Supply Chain Management of Wal-Mart - Essay Example

Supply Chain Management Of Wal-Mart Contents Different components of the supply chain 3 Different firms involved in the supply chain 4 Objectives of these firms 6 Conflicting objectives in this supply chain 6 Risks that rare or unexpected events pose to this supply chain 7 The key issues in the supply chain from the strategic through the tactical to the operational level 7 The role of information and IT in the chosen supply chain 7 Recommendations 8 References 9 Different components of the supply chain A supply chain is defined as the network of organizations who collectively work to create and deliver a product or service to the end user or the consumer. It is the management of the relationships with all the stakeholders to deliver the quality customer value at the least cost possible to the supply chain as a whole. The report highlights the supply chain management of Walmart. The main elements of supply chain of Walmart include purchasing goods, then operations, integration and finally distribution (Chopra and Meindl, 2007, pp.81-83).Wal-Mart is the powerful and largest retailer in the world by having an efficient logistic system. It has four components of its supply chain firstly vendor partnerships from where they obtained large quantities of manufactured goods, then cross docking and distribution management which control the inventory management through routing the products from the suppliers to Wal-Mart’s warehouses and then transferred to the stores. Information technology plays a vital role in the supply chain, and finally integration of these systems to produce the cost effective products to the consumers (Patton, 1986, p.78). Different firms involved in the supply chain The supply chain of Wal-Mart is more of a push system because it is based on the demand forecast than the actual demand of the customer. It comprises of the following firms that includes the internal functions, upstream suppliers and downstream customers. The internal functions includes transforming the inputs from the suppliers, they have strategic partnerships with the vendors worldwide and obtain large quantities of manufactured products at lower costs, which includes even the farmers (Wincel, 2004, p.56).Wal-Mart then does the packaging and pricing of the products and finalizes on the delivery dates. Then production scheduling is done which involves scheduling work centres, material requirement planning, workforce planning and maintenance of machines. The upstream suppliers are healthy relationships to be maintained by the purchase managers with the suppliers; the suppliers located in USA and even across the globe (Chan and Lee, 2005, p.109).Wal-Mart even has strong relationship with Proctor & Gamble for the supply of products. The material mangers plan forecast and schedule the flow of materials in the supply chain. After the product packaging they are transferred to the distribution centre which are about 158 in total with the help of Wal-Mart’s own 6500 tractors, having skilled staff of 7000 truck drivers and 55000 trailers (Ayers and Odegaard, 2007, pp.85-86). Wal-Mart’s distribution centres are located across United States and in such a way it is located that they are geographically convenient to their retail stores. Finally is the downstream to the external customers where the product is finally transferred to the shelves of the Wal-Mart retail stores (Leeman, 2010, pp.107-110).The company headquarters with the help of technology keeps a track and restock the goods being sold off from the shelves and even in truck and distribution centre. Objectives of these firms Wal-Mart has strategic partnerships with the vendors; these vendors supply large quantities of products at a competitive price for a longer period of time to serve quality products to the end users. Cross docking technique is used by Wal-Mart to focus on the high inventory turnover. This system enables the products to be supplied Wal-Mart’s warehouses near the stores and then it is cross-docked and delivered to the retail outlets of Wal-Mart by spending minimum time possible in the warehouse (Gattorna, 1998, pp.130-131). This helps to decrease the inventory carrying and make variety of products available to the customers at the lowest price possible. The objectives of the various firms in the supply chain is to lower inventory carrying costs, improve the variety in store, offer low product costs, and highly competitive prices for the end users, by not affecting their own profit margins (Radhakrishnan, 2001, p.67).The technology based infrastructure of Wal-Mart provides the Just in Time inventory system. The approach of the supply chain to make the product available at the right place, right time, damage free, and at competitive price makes Wal-Mart a strong leader in global market place. Conflicting objectives in this supply chain The conflicting objectives in the supply chain are that Wal-Mart is a company that involves multiple firms this is a major issue of conflict. The infrastructure of Wal-Mart is technology based so the suppliers also need to posses technology to have track of variety of tasks and if they are not it will lead to a communication failure (World Watch Institute, 2014). One more conflict is that if the supply chain does not co-ordinate well and the suppliers fail to deliver products on time since Wal-Mart uses Just in time approach there can be shortage of inventory. Risks that rare or unexpected events pose to this supply chain The possible risks that pose to this supply chain is that it would lose on its profits is if the supply chain is not managed correctly as they provides products at a lower cost than the competitors so they need to receive low prices from its suppliers. There is computer based system used by the company headquarters to track the movement of goods in and out of the distribution centres to the retail outlets if the system fails then the whole of calculated data will be lost (Kumar, 2007, pp.98-100). If the suppliers fail to deliver products on time Wal-Mart can charge late shipment fees but this may lead to communication gap and the suppliers can turn to its competitors which will affect the business in a huge way. The key issues in the supply chain from the strategic through the tactical to the operational level Wal-Mart sources the product strategically from its suppliers at the best price, through cross docking enables effective inventory management and lower transportation and carrying cost. Finally through technology effective control over inventory is initiated and quality products at lower cost are delivered to the end user. The role of information and IT in the chosen supply chain IT plays a key role in supply chain of Wal-Mart. It ensures tracking and predicting inventory levels, manage customer relationships, forecast demand, provide efficient transportation routes, and service response logistics. Recommendations As a supply chain manager I would suggest that Wal-Mart should have a common technological structure which can be used by its suppliers also to track the inventory levels, since the demand is more Wal-Mart should focus on keeping a bit more inventories to meet the demand in case the supply is not on time. References Chopra, S., Meindl, P. 2007. Supply Chain Management: Strategy, Planning, &Operation. New Jersey: Upper Saddle River. Chan, C. K, Lee, H.W.J. 2005. Successful Strategies in Supply Chain Management. Pennsylvania: Hershey. Patton, J. D. 1986. Logistics: Technology and Management the New Approach. New York: Jamaica. Wincel, J. P. 2004. Lean Supply Chain Management. New York: SAGE. World Watch Institute. 2014. Wal-Mart Scrutinizes Supply-Chain Sustainability [Online]. Available at: http://www.worldwatch.org/node/6200 [Accessed on 6th March 2014]. Leeman, J. J. A. 2010. Supply Chain Management: Fast, flexible supply chains in manufacturing and retailing. Germany: Book on demand. Radhakrishnan, P. 2001. Logistics and Supply Chain Management. New Delhi: Allied Publishers. Kumar, S. 2007. Connective technologies in Supply Chain. New Delhi: CRC Press. Gattorna, J. 1998. Supply Chain Alignment. Great Britain: Gower Publishing Ltd. Ayers, J.B., Odegaard, M. B. 2007. Retail Supply Chain Management. US: CRC Press Read More