Operations Management and Logistics: Wal-Mart Profile - Case Study Example

Operations Management and Logistics Wal-Mart profile It was established in 1962 in Rogers, Arkansas by Sam Walton.Wal-Mart is an American multinational retail corporation that operates a chain of largediscount department stores and warehouse stores and is listed in the New York Stock Exchange market. It is divided into three major segments theWal-Mart U.S., the Wal-Mart International, and the Sam’s Club. (Wal-Mart Stores Inc.). The company has over 11,000 stores in 27 countries. They have employed over 2.2 million associates all over the world and also conduct business online. It became an international company in 1991, with, more than 6,100 stores internationally. It has stayed ahead of the competition by providing quality services and goods, variety and lifestyle enhancing products. Wal-Mart store setups range from, supermarkets to hypermarkets that showcase distinct world-class shopping facilities. All their retail branches hold a variety of over 50,000 quality products, thanks to their rich heritage and passion for retail excellence. The stores worldwide have carved out a niche for itself as the ideal shopping and entertainment centers for the whole family. Wal-Mart international is involved in both wholesale and retail operations and now customers can also purchase a range of merchandise and services online. It is involved in social, environmental and company initiatives the communities they serve. Besides their corporate endeavours, Wal-Mart operations are tailored to be highly sustainable on all fronts; they take effort to ensure that their operations impact positively on their customers and the environment. Wal-Mart is also an active social development investor and is highly involved in community development projects such as entrepreneurship, environment, and education. Literature Review The operations management and logistics in Wal-Mart is divided into three major sections that include: logistics theories, the internal and external process flow in management. The theoretical underpinning of this study is that a balanced and arranged information process is vital in the operation and advancement of any organization. Any supply chain is based on demand, inventory control and supply of the products or services. The process flow includes various activities. Operation management and logistics is important to any company that is in a competitive environment and the adaptability with changes that are required in satisfying customers’ demands. The complexity and size of Wal-Mart makes it impossible to tell precisely how the supply chain works, but there is a general view of the operations management in keeping a steady supply of products as well as its relationship with other actors.  Inventory management often interact with other areas of operations management domain like provision of raw material for production scheduling and production of inventory of finished items, this in return affects the availability of products. Logistics is the physical activities involved in the procurement, movement, storage and accounting of raw materials partially processed goods and finished goods have developed into an industry in their right (Jones & Robinson, 2012). Operations management is involved in the internal operations of thecompany; it involves overseeing of workers, formulation of policies, assessment and planning, and managing the daily operations of the company. Wal-Mart has been quoted as an excellent example in using the theory of supply chain management, which is concerned with the management of inventory, suppliers, production, information, technology and quality; these are all the factors that affect the supply chain. In our case organizationWal-Mart this has been well explained based on the process flow. The Process Flow in the operations management and logistics Any supply chain is based on demand, inventory control and supply of the products or services. The supply chain ranges through various information, tools, and standard procedures. Assessment and Planning This process is done through planning, designing and preparation. It involves identifying a reliable source of information, collecting this information, interpreting and analyzing this data to make a decision. Assessments can be done by means of questionnaires, surveys, or interviews. These methods are used to gather first-hand information from the consumers. Wal-Mart uses electronic ordering and sharing of information among all its suppliers, and this helps in stability and giving better payment terms to suppliers (Robinson & Malhotra, 2005). Procurement Procurement is the process of identifying and acquiring of goods and services. It is involved in the tendering process, getting quality material, ensuring delivery is on time and monitoring stock. Wal-Mart has integrated the use of computers and e-marketing that helps in the handling of various processes all the way to distribution. It acquires all its goods directly from the manufacturers surpassing all the intermediaries, and this helps lower the cost of goods to the customers. This is also done because the good are on high demand by the customers. Warehousing and inventory management A warehouse is a space used for storage of goods and products. A storage space should have the necessary health and safety procedures, strategically located and well fitted. Inventory management involves monitoring the movement of goods to and from the warehouse and the quantity of stock. Wal-Mart has a number of warehouses that are in constant supply of goods direct from the manufacturers. It has systems that can track sales and inventory in all stores. Every store manages theirstock. In inventory management, the store has computerized all its operations to ensure accuracy and simplicity. The store has utilized the method of cross-docking to minimize space wastage and cut unnecessary cost. Due to high competition the role of the company management is to know the products flow faster than the others, the products that are more profitable and this can only be done through inventory taking and thus it is an important activity to any company so as to limit unavailability of goods when needed. Fleet management It involves managing and coordinating the various modes of transports used. Transport involves the movement of good from one place to another. In our case from the manufacturer to the consumer, it ensures timely delivery. Means of transportation include air, road, rail and sea. Some companies may run their own transport or outsource transportation. The operations manager then manages traffic on the goods to ensure delivery and pick up is on time. Wal-Mart has a number of company owned trucks that collect goods from the distribution centers to the various stores. There is a coordinator who schedules all the dispatches and collections with the drivers. Disciplined personnel and quality set procedures help to minimize loss, damages and theft during transportation. Distribution This is the movement of end product from purchasing to the consumer. It also involves the movement of these products from the warehouse or storage space to the various stores. Distribution may include handling, packaging, branding, and transportation. Wal-Mart’s distribution centers ensure a steady flow in goods for a constant supply. The use of distribution strategy of the cross docking method where a central warehouse acts as a coordinator of the supply process and transshipment point for incoming demand and the suppliers (Bramel & Simchi, 1997). This also helps reach a larger geographical area in a reasonable amount of time. This method of using the competitive advantage theory puts Wal-Mart at a favorable position comparing to the other retail outlets. Monitoring and Evaluation Monitoring and evaluation are involved in the goals and progress of the organization. This process helps to see if the organization has met their set goalsand the challenges that they have been faced, as well as come up with recommendations. Evaluation and monitoring feed the planning process with the desirable programs for implementation. Instead of always holding promotional offers and seasonal offers for their consumers, Wal-Mart has other strategies that include low prices throughout the season. The use of technology to monitor orders, shipments and inventory in all stores is done by their satellite, this increases efficiency and transparency. Internal and external process map(s) of the logistics and process flows of the Wal-Mart Retail Outlets. Wal-Mart has retail outlets and distribution centers that make up its supply chain. Different centers hold different types of products that are distributed to retail outlets. To ensure flexibility and minimize storage cost Wal-Mart also uses the cross-docking method where products flow to the stores directly without being put in warehouses (Chiles & Dau, 2005). In the retail store, the vendors or suppliers have the goods that are then taken to the distribution centers or the stores warehouses, the goods are then transported to the various stores and sold to the consumers. Besides the physical flow of the product, information also passes from the consumers as feedback on the goods obtained. The managers of various outlets also communicate on the products they need to be replenished. The logistic process is still influenced by external factors that mainly involvepurchasing, transport, and storage. Purchasing involves the placing of orders and in some cases tendering. Wal-Mart is directly involved with the suppliers who avail goods to the distribution centers, long-term stable relationship is required between the purchaser and the supplier. In the distribution centers, and warehouses the goods are branded, and the quality improved to the customers’ satisfaction. After this process, the goods are then dispatched to the retail outlets. The store uses its company trucks to deliver these good. There is a time schedule for the dispatch and delivery. The logistic process ensures that the day to day operations are efficient and customer satisfaction. Wal-Mart operationusing internal and external analysis The five objectives The buyers bargaining power, is the power of the customer in purchasing goods. Wal-Mart is a retail outlet that offers its customers the option of buying goods in bulk at a lower price. It offers all the information needed by the customer in their website this helps them in deciding on the products they need and how to get it at a cheaper price (Wal-Mart,2013 ) The threat of substitutes involves the use of alternative’s products, changes in fashion and technology as well as product innovation. Wal-Mart has a market strategy of using the Everyday Low prices in all their products. It has also embraced the integration of e-commerce in its system making it easier for the customers to check on the available products (Wal-Mart, 2013). Entry of competitors in the market, in any market when there is a niche new entrants come into the market, they are competitors who have identified a market gap they provide competition leading to lower profit margins. This can be dealt with accordingly with the logistic process and marketing strategies. Bargaining power of suppliers, suppliers will work with a company that brings profits and is willing to accept their terms, by partnering with them and supporting the local suppliers, Wal-Mart has diversified and encouraged the use of locally available resources. These goods are available at a cheap price and additionally there is support to the local producer (Wal-Mart, 2013). Rivalry among existing players, there are many other retail outlets that offer competition to Wal-Mart. However, it is a well-established store with a number of outlets and hence offers stiff competition and not just in terms of prices. It has introduced e-commerce as a retail outlet and hadgreat investments leading to growth opportunities (Wal-Mart, 2013). A SWOT analysis helps understand the strength, weakness, opportunity and threat to a business. It involves identifying the internaland factors that are favorable and those that are not favorable to business. This analysis involves exploring the organizations strengths and weaknesses that are the internal factors that are within the control of the organisation (Chen 2011). Opportunities and threats are external factors affecting an organizationin which it has no control over. The strengths are positive factors that a business can build on, weakness require to be remedied for a business to prosper. In the external factors opportunities are the prospects available to the business that should be prioritized and invested on, threats are a danger to the business, and it should put measures on how to handle them appropriately. Advantages The use of technology puts the outlet at a competitive advantage with the other retail outlets. Technology is affected by the social changes in our society. The introduction of modern logistics methods helps the company prepare adequately to adapt to these changes without leaving a generation gap. Identifying market gaps helps build opportunities this is evidenced by Wal-Mart having a large number of outlets in various countries all over the world while still providing quality products and satisfactory customer service. An economy of scale isachieved, owing to the large scale of operation there is reduction in price which is passed down to the consumer. This attracts a large number of customers. International operations and rapid growth of a market in other countries helps increase completion and increase the profit margin. The competent use of information and distribution system- A proficient supply chain management and logistics is the core of any business organization; it improves productivity, efficiency and transparency in all its operations (Chandran, 2003). There are no unnecessary delays and all the information gathered is acted upon immediately. Using these analyses in logistics, it makes it easy to identify the competitions vulnerability and thus strategize on ways to exploit this opportunity. Disadvantages The use of SWOT analysis sometimes puts the organization before the community. During mergers and take-over many people also lose their jobs. There is also rapid growth of other retail outlets and entry of new players that will increasecompetition. Various businesses may offer only online shopping and faster delivery of good. This increases competition and may lead to decrease in sales of some productsin the stores. Negative publicity coupled up with different lawsuits is also a major challenge, thereare various complaints of poor working conditions and low pay by the workers. Recommendations The subsequent recommendations have been made with regards to the analysis made of the company. The company should avail the necessary information to the consumers about the products they want to buy, the availability of these products and delivery status. In the light of customer’s complaints, the company should invest in trainingtheir personnel on handling of products in the stores and warehouses and also training them on interpersonal skills when handling customers. In matters of compensation and motivation, the company can provide incentives such as rewarding them, giving bonuses, holding extra-curricular activities and promotions. Offering employees competitive salaries help to maintain loyalty and increased efficiency. Offering equal training opportunities and rewarding the employees would also act as a powerful motivator to the employees. The business is supported by the community that surrounds it, therefore it would be a major step by partnering with local industries, producers and making their products readily available by creating a market for them. Partnering with NGOs, Environmental organizations to help with recycling, environmental sustainability and giving back to the community through sponsoring local events, charities, offering scholarships. In order to increase efficiency, the company can monitor market developmentand this can be done through periodic evaluations of the external environment and strategies used by the competition. In this case, ensure there are always improvement and innovation programs involved. Quality control in logistics refers to the use of a progressive approach in management and products. It involves the use of scientific methods planning and implementing. It ensures the optimization of cost and products. The company should adopt emerging trends in modern technology to in order to stay relevant. Reference list: Jones, P., & Robinson, P. (2012). Operations management. Oxford, Oxford University Press. Chiles-Ronald C. &Dau-Thi M. (2005) An Analysis of Current Supply Chain Best Practices in the Retail Industry with Case Studies of Wal-Mart and Amazon.com. Masters of Engineering Logistics, Massachusetts institute of Technology. Bramel, J., & Simchi-Levi, D. (1997). The logic of logistics: theory, algorithms, and applications for logistics management. New York, Springer. Robinson, C. J. & Malhotra, M. K. (2005). Defining the concept of supply chain quality management and its relevance to academic and industrial practice. International Journal of Production Economics, 96(3), 315-337. Chen J. (2011). SWOT analysis of the logistics process of Shun Yue Cement Company Limited. Degree Programme, Savonia University of Applied Sciences. Logistics Operational Guide (2009). Retrieved on 9th Dec 2014 from: http/log.logcluster.org/mobile/preparedness/logistics/index.html. Chandran, P. M. (2003). Wal-Marts supply chain management practices. ICFAI Center for Management. Retrieved on 9th Dec 2014 from: www.icmrndia.org. Wal-Mart (2013). Annual Report: Wal-Mart Corporate: Our Story. Retrieved on 9th Dec 2014 from: corporate.mal-mart.com. Read More