplying-to-telstra/sustainable-procurement
Telstra Corporation, 2018. About Us. Telstra Corporation Limited. Retrieved from: https://www.telstra.com.au/aboutus
Telstra Corporation, 2018. Telstra whole Sale. Telstra Corporation Limited. Retrieved from:https://www.telstrawholesale.com.au/
Wang, Y., Wallace, S.W., Shen, B. and Choi, T.M., 2015. Service supply chain management: A review of operational models. European Journal of Operational Research, 247(3), pp.685-698.