Wal-Mart as the Leading Retail Industry in the World - Case Study Example

Global Supply Chain Introduction Wal-Mart Company is of great importance to almost all individuals whohave access to its services. The organization facilitates individuals to save money as well live better whenever and wherever they are located. It is estimated that weekly the company has over 200 million members and customers who visits their premises under 71 banners in twenty-seven countries, as well as e-business websites in 10 countries. Wal-Mart is among top companies that have been listed by Fortune 500 having an estimated sale of $3473072 million in fiscal year 2014 as well employment of over 2.2 million associates all over the world. Wal-Mart continues to lead in the retailer industry thus committed to assisting people live better life via a corporate social responsibility (CSR) initiative. It is not easy to consider the aspect of supply chain management without consideration of Wal-Mart. According to the WSJ market watch, in the fiscal year ending January 2014, the group grossed $476 billion rising from $408 billion in fiscal year 2010. In another consideration according to the National Restaurant Association, Wal-Mart revenue comprises of 81 percent of the entire revenue generated by the U.S. restaurant industry. That income was generated from more than 4100 stores as well fed through a sprawling supply chain and ranked 14th in the year 2014 by Gartner Ltd, which is the research and analyst company. From 2010, Gartner Ltd has placed Wal-Mart as being among its top 20 supply chains. Thus \in consideration of the recent rankings, Garner referred to Wal-Mart ‘’as a perennial supply chain powerhouse’’. Through support of the technology, Wal-mart has mature collaboration process with suppliers. The company exercises its mammoth purchasing power in shaping the suppliers behavior thus driving down the cost. The Arkansas 2012 business articles, progression of the Wal-Mart supply chain consist of three elements; distribution practices, technology as well as operations of trunks fleets. Because of its efficiency in supply chain, the company benefits in terms of time savings, better-enhanced cost –effective inventory management. In addition, to improved forecasting on the product (Vickery, Jayaram, Droge, & calantone, 2003). Global procurement change. Wal-Mart started dealing with manufacturers directly in 1980s thereby giving the suppliers task of managing inventory within its warehouses. This resulted what was referred to as vendor-managed inventory (VMI) which to great extent smooth lines the irregularities of the flow of inventory in assisting to ensure that products were always available on the store shelves. Overall, the process enhanced cooperation as well collaboration with suppliers producing more efficient supply chain with technology assisting in the connectivity. This was enabled by the fact the Wal-Mart had already tapped technology even before developing VMI. This facilitated the company to make use of a computer system for controlling inventory in its warehouses and centers of distributions. At the moment the Wal-Mart’s inventory management, funnels information from the stores and in particular from the point of sale, real-time sales in centralized databases and warehouse inventory. By the year 1987, Wal-mart had installed its satellite systems that allowed voice as well data communication between the company’s segments. It is 1989 that Wal-Mart realized the benefits of supply chain management in relation to distribution cost that comprised 1.7 percent of the sales. Wal-Mart’s supply chain is not entirely based on the technology. The company has the network that is sprawling of almost 160 distribution centers that cover almost 120 million square feet being within 130 miles of stores being supplied. Wal-Mart has also instituted cross- docking to its warehouses entrances, thus moving inventory directly to/ from the departing or arriving trucks. Meanwhile, products are taken from truck arriving and packed in a truck bound for store without lengthy storage in a warehouse. This in the results into lowered cost of the inventory storage, reduce transportation cost as well as time savings on products on transits. In order to maintain high standards, Wal-Mart uses its trucking fleet ad drivers. Overall Wal-Mart components of the supply chains differ from most supply chains concerning the purchasing, operations, distributions, as well as integration. Wal-Mart supply chain starts with the purchasing manager determining products that need to be sold, then finding the vendor thus arranging the deal for the product. Operation part of the supply concentrates on the demand planning, forecast and management of inventory. Demand planning is essential for the creation of the accurate forecast that is paramount for efficient inventory management. A comparison between the forecasts and the inventory levels ensures that the warehouse does not have too much nor below the minimum required level in meeting the demand. The function of the supply chain distribution is to move product from the manufacturing plant to stores and later to the customers. In maximizing efficiencies supply chain integration, connect workflow as well information among all supply chain links (vickery, jayaram, droge, & calantone, 2003). Currently, Wal-Mart has shown a commitment in strengthening further sustainability of the global supply chain by improvement of the energy efficiencies to its china based manufacturers. In the undertakings, it agreed that 70 percent of the Wal-Mart suppliers in china would be invited to participate on the energy efficiency program towards the end of 2017.In relation to that initiative; Wal-Mart undertakes that it will save significantly in energy consumption by translating to greenhouses emissions (GHG. China being a key market for the Wal-Mart’s long-term sustainability strategy; it is the interest of the Wal-Mart to be part of the solutions in improving the environment issues facing the country (Wee, Peng & Wee, 2010). Besides having rich history of collaboration with key stakeholders in china like the government representatives, NGOs, and suppliers, Wal-Mart is committed to creating new models and solutions for a sustainable growth. The company has successfully implemented since 2008 energy efficiency program in its facilities in China thereby resulting to a 20 percent energy reduction in over 200 factories in addition to saving energy costs. As if that is not enough, Wal-Mart has also enhanced the following achievement in china’s operations. First is the investment in LED technology, reduction of the energy consumption, expansion of the sustainability consortium and increased use of solar energy. It is the Wal-Mart continuous endeavor in helping the suppliers to improve their environmental and energy effectiveness. In successfully undertaking the concept of supply chain management, Wal-Mart has embraced technology thus becoming an innovator in manner that inventories are track, restock, cut cost and consequently pass the saving to the consumers. Consumers enjoy these benefits since Wal-Mart charges low discounted prices for high-quality products compared to the prices charged by its competitors (vickery, jayaram, droge, & calantone, 2003). Recommendations. Currently, Wal-Mart operates under such arrangements as illustrated in diagram 1.0 below in the customers are provided with pick up sites. With rapid technological changes, it is imperative that the organization invests to the great extent on the E-business and distribution network (Steinfield, Markus, & Wigand, 2011). This in the end can provide a positive impact thereby giving customer a complete new experience. Diagram 1.0 Some of the likely attributes to be experience by going fully to the digital distribution are as follows, first is the lengths of response time. In the case of the products that are not in software, its response time will be high resulting for the need of transportation. Variety of the product via e-business is high, and the customers have sufficient information as to the availability of the products (Schoenherr, 2009) The company that adopts e-commerce interacts more with customers thus understanding their changing needs and thus producing products that are needed by the customers. Internet makes it possible of r the customers to access. Thus, customization and convenience presented to them via internet is very critical in ensuring the customers’ needs are met satisfactorily. This is critical for success of the organization in ensuring that the best is derived from the customer’s good relationship. It is as well faster to market a product, have order visibility as well as enhancing the operation of the marketing mix. Returns inwards are minimal when operating online thereby increasing the organization’s revenues through the efficient funds transfers that are currently in operations (AE, 2009). The adoption of the internet reduces a lot of costs ranging from the operational cost, transportation cost and better coordination of the information thereby helping in lowering the cost as well better matching of the demand and supply. The choice of distribution channels should be considered prudently since it has consequences that are long lasting to the organization (Roh, Min & Hong 2011). References Fisher, M. L. (1997). What is right supply chain for your product? Havard Review business. Mason-Jones, R., Naylor, B., & Towill, D. (2000). Lean, agile or leagile? Matching your supply chain to your market. International Journal of production Research, vol 38 (17) 4061-4070. vickery, jayaram, droge, & calantone. (2003). The effects of an integrative supply chain strategy on customers service and financial performance: analysis of direct versus indirect relationships. Journal of operational management, 21, 523- 539. Wilding, R. (1998). The supply chain complexity triangle- an uncertainty generation in the supply chain. International journal of physical distribution and logistics management, 599-616. Roh, J, Min, H, & Hong, P 2011, A co-ordination theory approach to restructuring the supply chain: an empirical study from the focal company perspective, International Journal for Production Research, 49, 15, pp. 4517-4541 Steinfield, C, Markus, M, & Wigand, R 2011, Through a Glass Clearly: Standards, Architecture, and Process Transparency in Global Supply Chains, Journal Of Management Information Systems, 28, 2, pp. 75-108 Wee, H, Peng, S, & Wee, P 2010, Modelling of outsourcing decisions in global supply chains. An empirical study on supplier management performance with different outsourcing strategies, International Journal Of Production Research, 48, 7, pp. 2081-2094 Schoenherr, T 2009, LOGISTICS AND SUPPLY CHAIN MANAGEMENT APPLICATIONS WITHIN A GLOBAL CONTEXT: AN OVERVIEW, Journal Of Business Logistics, 30, 2, pp. 1-25, Branch, AE 2009, Global Supply Chain Management And International Logistics, New York: Routledge, Discovery eBooks, QUESTION TWO Introduction Strategic sourcing involves supply chain management approach that formalizes the way information is collected as well used in an organization in leveraging its purchasing power in finding the best values in the market. What is important in this set up is the analysis of what the organization buys, the source of purchases, the price, and the quantity. Sourcing strategy differs from the conventional purchases for it places emphasis on entire life cycle of the product and not only just the original purchase price. In the contemporary business world of today, strategic sourcing software facilitates the approach by harmonizing the requirements of the source. Thus, providing users with the data technology, that facilitates in the sharing information about the products, market and needs of the business (Wang, Chan & Pauleen, 2010). This paper analyzes the implementation of the of the e-commerce distribution network for the Wal-Mart stores. Recommendation from the first-course work The increased effects of globalization have reduced the globe into small global villages (Wilding, 1998). In addition, the advancements in information technology have increasingly changed all the aspects of the business operations, it is imperative that organizations like Wal-Mart change manner in which they carry out their activities. The use of technology enhances positive attributes in the key drivers of the supply chain management that in clued the facilities, inventory, transportation, sourcing, pricing, and information. Selecting an international suppliers Diagram 1.2 International strategy entails the aspect of taking product that is originally produced for use in the domestic market, to the international market with less local customization. The international strategy is viable in case when there are low-cost pressures and as well low pressure from the responsiveness of locals. International strategy is paramount in situation where a firm can be able to transfer core competencies that competitors do not have. In addition, international strategy is essential where firm faces weak competitive pressures in the foreign markets. The problems attributed with an international strategy arise in case the cost pressures rise or in scenarios where the competitor stresses responsive. Wal-Mart plans to close the poorly performing 50 stores in Brazil and China hence add 14 million new store space in the international market. The company also opts to open new stores in India thus doing away its joint venture association with Bharti enterprise Ltd (Wang, Chan & Pauleen, 2010). Managing international suppliers Choosing a suitable country is important since the tradeoff between the levels of regulations and prices as well protection is expected. In most cases, suppliers from developing countries are cheaper though it is difficult to resolve viable problems. Some of the key factors that need consideration when making such critical decisuio0ns include. Clearly knowing the country of the supplier, thus having contacts within your reach to make doing of the business easier is critical. Communication is significant in enhancing proper understanding among the key shareholders. If having different language exists, it is critical to consider engaging an interpreter overall, it is easier trading with a developed country than developing one. It is thus important to put into consideration the level of the country’s development. There are numerous sources of in formations that one can use to get potential suppliers; these may include trade associations, target country’s embassy, overseas trade exhibitions, visits, and trade services suppliers. In consideration of the Wal-Mart, which is so deeply concerned with the customers and members satisfactions, Wal-Mart has a network of global suppliers. It collaborates with NGOs and leaders of the government in verification of the products sold are produced in manners that dignify the respects and commitment for the workforce in the supply chain (Fisher, 1997). In consideration of the Cox model as well as the resource-based theory, organizations are a combination of various unique resources that make core competencies and distinct capabilities (Manuj & Mentzer, 2008). In classifying different contractual relationships, Cox categorized them as adversarial leverage, which comprises of multiple suppliers maintain secrecy on cost, design, and contracts. Preferred suppliers are the restricted list of potential suppliers, and single sourcing entails middle asset specify dealing with high strategic and reduce cost of transactions. Networking source and partnership these requires the medium asset with highly complementary competencies and lower cost via an organization that accepts contracts with suppliers (Wahl & Bull, 2014). On the other hand, strategic supplier alliances are more of the joint venture in which companies have total complementary competencies hence low assets specificity (mason-jones, Naylor, & Towill, 2000). Conclusion Strategic sourcing involves supply chain management approach that formalizes the way information is collected as well used in an organization in leveraging its purchasing power in finding the best values in the market. What is important in this setup is the analysis of what the organization buys, the source of purchases, the price, and the quantity. The use of technology enhances positive attributes in the key drivers of the supply chain management that in clued the facilities, inventory, transportation, sourcing, pricing, and information. Choosing a suitable country is important since the tradeoff between the levels of regulations and prices as well protection is expected. In most cases, suppliers from developing countries are cheaper though it is hard to resolve viable problems. Some of the key factors that need consideration when making such critical decisuio0ns include. Communication is considerable in enhancing proper understanding among the key suppliers. If having different language exists, it is crucial to consider engaging an interpreter. Overall, it is easier trading with a developed country than developing one, thus necessary to put into consideration the level of country’s development. References Fisher, M. L. (1997). What is the right supply chain for your product? Havard Review business . mason-jones, R., Naylor, B., & Towill, D. (2000). Lean, agile or leagile? matching your supply chain to your market. Iinternational Journal of production Research , vol 38 (17) 4061-4070. vickery, jayaram, droge, & calantone. (2003). the effectts of an integrative supply cahin strategy on customers servise and financial performance : analysis of direct versus indirect relationships. journal of operational management , 21, 523- 539. Wilding, R. (1998). The supply chain complexity triangle- uncertainty generation in the supply chain. International journal of physical dissrtibution and liogistic management , 599-616. Wang, W, Chan, H, & Pauleen, D 2010, Aligning business process reengineering in implementing global supply chain systems by the SCOR model, International Journal Of Production Research, 48, 19, pp. 5647-5669 Manuj, I, & Mentzer, J 2008, GLOBAL SUPPLY CHAIN RISK MANAGEMENT, Journal Of Business Logistics, 29, 1, pp. 133-155, Wahl, A, & Bull, G 2014, Mapping Research Topics and Theories in Private Regulation for Sustainability in Global Value Chains, Journal Of Business Ethics, 124, 4, pp. 585-608, Section Two In evaluating the current operations of the Wal-Mart, it is significant to put into consideration the aspect s of the rapid growth of the organization’s revenues and expansions. Wal-Mart is bringing into line data of the product like color, packaging dimensions, and weight with around 800 suppliers across 62000 items (Vikulov & Butrin, 2014). The company saves from the administration costs through synchronization of products data in which the Wal-Mart eliminates the needs of the clerks in manually correcting the inconsistent information. In the modern set ups Wal-Mart requires its suppliers to use RFID Radio frequency identification technology that potentially saves the retailer substantial amount of money ( Vikulov & Butrin, 2014). The companies also currently undertake to train individuals in suppliers companies. Wal-Mart has a number of suppliers that replenish inventory daily via just in time techniques (JIT). This in the long run facilitates the company in reducing wastages; lowering cost and making more orders hence better customers’ satisfaction. It is important that in all sectors in today’s business operations to undertake through set up of the operation ion enhancing higher productivity, more sales and better usage of the resources. It is as well critical to put it here that Wal-Mart is performing well through its effective performance as well adoptive of strategies that are up to date and relevant with the prevailing economic conditions (Garry, 2009). The organization does not use intermediate warehouses as well as distributers, thus eliminating intermediaries reduces the costs. Excesses inventory brings forth many costs thus Wal-Mart manufacturing, planning and controlling systems provides foresights in avoiding excess cost on warehouses. The company also researches on the production costs as well as raw materials of suppliers in avoidance of the excess spending. The organization has quick response to the customer’s request, thereby serving then beyond their expectations (Gonzalez-Loureiro, Dabic & Puig, 2014). Wal-Mart offers variety of products that are made available to the consumers through affordable price thereby giving customers a very complete experience from what offered by the competitors. Wal-Mart continues to the global leader in the retailer industry thus committing to assist people live better live via corporate social responsibility (Malik, Niemeyer & Ruwadi,2011). Through support of the technology, Wal-mart has mature collaboration process with suppliers. The company exercises its immense purchasing power in shaping the suppliers behavior thus driving down the cost. In lucratively undertaking the concept of supply chain management, Wal-Mart has embraced technology and therefore becoming an innovator in manner which inventories are track, fill up on, cut cost and as a result pass the saving to the consumers. Customers receives these benefits inform of favorable pricing strategies, that entails low discounted prices for high quality products compared to the prices charges by it s competitors( Garry, 2009). Conclusion Wal-Mart is the leading retail industry in the world. The company has undertaken low pricing strategy as one of it s key competitive advantage thus rapid growth and immense increase in revenue generation. The company saves from the administration costs through synchronization of products data in which the Wal-Mart eliminates the needs of the clerks in manually correcting the inconsistent information. In the modern set ups Wal-Mart requires its suppliers to use RFID Radio frequency identification technology that potentially saves the retailer substantial amount of money. The companies also currently undertake to train individuals in suppliers companies. Wal-Mart has a number of suppliers that replenish inventory daily via just in time techniques (JIT). Just in time, practices assist in reduction of wastes in that they have e a demand-pull mechanisms in which the products are produce in relation to the demand of the consumers. This in the ends assists in reduction of wastages and better management of the resource (Li, & Chan, 2012) References. Fisher, M. L. (1997). What is the right supply chain for your product? Havard Review business . mason-jones, R., Naylor, B., & Towill, D. (2000). Lean, agile or leagile? matching your supply chain to your market. Iinternational Journal of production Research , vol 38 (17) 4061-4070. vickery, jayaram, droge, & calantone. (2003). the effectts of an integrative supply cahin strategy on customers servise and financial performance : analysis of direct versus indirect relationships. journal of operational management , 21, 523- 539. Wilding, R. (1998). The supply chain complexity triangle- uncertainty generation in the supply chain. International journal of physical dissrtibution and liogistic management , 599-616. Garry, M 2009, Recession Impacts Wal-Marts Supply Operations, SN: Supermarket News, 57, 23, p. 8 Li, J, & Chan, F 2012, The impact of collaborative transportation management on demand disruption of manufacturing supply chains, International Journal Of Production Research, 50, 19, pp. 5635-5650 Malik, Y, Niemeyer, A, & Ruwadi, B 2011, Building the supply chain of the future, Mckinsey Quarterly, 1, pp. 62-71, Business Vikulov, V, & Butrin, A 2014, RISK ASSESSMENT AND MANAGEMENT LOGISTICS CHAINS, Logforum, 10, 1, pp. 43-49 Gonzalez-Loureiro, M, Dabic, M, & Puig, F 2014, Global organizations and supply chain, International Journal Of Physical Distribution & Logistics Management, 44, 8/9, pp. 689-712, Read More