How does an individual firm like wal mart

Assignment Help Business Management

Reference no: EM131287200

WAL-MART: PIONEER IN SUPPLY CHAIN MANAGEMENT

Wal-Mart dominates the retailing industry in terms of its sales revenue, its customer base, and its ability to drive down costs and deliver good value to its customers. After all, the world's largest corporation takes pride in having received numerous accolades for its abilityto continuously improve efficiency in the supply chain while meeting its corporate mandate of offering customers Everyday Low Prices. Tight inventory management is legendary at Wal-Mart through its just-in-time techniques, some of which are homegrown, that allow the firm to boast one of the best supply chains in the world.

Wal-Mart has not only transformed its own supply chain but influenced how vendors throughout the world operate. For example, retailers everywhere are now placing much more emphasis on vendors' on-time and accurate deliveries. To meet these requirements, vendors have had to upgrade their inventory management and delivery systems to ensure they are doing business the way their large retailer customers prefer. Recognized for its ability to obtain merchandise from global sources, Wal-Mart also pioneered the strategy of achieving high levels of growth and profitability through its precision control of manufacturing, inventory, and distribution. Although the company is not unique in this regard, it is by far the most successful and most influential corporation of its kind and has put into practice various innovative techniques. And when Wal-Mart does something, it does it on a massive scale.

Wal-Mart's computer system, for example, is second only to that of the Pentagon in storage capacity. Its information systems analyze more than 10 million daily transactions from point-of-sale data and distribute their analysis in real time both internally to its managers and externally via a satellite network to Wal-Mart's many suppliers, who use the information for their production planning and order shipment. Much of the popularity of supply chain management has been attributed to the success of Wal-Mart's partnership with Procter & Gamble. During the 1980s, the two collaborated in building a software system that linked P&G to Wal-Mart's distribution centers, taking advantage of advances in the world's telecommunications infrastructure.

When a Wal-Mart store sold a particular P&G item, the information flowed directly to P&G's planning and control systems. When the inventory level of P&G's products at Wal-Mart's distribution center got to the "reorder point," the system automatically alerted P&G to ship more products; this information in turn helped P&G plan its production. Wal-Mart was also able to track when a P&G shipment arrived at one of its distribution warehouses, which enabled it to coordinate its own outbound shipments to stores. Both Wal-Mart and P&G realized savings from the better inventory management and order processing, savings that in turn were passed on to Wal-Mart's consumers through its low everyday prices.

Wal-Mart's Innovations
Wal-Mart has pioneered many innovations in the purchase and distribution processes of the products it sells. As many as 20 years ago, Wal-Mart drove the adoption of UPC bar codes throughout the retail industry; it also pioneered the use of electronic data interchange (EDI) for computerized ordering from vendors. Its hub-and-spoke distribution network ensures goods are brought to distribution centers around the country and then directed outward to thousands of stores, each of which are within a day's travel.

Through the use of cross-docking, one of its best-known innovations, goods get trucked to a distribution center from suppliers and then are immediately transferred to trucks bound for stores, without ever being placed into storage.26 In addition, Wal-Mart uses a dedicated fleet of trucks to ship goods from warehouses to stores in less than 48 hours, as well as to replenish store inventories about twice a week. Thus, with flow-through logistics, the company speeds the movement of goods from its distribution centers to its retail stores around the world. Today the retail giant continues to push the supply chain toward greater and greater efficiency.

It has well-established systems for the continuous replenishment of merchandise, vendor-managed inventory, cross-docking, strategic collaborations with producers in the manufacturing planning cycle, order and delivery, and direct shipments from manufacturers. It also strives to apply new technologies. For example, by the end of 2006, Wal-Mart had all suppliers place RFID (radio frequency identification) tags on all pallets and cases it received.27 Its continuous use of innovations thus leads to lower inventory and operating costs, which enables Wal-Mart to keep its costs in check.

Wal-Mart furthermore has made an art of managing the flow of products and information among its suppliers, distribution centers, and individual stores through technology, the application of which allows for precision control of logistics and inventory. It's this type of innovation that has put Wal-Mart at the top of the retailing game. Not all organizations can pull this approach off so well; Wal-Mart is a unique case in which a single, very powerful firm took primary responsibility for improving performance across its own supply chain. By developing a superior supply chain management system, it has reaped the rewards of higher levels of customer service and satisfaction, lower production and transportation costs, and more productive use of its retail store space.

Fundamentally, it boils down to Wal-Mart's ability to link together suppliers, manufacturers, distributors, retail outlets, and, ultimately, customers, regardless of their location. Although operational innovation isn't the only ingredient in WalMart's success, it has been a crucial building block for its strong competitive position.

Questions

1. How does an individual firm like Wal-Mart "manage" a supply chain, particularly considering that supply chains include multiple firms with potentially conflicting objectives? Describe some of the conflicts that could arise in such a circumstance.

2. What are some of the ways that Wal-Mart's supply chain management system has provided it the benefits of higher levels of product availability and lower merchandise acquisition and transportation costs? Provide specific examples of each benefit.

Reference no: EM131287200

Questions Cloud

Nature of uncollectible accounts : Nature of Uncollectible Accounts The XYZ Corporation owns and operates casinos. As of a recent year, The XYZ Corporation reported accounts receivable of $715,000 and allowance for doubtful accounts of $99,385. Compute the percentage of the allowance ..

Explain effective approaches to the broad spectrum : Explain effective approaches to the broad spectrum of employee relations, including career development, fostering ethical behavior, discipline, labor relations, and dismissals.Use technology and information resources to research issues in human re..

How dell has revolutionized computer sales and delivery : Describe how Dell has revolutionized computer sales and delivery. Is there any indication that Dell has partnered with other companies to sell peripheral equipment like printers or scanners?

Company sells kitchen supplies and housewares : La Cucina Company sells kitchen supplies and housewares. Lava stone is used in production of molcajetes (mortars and pestles used in the making of guacamole) and is purchased from external suppliers. What is the EOQ for lava stone? (pounds). How many..

How does an individual firm like wal mart : How does an individual firm like Wal-Mart "manage" a supply chain, particularly considering that supply chains include multiple firms with potentially conflicting objectives?

Describe in words what the solution sets mean : Show the solution sets written algebraically and as a union or intersection of intervals. Describe in words what the solution sets mean, and then display a simple line graph for each solution set.

Build a model using r or python software : Build a model Using R or Python software by applying Dirichlet mixture model for detecting spammers in Instagram dataset - How to collect the data, you want to search from the Internet or you want to collect it by yourself.

Learned about the value of information : Using what you have learned about the value of information and how it is able to be converted into a meaningful and useful context, review the case study on page 90 of the Baltzan text, "Political Microtargeting: What Data Crunchers Did for Obama"..

Should you set price higher or lower than the of competition : There are two other well-established pet services in your area. Should you set your price higher or lower than that of the competition?

User Account

All Pages