|Essay type:||Analytical essays|
|Categories:||Leadership analysis Walmart Supply chain management Strategic management|
The successful operation of Amazon comes down to its strategic supply chain management (Marcus, 2017). The core of every successful company is the Strategic supply chain management, and that is what Amazon is. They carry many different products and the demand for those products fluctuate. They use an aggregate plan to respond to predictable variability. From the way Amazon manages its supply of products to the way they determine how their demands will be fulfilled is how Amazon has maximized the company's profitability. The unique supply chain approaches of Amazon and its unceasing technological innovation have by now transformed how supply chain management works (Collins, 2016). Even with supply chain constraints, Amazon will continue to grow, maximizing profitability.
Supply chain management is actively managing supply chains to maximize supply surplus while satisfying customer needs. It involves business forming strategic supply chains that are economical, efficient, and capitalize on the surplus of raw material procurement to the final provision of the product or service to their prospective client base. The flexible chain integrates the manufacturer and suppliers; additionally, the retailers, stockrooms, transporters, and even customers. In any organization, for instance, the producer, the flexible chain combines all capabilities involved with accommodating and satisfying the demand of the customer. The abilities include, yet are not limited to, innovative product enhancement, conveyance, advertising, account, and customer care. Supply chains are always changing, and successful business must continuously analyze information, products, and funding at the various stages of the supply chains.
The generally new thought of flexibly chain the board initiated during the 1980s, and not until the 1990s worked together to acknowledge the view as an approach to boost esteem. One noteworthy assessment that helped shape the current flexibly chain the executives was the presentation of the PC. Vital and the best practices of supply chain management that light the route for authorities in the field needs an appropriate idea of the whole gracefully chain domain – from the appropriate approaches accessible to the execution of providers to overall rules to traditionalist thoughts.
The response of Amazon to Predictable Variability and Integrating Aggregate Planning
The change in demand for predictable variability can be forecasted. There is usually an unexpected change in demand when a new trend arises or the season changes. When this happens, a company can lose profits by not planning. Amazon plans for these changes and integrates aggregate planning into the supply chain. Aggregate planning is an intermediate-term invention choice in an industrialized organization that regulates the rate of production, subcontracting quantity, level of inventory, and labor force level in each period subject to a set of restrictions (Chopra, 2016). Amazon plans for different peak demand periods by carrying high-demand inventory at its facilities. Even if a product was previously in high-demand and now lower in demand, it may still be stocked at a facility in case it became in high-demand again based on trends. Amazon used third-party suppliers for low-demand products. With aggregate planning, Amazon can reduce various costs like transportation costs, inventory costs, and facility costs. Amazon also has a large number of workers to make sure that the correct products are shipped out and delivered.
Management of Supply and Demand
The goal of a company is to react in a way that stabilizes supply with demand to make the most of profitability (Brown, 2017). The idea that a company manages its supply and its responsiveness to the market will decide if that company's system is working efficiently. Amazon controls its supply by using capacity and inventory. Amazon hires seasonal workers during holiday rushes to keep the merchandise flowing for the demand. They also maintain a vast list of high-demand products. They obtain the products in the off-season to have them ready for the peak season. Amazon also has extensive distribution facilities that strategically located on the outskirts of main cities that can hold large amounts of high-demand products.
Amazon manages its demand by having enough products for the needs of the consumers. When Amazon has an overstock of supply, they present the customer with a sale called Prime Day. This is where Amazon puts some of its inventory on sale. Massive discounts are given for specific products for a specified period. Most of the products are sold out within minutes. Another way they manage demand is by keeping low-demand products with the third-party supplier. They do not like to hold too much inventory of a product they don't sell as much.
How do the Sales and Operational Plan Affect Supply Chain performance and Maximize profitability?
The significant supply chain resolution stages of supply chain management that Walmart uses are strategy, planning, and operation. When Walmart began to strategize on how to get the lowest price possible, they decided to go directly to the manufacturer to cut costs. They then passed these savings on to the customer. With the planning, they decided to do cross-docking, which reduced transportation costs and times. It kept inventory on the shelves and restocked in short amounts of time. The merchandise was transferred from inbound and outbound trucks with no storage in between. During the operation phase, Walmart chooses how to handle orders of the client in the best way possible. The delivery truck schedules would be coordinated with supplier deliveries so that that merchandise would get to the store in a timely fashion. By completing these phases, Walmart was able to get products on the shelves and ready for customers.
Effects of Risk Management process on Supply Chain constraints
Numerous sustainable competitive advantages provided to Walmart's supply chain management include better-quality in-store variability and assortment, cheap inventory carrying duty, highly economical charging for the customer, and lower product costs (Meindl, 2016). With these advantages, Walmart was able to provide better customer service and to retain the loyalty of the customer. With Walmart having its transportation system, they were able to replenish the shelves of the store four-times quicker than the average competitor.
Strategies to improve overall Supply Chain performance & overcome constraints
Establishing a reliable supply chain management system helped Walmart to become the top retailer. Walmart was named Retailer of the Decade. Walmart was able to cut costs on all aspects and pass those costs on to the customer. The flow of material with minor inventories has advanced due to proper communication and association networks with the providers (Fung, 2017). All these organizational considerations have enabled them to establish supply chain initiatives and align them with customer needs. By knowing the customer wants lower prices and managing to get them for the customer, all while making an astounding profit, means that the strategic supply system of Walmart chain management is an achievement.
The system of Walmart's strategic supply chain management is a massive success for the company and a great learning tool for other companies. Walmart's sharing and collaborating information with suppliers and manufacturers have helped to cut costs and transportation times for goods. With all these parties working together and efficiently, it has helped Walmart to dominate in the strategic supply chain management. It has given Walmart its competitive edge against competitors by allowing them to provide low cost and more improved in-store variety, thus becoming one of Walmart's greatest successes.
Brown & Marcus (2017). The evolution and future of logistics and supply chain management. European Business Review, 332-348.
Chopra, S., & Meinl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation 6th Edition. Boston: Pearson Education, Inc. https://bookshelf.vitalsource.com/#/books/9781323456842/Fung, C. (2017). Walmart's successful supply chain management. Retrieved from TradeGecko: https://www.tradegecko.com/blog/incredibly-successful-supply-chain-management-walmart
Collins, S. (2016). Procurify Blog. A Brief History of Modern Supply Chain Management and Best Practices. http://blog.procurify.com/2014/12/17/brief-history-modern-supply-chain-management-supply-chain-management-best-practices/
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