Analysing the Modern Business 

Executive Summary

As concerns the subject for this report, the topic chosen was centred on the minimisation of delays in the supply chain and increasing efficiency of the retail industry in Australia through the use of AI, specifically in demand forecasting, and managing of inventory. In the retail trading year 2023-2024, fluctuating inflation rates, uncertain customer demand, and delayed imports adversely affected the Australian industries’ supply chain in terms of stock stability and customer satisfaction.

As a result of the sensitivity of the supply chain, it becomes a good plea to change to help retailers avoid congested orders and ensure proper demand in stores is met without causing congested supplies or stockouts. These are accuracy, the cost of implementing a solution, and scalability which when assessed lead to the conclusion that the preferred solution is the AI-powered demand forecasting system. Precisely, this system’s capacity to forecast demand oscillations adequately handles the underlying issues of supply chain failures, which presents long-term advantages. Increasing the demand accuracy and decreasing the wastage helps Australian retailers stay stable despite the outside conditions.
 
1. The web-address of the news website articles that describe the chosen topic

Articles on this issue can be found at:  
•    SMH (https://www.smh.com.au/business/the-economy/shoppers-warned-to-expect-empty-shelves-delays-if-ports-strike-continues-20240105-p5evd6.html)
•    Sky News: (https://www.skynews.com.au/business/retailers-increasingly-concerned-about-shipping-delays-as-consumers-are-warned-they-could-face-higher-prices-for-essentials/news-story/786f94c4875def51029ccd8393924c86?amp=&nk=e81042909cf712dce8793d67bed3f1b7-1726933269)
 

2. Analysis of the Current Situation in the Australian Retail Sector

2.1 Overview of the Australian Retail Sector and Key Issues

The external sources influencing the Australian retail sectors are increasing inflation, fluctuating consumer power, and difficulty in importing products, which has caused extreme impairment of supply chains (Sky News, 2024). The Australian Retailers Association has revealed that its members are facing 20% delays, which has led to empty shelves and a shortage of stocks.

There have been several inconveniences, which would be worse in the urban areas, including delays in receipt of essential goods because of an average of 15% product shortfall in 2023, compared to 2022 (Sydney Morning Herald, 2024). Studies have shown that due to Red Sea terrorist attacks, port strikes have occurred which have delayed import of food, furniture and clothing (SMH, 2024).

These supply chain challenges, coupled with the effects of the COVID-19 pandemic, have further stretched the ability of retailers to achieve an acceptable inventory position across their networks, to adequately meet consumer requirements.

•    The primary aim of the Australian retail Industry is to enhance supply chain efficiency, and stock availability along with ameliorating consumer satisfaction. It is found that retail companies in Australia strive to adapt to external financial pressure including inflation and volatile customer demand. Through the incorporation of advanced technology such as AI for inventory management and demand forecasting, the Australian retail Industry intends to reduce product delivery delay and optimise business operations, thereby boosting business profitability. 

•    The major beneficiaries of the retail industry are customers who expect on-time delivery of ordered products and services (Cui et al. 2024). The industry also serves different stakeholders incorporating logistics providers, employees and suppliers (Prataviera et al. 2024). Organisational management of the concerned industry, by addressing the existing challenges and aligning business operations with customer requirements, might be capable of developing a resilient ecosystem that not only supports consumer loyalty but also accelerates business sustainability.

2.2 List of key processes (and capabilities) that are already in place

Figure 1: Identified list of processes in the Australian retail sector
(Self-developed)

The Australian retail sector has established several essential activities to control the processes that occur within it. One of them is the propelled inventory technique, in which large stocks use computerised methods to keep track of inventory levels and to reorder the products when they get low. Another important documented process is customer relationship management, which is used by retailers to collect and process information about consumers.

A survey carried out among 50 retailers and an industry survey revealed that while 70% of these utilised CRM purposes to determine customer preference, only 40% used CRM data for demand forecast. This uncordial relationship is surprising more so that retailers are missing out on using CRM data to want and estimate consumer demand patterns.

It is revealed that optimism level among Australian customers is limited (33) compared to consumers from emerging markets (McKinsey, 2024). Research has also shown that the tendency among retired individuals to spend on specific products and services has remarkably escalated. In terms of fulfilling the demand, most retail companies in Australia have introduced innovative products with the help of advanced software. However, owing to supply chain issues, it has become arduous for those organisations to accumulate the required raw materials to maintain high productivity.

2.3 Two of the identified processes described by BPMN diagrams

According to the findings in the Australian retail industry, accurate demand forecasts, and timely inventory tracking will help to address the issue of supply chain interruption (Patel, 2023). For instance, the AI-Powered Demand Forecasting System analyses the purchasing history of consumers, seasons, and other trends in the market to make a forecasted estimate of customer demand. This technology also minimises mistakes in the restocking of inventories as well as improves overall retail productivity (Jodlbauer et al. 2023). 

BPMN diagram: CRM-Driven Demand Forecasting
 
Figure 2: BPMN diagram for CRM-Driven Demand Forecasting
(Self-developed)
 

The Inventory Replenishment System feature replaces other manual or time-consuming replenishment procedures. When the inventory number falls to a set threshold, the system issues a purchasing order, cutting the number of stockouts by a third of that of the manual system (Mulopulos, 2023). They both enhance decision-making and supply chain responsiveness to market changes as well.

BPMN diagram: Inventory replenishment
 
Figure 3: BPMN process for inventory replenishment 
(Self-developed)

The above infographic has delineated the BPMN process for inventory replenishment. It is found that the process has started from inventory levels which are monitored and analysed. After that, checking the stock level and making decisions about whether the existing stock levels are below the threshold have been addressed. In case the stock remains over the threshold, a return to check stock levels will be considered. However, if the stock level is found to be below the threshold, a new order will be placed with suppliers.

2.4 Roles and Organizational Structure

 
Figure 4: The roles that are exist within the Australian retail sector
(Self-developed)

The organisation structure of Australian retailers is hierarchical because some important positions could be illustrated as follows: Supply Chain Managers are also responsible for suppliers and logistics. These managers are considered to have a major responsibility for managing delays and ensuring product throughput. Inventory Controllers report to supply chain managers and are mostly responsible for stock management and ordering. Also, Data Analysts employed by retail companies need to use CRM, and sales data, for demand forecasting (Muthukalyani, 2023). 

The roles in the context of retail organisation structure defined several key roles that guarantee a smooth supply chain. It is the duty and responsibility of some Supply Chain Managers to manage supplies and ensure effective supply by understudying shipping companies and suppliers. These professionals have become even more essential by 2024, due to global supply chain issues causing shipping delays.

Furthermore, data analysts also feed their information to AI systems to analyse a large number of data that is obtained from the customers and market trends to arrive at decisions that retailers can implement (Kumar et al. 2023). Reportedly, to meet the changing demands of customers, retail managers, supply chain partners and IT departments have developed innovative business strategies (Hugos, 2024). 

For instance, most companies have adopted Omnichannel marketing strategies to reach out to target audiences within a short period. Nevertheless, due to supply chain disruption, organisations in the mentioned industry have grappled to continue providing quality services to customers. SOTI’s new retail report indicates that the Australian retail supply chain management has confronted shipping delays and product unavailability (ITBrief, 2023).

Because of these issues, most retail managers have failed to make suitable business strategies to meet the growing demands of customers. Another responsibility of the Warehouse Managers is to ensure an adequate supply of inventories to prevent regular stock-out interruptions. The roles of these positions have been modified by AI and data analytics to focus on decision-making based on intelligence and analysis, rather than the physical work (Rolf et al. 2023).

2.5 Key Technologies in Use

 
Figure 5: Key technologies that are already in use
(Self-developed)

The following are some of the key technologies employed by Australian retailers to improve the supply chain. Automated Demand Forecasting System is commonly adopted to forecast demand and ensure they do not stock too many goods or run out of goods. Scholars have observed that the systems enhance the precision of forecasts.

Furthermore, RFID as a technology is employed for tracking inventory in real-time thus cutting inventory variances. Reportedly, to meet the changing demands of customers, retail managers, supply chain partners and IT departments have developed innovative business strategies. For instance, most retail companies have adopted Omnichannel marketing strategies to reach out to target audiences within a short period (Nagy et al. 2024).

Nevertheless, due to supply chain disruption, organisations in the mentioned industry have grappled to continue providing quality services to customers. SOTI’s new retail report indicates that the Australian retail supply chain management has confronted shipping delays and product unavailability (ITBrief, 2023).

Because of these issues, most retail managers have failed to make suitable business strategies to meet the growing demands of customers. Another benefit of the utilisation of cloud-centred management solutions is the capacity for maintaining actual cooperation with the supply chain, again increasing effectiveness.

2.6 A brief description of the current situation/issue/opportunity

 Figure 6: Identified current situation/issue/opportunity
(Self-developed)

When it comes to the contemporary retailing environment the key threats that Australian retailers experience is linked to supply chain issues which stem from inflation and imports. Stores face growing expectations to adopt new IT applications including artificial intelligence techniques to predict and manage stock levels efficiently; opportunities exist whereby stock-out risks can be cut by a fifth.

The imperatives for change occur and some of the retailers who will not change might experience some of the losses indicated below; that is why these technologies are a necessity rather than an investment to prepare for tomorrow’s operations and challenges. Currently, shoppers of Australia have been warned to expect increased prices of essential products and services and delayed delivery of ordered products. In terms of eradicating the issue, the peak retail lobby group of Australia has called for government intervention (SMH, 2024). Nevertheless, the inappropriate strategies to eradicate natural disasters and cyber-attacks have impeded Australian retail companies from continuing business performance.

3. Identification of the Stakeholders need to interact with 

3.1 Stakeholder Identification

The following are key stakeholder groups in an effort to undertake the change project of bringing in AI demand forecasting and real-time inventory management in the Australian retail industry. Retail Managers are one of the key stakeholder groups that would be charged with the responsibility of running the day-to-day business and ordering new stock or restocking to match current inventory trends. 

The other directly affected segment is the supply chain partners such as the suppliers and the logistics providers. The above report shows that Australian retailers rely on other sellers for some of the most crucial products, making the network crucial for effectiveness (AI Humdan et al. 2024). Connecting with IT Departments is also essential especially since they will oversee the technology requirements in the processes that will lead to future systems adoption process. Their knowledge will be helpful for the purpose of guaranteeing that all the solutions reflect the current organisational practices and processes.

Stakeholder management strategies

Table 1: Stakeholder management strategies
(Self-developed)

4. Elicitation to Identify and Document Requirements:

 
 
 
Figure 7: Identified and documented requirements 
(Self-developed)

The requirements needed for the proposed demand forecasting using artificial intelligence and the real-time inventory management system should be elicited in a comprehensive manner. Standards developed here under General Requirements will be as follows.

•    Technical interventions require the interfacing of the system with other ERP software so that data can be exchanged easily for analysis (Weerasekara and Gooneratne, 2023). 
•    Among all the functional requirements, the Functional Requirements are especially important. Some of the few skills that will be required include real-time data processing for accurate tracking of stocks within the warehouse to avoid incidences of stockouts or overstocking. Demand variability in the retail industry has increased since the pandemic and, therefore, demand forecasting must be done accurately (Papagiannidis et al. 2023). The system should also include notifications about low quantities of stock so that replenishment can be done in a timely manner and integration with suppliers where orders are placed automatically. 
•    Non-functional requirements will be dedicated to how the system will perform or function. It must be capable of supporting high transaction volumes, data integrity, and data conformity besides meeting the requirement of data privacy laws with increasing threats to data security in retail.
•    Finally, some recommendations for Transitional Requirements are the training of staff to enable quick utilisation of the system as well as a step-wise implementation of this new system to avoid interferences with other activities. When placed together, these requirements depict a considerable improvement in the current position, which explains why the change, as proposed here, is warranted.

5. Identify criteria for evaluating solutions 

 
Figure 8: Evaluation/Measurement criteria,
(Self-developed)

For the purpose of assessing possible solutions for retail sector AI-based inventory management, appropriate measurement criteria need to be defined. These criteria include Cost Efficiency which compares the overall cost of putting into consideration the implementation cost and the managerial effort involved in maintaining the improved inventory accuracy to the potential cost savings.

The final core criterion is known as Operational Effectiveness which measures the degree to which the proposed solution can help to increases the rates of stock turnover as well as diminish the risks of stock shortages. For example, AI leads to a decrease in stock out level and an increase in sales because of the number of goods available. There are calculated indicators including fill rates and lead times which will be used in tracking these gains (Kumar et al. 2023).

User Satisfaction will also be crucial as far as ascertaining the level of acceptance of the new system amongst stakeholders. Customer surveys and feedback from retail staff can measure this criterion, to make sure that the solution provides for user requirements. According to reports, majority of the employee population prefers intuitive business applications that remove the complexity of inventory work.

All these criteria will first be quantified based on their significance, whereby; both cost efficiency, operational effectiveness and user satisfaction will increase by a whopping amount. The total number of scores to be obtained will be derived by using a weighted scoring model in this approach, candidate solutions will be scored from 1 to 5 for each criterion. This weighted summation determines the overall suitability score which would enable direct comparison amongst various solutions possible.

Here is an example of evaluation process outlined below.
 
Figure 9: Evaluation process as per the criteria set above
(Self-developed)
 

6. Solution Design

•    Candidate Solution 1: AI-Powered Inventory Management System
 
Figure 10: Description of candidate solution 1
The updated BPMN diagram
 

The first candidate solution is a smart inventory management solution that aims at improving the efficiency and effectiveness of operations together with decision-making in the retail industry. This solution includes several computational components such as data storage and processing in a cloud server, a client-based application for staff to track stock in real-time, and access to machine learning services of third parties.

The processes unique to this solution are the improved systems for keeping track of inventory or ordering new stock. For instance, implementing a Business Process Model and Notation (BPMN) diagram will illustrate the new workflow: to pre-set the reorder level, the system will send a message to the staff whenever the inventory reaches a certain minimum, so that reordering can be done. 

It is believed that this solution has important implications not only for improving functional operations. In contemporary literature, Boute and Udenio (222), as retailers employ AI for data analysis, they are able to predict demand better therefore rectifying the issue of stocks and customer satisfaction.

AI-powered inventory management system has remarkably optimised stock levels to demand forecasting, real-time inventory tracking and automated reordering. The mentioned management system is found to be beneficial in providing accurate insight into current sales trends along with product performance and seasonal variation. This has significantly improved business decisions in reducing the possibility of stock out and overstocking.

Candidate Solution 2: Enterprise Resource Planning POS System

 
Figure 11: Descriptions of candidate solution 2
(Self-developed)
The updated BPMN diagram
 
The second enables an integrated point of sales, POS, system that links with the company’s inventory system to constantly output sales trends and stock. Some of them are versatile POS software compatible with other existing retail management software, POS interface options including tablets or touch screens, and secure payment portals for Physical and online payments. ERP (enterprise resource planning) system has significantly upgraded the inventory management of Australian retail companies by emphasising real time inventory visibility and demand forecasting (Vaka, 2024). The concerned system is found to be effectual in notifying managers when the stock level remains below a specific threshold. In this way, retail managers are able to make new decisions to enhance product availability in both online and offline stores.

An ideal process update within this solution involved synchronising the sale data with the inventory content. A BPMN diagram can depict the new process: anytime a sale is made, the inventory is adjusted in real time allowing the system to alert the management when the stock is low.

The ERP system also improves supplier management strategies by tracking vendor performance. The system is SSC in creating a balanced inventory level by optimising stock levels based on the current demands of customers.

When customers are capable of buying items with the assurance that what they are buying cannot or does not run out of stock, then people will be loyal to brands in business because they will always get what they want.

The capability of breaking down this sales data makes it possible to tailor particular marketing approaches, which can be used effectively to overcome certain trends. It is also in sync with the need for a strategic plan to bring about an increase in operation efficiency through the use of technology.

7.  Analyse Potential Value and Recommend a Solution 

The process of assessing solution designs

The first solution, the inventory management system using Artificial Intelligence, covers several of the identified criteria and System Integration criteria. It can bring down the operational costs by about 25 % due to the automation of the tracking of inventory, which is a primary goal of the organisation as stated in The Sydney Morning Herald (2023). Furthermore, it makes it easy for retailers to predict customer demand and this, in turn, will reduce the likelihood of out-of-stock products thus improving customer satisfaction.

On the other hand, the integrated POS system also meets key criteria, especially in the area of real-time data updates. This solution also increases turnovers by approximately 30% concerning inventories positively affecting powerful sales and customer experiences. However, as we have seen both solutions are workable, however, the AI-supported inventory management system comes out as the most suitable. Its predictive features enable the organisation to forecast demand like fluidity in demand and thus ideal for automating the organisation’s inventory management. The promises made by these decisions such as significant cost reduction and increase in operational efficiency make this decision solidify the organisation's strategic goals and objectives.

8. Conclusion

Both solutions are purposefully aimed at fulfilling the specified requirements successfully and improving the organisational capabilities to handle inventory and adapt to market forces. The automated inventory control streamlines is based on the use of Artificial Intelligence and predictive analysis whereas the integrated POS system calls for real-time synchronisation of sales data. All of these solutions not only enhance the current operational effectiveness but also correlate with a strategic vision of the effective usage of technology in order to develop competitive advantages in the sphere of retail. The above discussion has highlighted multiple strategies for improving supply chain management of Australian retail companies which incorporate the procedure of Assassin solution design and utilisation of ERP system in enhancing real time inventory visibility along with demand forecasting. Throughout the report, the positive effects of AI-powered inventory management systems have been analysed in the evaluation solution section.

 

Top Management Samples

References

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