Wal-Mart Story in Strategic Management - Case Study Example

WALMART Case Study Strategic Management Wal-Mart has been able to achieve respectable leadership in the retail industry because of its focus on supply chain management. Discuss in detail the distribution and logistics system adopted by Wal-Mart. As the globe’s largest trader with approximately 419 billion dollars worth of net sales for the financial year of 2011, Wal-Mart thought about a best-within-class business for its practices with reference to the management of its supply chain. These processes are a major competitive advantage, which have assisted Wal-Mart to attain headship within the retail industry via a concentration on rising operational effectiveness and on consumer requirements. Wal-Mart’s official business website names logistics, along with distribution as the focal point of its business, one that maintains millions of goods moving to consumers each day of every year (Plambeck 2007:29). Wal-Mart’s highly computerized distribution stores, which function twenty-four hours every day and are supplied by Wal-Mart’s fleet of trucks, are the groundwork of its development plan and supply system. Within the USA alone, the corporation has more that forty local distribution stores for mainly import flow and additional 140 distribution stores of more for domestic flow. At what time Wal-Mart enters a novel geographic ground, it initially establishes if the region will have the aptitude to contain adequate storehouses to sustain a center for distribution. Every distribution center sustains between seventy-five to one hundred retail storehouses in 250-mile region. As soon as the center is constructed, storehouses are increasingly constructed around it to oversupply the region and the system of distribution is realigned to make the most of the effectiveness through a re-optimization development (Leeman 2010:27). The outcome is a “trickle-down” result, where trucks only need to travel shorter distances so that the company cab be able to reduce the costs of transport and lead time. Diminutive lead time signifies holding less security inventory. Given that shortages do take place, replacement has the capacity to be made additionally fast since storehouses receive everyday deliveries that come from the centers of distribution. Wal-Mart’s network of hub-and-spoke distribution uses a manufacturer storeroom system that has consumer pickup. There is no inventory stored within Wal-Mart’s centers of distribution. Wal-Mart’s fleet of six thousand devoted trucks and more than fifty thousand trailers are utilized to pick up supplies directly from product manufacturer storehouses, therefore, getting rid of the intermediaries and enhancing responsiveness. The trucks utilization elevates the cost of transport; however, it is rationalized in stipulations of inventory that is reduced. Goods that the trucks bring into centers of distribution are organized for delivery to storehouses in one day to two days. On the other hand, the contractors transport some goods, for instance, automotives, along with drug goods directly to storehouses. Wal-Mart, a pioneer within the logistics cross-docking method, additionally has store-particular orders sorted and distributed directly to the storehouse by the producers (Li 2007:46). For the reason that Wal-Mart has a fast receptive transport operations, the process was made a key fraction of the corporation’s triumphant logistics structure, immense care is taken within the taking into service, training, administering, allocating of drivers’ timetables and job functions. Since Sam Walton, the originator of Wal-Mart started his retailing line of business; he has realized the significance of employing people who are experienced and of constructing loyalty not merely within his consumers but within his workforce, as well. The corporation takes on drivers who have experience in that they have driven over 300,000 miles have not caused any accidents and whom it supposed will have commitment t consumer service. Wal-Mart’s retail storehouses are deemed significant consumers of the centers of distribution. The drivers are chosen in this manner because the personal Fleet Driver instruction manual, which every driver gets a copy, states that drivers are anticipated to be well-mannered and kind while handling store employees and other individuals. 2. The use of innovative information technology tools had benefited Wal-Mart’s supply chain management. In the light of the above statement, briefly explain how IT benefited Wal-Mart’s logistics and inventory management. Wal-Mart has utilized the incorporation of technology within fostering an effectual progression of operation within the management of supply its supply chain. It is contemplated that Wal-Mart has one single largest Information technology system from the ones that exist in its company construction, where technological corporation and its effect is tremendously enormous and play an important role within Wal-Mart’s chain of supply. The major technologies taken on within its management of the supply chain include the Universal Bar Code, the Radio Frequency Identification Technology (RFIT), and the Magic Wand (Wisner Et Al 2011:145). The Universal Bar Code is the foremost of its type technology that Wal-Mart introduced within the industry of retail. The main goal of this worldwide bar code that was taken up by Wal-Mart was to bring in transformation with the retail industry system of bar coding for ordinary tagging. This is to some extent a grand technology taken up by Wal-Mart, which developed its business practice if it produced every type of specific information needed. The Radio Frequency Identification Technology (RFIT) was utilized by Wal-Mart to incorporate the radio frequency expansion to pass on information and whichever relevant date that is stored within the corporation’s intranet, as well as extranet system (Plambeck 2007:69). The magic wand, which is a device that is held by hand, is utilized by Wal-Mart within its storehouses around the globe. This piece of equipment is mainly implemented by the assistance of computers, in addition to making use of the system of point of sale, along with its incorporation, which aid in sales tracking of goods and the products within stores correctly. 3. What were the supply chain management processes adopted by Wal-Mart and how far were they effective? Discuss. Wal-Mart took up eight major practices, which Wal-Mart took up to green the company’s chain of supply. These practices take account of identification of objectives, metrics, and novel technologies, endorsing products that are environmentally sustainable, offering network partner support to contractors, coming to superior volumes of goods that are environmentally sustainable, leaving out the middleman, streamlining the consumer role, combining direct contractors, as well as authorizing environmental modernizations. In amalgamation, the above practices have brought about considerable business worth for the corporation. Primarily, they have been able to reduce costs outstandingly through improved energy effectiveness. Secondly, Wal-Mart has introduced novel sources of income. For instance, when the corporation used to pay out 16 million dollars every year to do plastic waste hauling from its storehouses to landfill, it currently pelletizes and puts the plastic on the market to its packaging contractors, which adds 28 million dollars each year to its baseline. Thirdly, the practices offer supply guarantee. At what time the Chinese regime made threats to have various textile dye dwellings shut down so that pollution can be reduced prior to the Beijing Olympics of the year 2008, Wal-Mart signed up one of its novel non-governmental organization to assist a contractor instantaneously put together a process that was additionally environmentally friendly (Wisner Et Al 2011:145). Lastly, the corporation has been able to obtain greater influence with makers of policies, offering legislation input, for example, the Supply Star Act of the year 2010. Conceivably the furthermost benefit to Wal-Mart’s supply chain management processes has been an increase within public associations, which assists the business to secure authorization to open newfangled stores and boosts sales within its accessible locations. 4. What was the nature of benefits derived by Wal-Mart from the efficient supply chain management practices and how far it has contributed to its sustainable competitive advantage? Explain. Wal-Mart has been well known for taking up innovative company practices within all its trade processes particularly the management of its chain of supply. Within the 1970s, the company turned out to be one of the foremost retailing corporations within the globe to consolidate its system of distribution, revolutionizing the retail hub, as well as spoke system. Underneath the system, products were ordered from a central place, assembled at a massive warehouse that was constructed specially referred to as the center of distribution, where goods were transported to the specific storehouses as for every order obtained by the stores (Plambeck 2007:94). The centers of distribution and spoke structured assisted Wal-Mart to accomplish noteworthy cost benefits by the central buying or merchandise in large quantities and dispensing them through its individual infrastructure of logistics to the retail storehouses stretched across the United States. Separately from an effectual system of distribution, Wal-Mart was constantly amongst the leaders of taking up IT to run its processes of the supply chain. The corporation began utilizing IT to smooth the progress of cross-docking within the 1970s, followed by the bar codes utilizing for tracking of inventory, and Electronic Data Interchange (EDI) for instituting direct connections with the storehouses and putting in place of systems of satellite communication to bring together all its supply chain activities (Ray 2010:89). Wal-Mart’s strategy for the management of the supply chain has offered the corporation more than a few sustainable competitive benefits, including inferior product costs, trimmed down inventory carrying expenses, improved in-store diversity and assortment, and exceedingly competitive charging for the customer. This tactic has assisted Wal-Mart turn into an overriding force within a competitive worldwide marketplace. As technology advances, Wal-Mart goes on to concentrate on groundbreaking processes and structures to perk its supply chain up and accomplish greater effectiveness. 5. Does Wal-Mart use the “PUSH” or PULL Strategy in their supply chain and when meeting the customers’ demands? Please explain in details as to why you think what you think. Wal-Mart utilizes the pull strategy. For example, Wal-Mart uses the pull strategy to endorse its goods to the end user. A pull market strategy for Wal-Mart finds a way around the retail control and concentrates on promoting straightforwardly to the end user in anticipation that they would lay force on the retail industry to carry the merchandise, meaning that the retail industry would pull the merchandise through the channel of distribution. Wal-Mart took up a logistics practice referred to as cross-docking where goods are incessantly delivered to stockrooms where they are shipped to stores exclusive of ever spending time within inventory. This tactic condensed Wal-Mart’s sales outlay considerably and made it probable to offer daily low charges to their consumers (Roberts 2009:167). Within cross-docking, goods stay within the stockrooms two days at most. This helps steer clear of inventory and management expenses. Wal-Mart delivers roughly 85 percent of its commodities through its stockroom system. Storehouses generate orders for goods. Every distribution center, contractor, and storehouse of Wal-Mart is electronically connected to assure that every order undergoes processing and is carried out in hours. Wal-Mart runs a personal satellite-communications structure that propels point-of-sale information to every one of its vendors permitting them to encompass a clear visualization of stores sales. The system requires a quick and receptive transport structure (Leeman 2010:56). Wal-Mart has an out-and-out fleet of two thousand trucks, which serve their nineteen warehouses. This permits them to transport goods from stockrooms to stores within less than two days and restock stores two times each week on average. References LEEMAN, J. (2010). Supply Chain Management: fast, flexible supply chains in manufacturing and retailing. Düsseldorf, Institute for Business Process Management. LI, L. (2007). Supply chain management: concepts, techniques, and practices enhancing the value through collaboration. Hackensack, NJ, World Scientific. PLAMBECK, E. (2007). “The Greening of Wal-Mart’s Supply Chain,” Supply Chain Management Review. http://www.scmr.com/article/CA6457969.html RAY, R. (2010). Supply chain management for retailing. New Delhi, Tata McGraw-Hill Education. ROBERTS, D. (2009). “Wal-Mart CEO lays out ambitious social and environmental goals for his company,” Grist. http://www.grist.org/article/great-scott WISNER, J. D., TAN, K.-C., & LEONG, G. K. (2011). Principles of supply chain management: a balanced approach. Mason, OH, South-Western. Read More