Principles of Logistics Management in Wal-Mart - Report Example

Logistic Management of Wal-Mart Number Word Count: 1468 and of Lecturer’s Introduction Logistics management has taken the position of the key driver in defining the competitive landscape of the industry (Van Hoek, Harrison and Christopher, 2001). Simply stating, Logistic management refers to the supply chain management of the product and service for forward and backward flow from the point of production to the point of consumption in an effective and efficient manner. The efficiency and effectiveness are achieved with technically abreast planning, implementation and control systems (Farahani, Rezapour and Kardar, 2011). With this emphasized importance in the modern business world, the underlying report is aimed at the assessment of the logistics management system of grocery giant Wal-Mart. Incorporated in USA, Wal Mart ranks on the 18th position on the world’s most valuable brand (Forbes, 2013). The USA retail giant has around 6148 stores across the world: (McCarthy, 2013) The brand served around 250 million customers weekly and generates sales of $279 billion in the year 2013. The successful growth of the company is the result of the consistent focus on customer with excellence on operations to achieve and sustain the cost leadership (WalMart, 2014). For the purpose, the company has a consistent focus on the logistics management. The logistics info-graphics of Wal-Mart is as follows: (Berman Evans Retail, 2014) Hence, in order to achieve goals set forth for 2015 further continuous improvement in the processes are required to be inculcated in Wal Mart process (Berman Evans Retail, 2014). Order Processing System of Wal-Mart As Wal-Mart is a retail company which provides international, as well as local products to its customers through specific channel, it has focused on its inventory and replenishment process. Company has developed competitive advantage by being highly responsive and maintaining a low level of inventory. Wal-Mart has developed highly efficient product replenishment cycle by integrating technology and effective strategies which completes in 48 hours. Below is the process map of replenishment activities: Inventory Control System of Wal-Mart Wal-Mart as the largest retail store of the world has been successful in managing its inventory in an efficient manner. While operating in around 70 countries, company itself stocks huge numbers of items and maintains inventory alone. Wal-Mart is using the approach to maintain a low level of inventory in order to decline the cost as inventory management takes huge cost. In the result, this leads to lowering the prices of products. In this way company is successful to maintain the momentum of ‘everyday low prices. Wal-Mart has developed its just-in-time (JIT) inventory, and, on the other hand, keep the low level of inventory just to meet urgent needs. The inventory management system of Wal-Mart ensures that company has enough of stock to meet daily needs, but keep it as little as possible. Its effective inventory management results in satisfied customers, less cash engaged in warehouse and reducing sales. However, owing to its international contracts of production, rapid production processes, a continuous increase in its product lines make them store a necessary inventory. Wal-Mart tracks its sales, communicates with suppliers, receives data and uses information to ensure the availability of inventory for example products that are sold on seasonal demands. Also, Company has maintained good relationship and effective communication channels so that storeowners must inform when to reorder and purchase. The Use of ICT of Wal-Mart The company with such effective logistic management coordinates its demand estimation with the supply management under an interactive planning, projecting and replenishment process. Every single process is connected through advance technology which involves the central database system, systems regarding point-of-sale and a proper network of satellite. By using the advanced information and communication technology, company has implemented the bar code system of products in the country for the first time by implying the Universal Product Code. These codes help the company to collect and analyze information available at store by devising the Retail link. This retail link is further connected to the global satellite system which helps to project the suppliers demand to distribution centres as well as supplier associations and reflects the sales data to them. Wal-Mart uses its information collected from the cash register and point-of-sale is communicated to all the partners by processing through retail link. Moreover, company has adapted to more advanced technology by using Radio Frequency Identification Tags (RFID) to monitor the inventory and keep the management informed about items that are to be replaced. This technology based information and communication process helped the company to save time, increase inventory turnover, enhance storehouse space (Traub, 2012). Improvement Recommendations by Applying Logistical Theories and Concepts Wal-Mart has implemented the cross dock strategy in order to control and maintain separate stores combining number of inbound trucks to outbound trucks. This service involves the receiving of products and items from one truck and directly loading to another truck for final delivery, without any intervention of storing process. This service has saved the time, energy and cost of the company to store the products for the final delivery process. In this way, company can get their products shipped within 24 hours. The above model presents the complete model of cross dock strategy. However, now technology has developed the extensive progress in following four areas: Advance System Notification (ASN) Barcodes Warehouse Management System (WMS) Material Handling system (MHS) (Cognizant, 2014) (Cognizant, 2014) The above graph represents the present state of Barcodes, sorters and utilization of ASN. In order to be more effective by increasing efficiency and decline the cost, distribution centres of the company should incorporate the automated conveyor systems and warehouse management system to put into operation an automated delivery. This will lead to effective material handling system of the company. In addition to this, trading partners are now enhancing the power of barcodes by simply utilizing GS1 standards with regards to their business operations. It is recommended that company should use integrated ASNs and bar coded labels ranging from GS1-128, together with approved warehouse management process to maximize its supply chain performance (Cognizant, 2014). Although, company is using Radio Frequency Identification Tags (RFID) technology to track its inventory level and share information about the products to be replaced and added in the inventory. But now the advancement in the RFID technology has made it easy to meet the financial targets by the company. The TOSHIBA SX-series are the barcode label printers that help to print the label information directly onto RFID tags. This advancement in technology has made it possible to market practical approaches that merge TOSHIBA modernism and quality with low cost and high volume tag production based on RFID technology. This new technology is known as Short Pitch RFID Encoding Technology (SPRINT). Companies using SPRINT will be highly advanced with next generating application system including printers of TOSHIBA B-SX barcode, which results in cost-effective tags to meet large volume requirements. Wal-Mart has implemented effective strategies to carry out operations successfully. Company’s management has planned and accomplished the effective replenishment process of the product (Chandran, 2003). Nevertheless, Wal-Mart Company can further enhance and develop the procedure of the replenishment process and inventory management by counting the analytical and forecasting reports as well in the system. The information collected from the system of point of sales will be sent to the processed systems for the preparation of forecasting and analytical reports. The forecasting reports will allow the retail company to project the future expected sales and analytical reports will determine and analyse the seasonal demands of the products to carry out sales of various products according to the demand of product. This will also help to maintain the inventory during the period of low supply and increasing demand of products. Conclusion Wal-Mart is the world’s largest retail service company, which incorporates highly effective logistic management system. Company has maintained its operations in order to create cost effective and highly responsive services. Based on its major theme, “everyday prices decline," Wal-Mart has successfully implemented several strategies to lower the inventory cost, increase the information and communication technology and improve order processing system. The technologies and strategies used by Wal-Mart are Radio Frequency Identification Tags (RFID), cross dock strategy, Retail link and effective replenishment cycle. Therefore, Wal-Mart has been able successfully to operate and manage the processes in an effective and efficient manner and consequently it can maintain a competitive edge over other competitors in the retail industry. References Berman Evans Retail. (2014). Wal-Mart and Logistics: An Infographic. Retrieved June 22, 2014 from http://bermanevansretail.com/2014/02/19/wal-mart-and-logositics-an-infographic/ Chandran, P. (2003). Wal-Mart’s supply chain management practices. Retrieved June 22, 2014 from http://mohanchandran.files.wordpress.com/2008/01/wal-mart.pdf Cognizant. (2014). Improving Cross-Docking Efficiency in Four Key Areas. Retrieved June 22, 2014 from http://www.cognizant.com/insightswhitepapers/Improving-Cross-Docking-Efficiency-in-Four-Key-Areas.pdf Farahani, R. Z., Rezapour, S., & Kardar, L. (Eds.). (2011). Logistics operations and management: concepts and models. Elsevier. Forbes. (2013). The World’s Most Valuable Brands. Retrieved June 22, 2014 from http://www.forbes.com/powerful-brands/list/ McCarthy, N., (2013). Walmarts Wealth of Worldwide Outlets. Statista, Retrieved June 22, 2014 from http://www.statista.com/chart/1230/walmarts-wealth-of-worldwide-outlets/ Traub, T. (2012). Wal-Mart Used Technology to Become Supply Chain Leader. Arkansas Business, Retrieved June 22, 2014 from http://www.arkansasbusiness.com/article/85508/wal-mart-used-technology-to-become-supply-chain-leader?page=all Van Hoek, R. I., Harrison, A., & Christopher, M. (2001). Measuring agile capabilities in the supply chain. International Journal of Operations & Production Management, 21(1/2), 126-148. WalMart. (2014). WalMart-2014 Annual Report. Retrieved June 22, 2014 from http://cdn.corporate.walmart.com/66/e5/9ff9a87445949173fde56316ac5f/2014-annual-report.pdf Read More