|Categories:||Walmart Supply chain management|
Walmart is possibly the largest retail store in the world running over eleven thousand stores in more than twenty-seven countries in the world. It has an efficient supply chain management strategy that suits the modern day customer demands has enhanced its competitive strategy keeping it ahead of its competitors (Ballou, 2007). The retail company has customers centred supply chain management strategy that ensures the clients are placed first in its daily operations. The organization has maintained relatively low retail prices to its products through reduced costs in the supply chain management thus increasing its competitiveness in the market (Christopher, 2005). Reduced operational cost will translate to reduced prices thus increased customer loyalty.
The WalMart supply chain has some unique components as compared to other supply chains in the way they conduct their purchasing, operations, distribution and integration of the products and services(Ballou, 2007). Their supply chain begins with some managers who determine the products and services to be sold to the customers and make deals with the vendors to provide the products. The operations department of the organization focuses on the demand planning, forecasting, and management of the inventory. The historical data of the past buying patterns and external drivers are used to make the forecast thus maintaining a steady supply and disposal of their products (Simchi-Levi, 2005).
Accurate estimates are achieved through demand planning which is a critical move towards effective inventory management to enhance competitiveness. Forecast and inventory levels are balanced at the times to avoid over or under stocking at any particular time. The supply chain integration links the workflow and data among all the stakeholders in the business to increase efficiency (Bowersox et al, 2002). The connection between an effective supply chain management cost of products, better control and selection of its stores and efficient inventory have contributed to the competitiveness of the company in the retail market.
Utilization of technology
WalMart has a state of the heart technological innovation that has enabled to its competitiveness in the supply chain management. The retail shop uses technology to manage and track the inventory thus reducing the operation cost. WalMart has one of the largest information technology infrastructures in the private retail sector in the world (Meade & Sarkis, 1998). Their network design enables the organization to accurately forecast demands, track and forecast the inventory levels, manage customer relationships, create efficient transportation channels and offer efficient service response logistics. WalMart was the first company to use the universal code barcodes in the world which helped to collect information and analyze inventory information through its mammoth Bentonville database (Ballou, 2007). The organization uses Retail Link that is connected to a global satellite and accessible to analysts who predict supply demands to the supplier network displaying the real-time sales from the cash registers and to the WalMart distribution centres.
The suppliers and the producers in the supply chain can liaise through data synchronization to predict the demand thus they initiate a collaborative planning on how to stock the inventory appropriately (Handfield & Nichols, 1999). Every link in the chain is connected through well-laid technology schemes such as store-level point of sale system, central database, and satellite network. The organization shares all the supply management information with the stakeholders and partners which were a unique innovation.
WalMart has a unique frequent informal cooperation between stores, distribution centres and suppliers with less centralized control (Christopher, 2005). The supply chain tracks customer purchase and demand using the modern technology which allows consumers to effectively pull the products from the stores other than having the company to stock the goods into the shelves. The company is using Radio Frequency Identification Tags (RFID) that utilizes numerical codes that can be scanned from a distance to track batches of merchandize moving within the supply chain (Simchi-Levi, 2005). The inventory should be managed by both the suppliers and the WalMart, and they encourage suppliers to use RFID technology. The company is using hand held scanners that enable employees to detect any deficiency of products quickly in the shelves and restocking them appropriately.
WalMart has networked his suppliers through computer technology which has helped to reduce out-of-stock in the company with the support of RFID (Handfield & Nichols, 1999). The company has engaged the P &G to maintain their inventory in the stores and built an automated re-ordering system linking all the computers to the factory and P&G through a satellite communication system. P&G is able to deliver the products to WalMart or to specific stores through a technology initiated communication (Ballou, 2007).
Using cross-docking strategy
WalMart uses the logistics as its centrepiece to restock the inventory sufficiently. The direct transfer of products from inbound or outbound trucks by unloading the items from an incoming trailer or railroad directly into an outbound trailer reduces the need for an intermediate storage. Suppliers deliver products to WalMart distribution centres where they are cross-docked and delivered to the stores where they are required. The strategy helps to keep the transportation and inventory costs low as well as eliminating inefficiencies (Bowersox et al, 2002). WalMart trucks continuously distribute goods to distribution centres where they are stored, repacked and distributed without sitting the inventory thus enabling goods to cross from one dock to the other. The products are routed from suppliers to WalMart warehouses and then transported to the stores without having to hold them for long. The transporting trucks are never empty at any time thus reducing the transportation expenses which hike its competitive advantage.
Fewer links in the supply chain
The company works directly with the manufacturer to cut the supply chain link. The products are transported directly to its stores without involving the middlemen. The Vendor Management Inventory enables manufacturers to be responsible for the management of their goods in the Walmart stores (Christopher, 2005). The strategy allows Walmart to achieve a high order fulfilment on products. The distribution cost of restocking the Walmart retail shops is kept low which gives the organization a competitive advantage over the rival retail outlets.
Strategic vendor partnership
The organizations conducts vendor sourcing to identify products at the best market price from suppliers capable of meeting the supply demands world (Meade & Sarkis, 1998). The company makes strategic partnerships with the suppliers for long-term and bulk supply of merchandize at the lowest prices possible. It has a streamlined and an organized supply chain management equipped with efficient communication and partnership connections that enable easy flow of materials at lower inventory cost (Christopher, 2005). The organization has a global network of suppliers who collaborate to function as a single firm thus keeping the competitive advantage ahead of the pack.
Supply Chain Risk, Vulnerability, and Resilience.
Supply chain managers are constantly under pressure to improve the efficiency of their organizational supply chain management to allow the flow of merchandize quickly and at a reduced cost (Christopher, 2005). The growing realization and effort to achieve these goals have at times resulted in unforeseen problems within the organization. They increase the supply chain risks, resilience, and vulnerability. Removing the slack to protect the supply chain from unpredicted situations can create rigid supply chains that can bring an organization to a standstill due to a small niche (Ballou, 2007). The risks involved in the supply chain management should be kept as low as possible because they can pull down a successful establishment is a matter of days. A problem in the supply chain management will always trickle down to affect the consumers in terms of the prices that can influence the consumption and purchasing ability (Bowersox et al, 2002). The supply chain managers should be frugal and sensitive to matter regarding the supply of merchandize as it is the backbone of any industry.
Supply chain risk
Enterprises operate in some volatile environments which can be external or internal and will have adverse effects on the organization when they surface. The management should be vigilant to identify and solve any uncertainty occurring in the business environment (Christopher, 2005). A risk is any undesirable occurrence that can occur and alter the normal running of a system. The supply chain is currently affected by many risks some of which can be prevented at the management level while others occur naturally due to uncontrollable calamities. The supply chain can be affected by adverse weather, government regulations, political influence, volcanoes eruptions, war and many more natural occurrences and human power issues (Handfield & Nichols, 1999). These risk factors can put the supply chain of a company into havoc and reduce the organization to recess moments. Most organizations are working to reduce the operational cost so as to maximize profits thus exposing the supply chain to risks. The supply department plays a major role in the success of an organization and is most targeted by the cost reduction strategy.
How to avoid supply chain risks
When procuring, the suppliers think strategically by being holistic and integrated. It is good to adopt a strategic source-planning process to offer a lean, effective supply chain management team that has a cost and value improvement. A poor strategic source plan will lead to a crash between the risk factor and cost world (Meade & Sarkis, 1998). The management should adopt a plan that is the key to the success of the business while clicking desirable profit margins. Cost efficiency measures are likely to increase the supply chain risks, but a strategic trading partnership with the manufacturer and the management will help to overcome this problem (Christopher, 2005). The relationship should be enhanced by a written contract that clearly stipulate the suppliers obligations, goals to achieve the payback expected from the management.
The supply chain and risk managers should broaden the cooperation between stakeholders in the purchasing, logistics, transport and all the departments in the organization for smooth flow of information and products to the organization (Simchi-Levi, 2005). The collaboration helps the management from the different departments to work as a team thus allowing them understand the risks involved and work to solve them as a group. When all the parties collaborate towards the same goal, it is easier to work out the risk involved and share the effects of the same when they occur (Bowersox et al, 2002). The supply chain management should be cooperative to the law enforcers and other state agencies for the smooth flow of merchandize to reach the targeted market segment in time and in a good state.
The supply chain management should not ignore a risk just because they cannot quantify it especially the cost of a supply chain that is affected by stock-out. The customers are likely to lose their loyalty to the premise due to lack of the required items on the shelves thus a decrease in sales (Christopher, 2005). Especially when customers miss a grasp of the new product in your store...
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