Johannie Hobbs, executive vice president of logistics at Wal-Mart pondered how to keep the company’s supply chain successful which was having a competitive advantage over other firms.
Wal-Mart is one of the leading retailers of the world operating in 15 countries with excellent supply chain system. The company is having self-distribution system, tight relationship with suppliers, cross-docking of products, back-haul revenue, low cost priced and quality products to satisfy customers. In recent years, the company is facing tough competition from retailers like Amazon, Dollar store etc. (Lu, 2017)
The problem occurred at Walmart when there was rise in the number of grocery stores leading to lag in restocking shelves and wastage of time in sorting of products. The company has a broad range of products and various stores with different segments like grocery, clothing, department and wholesale and in 2006 it had excess inventory. (Chandran, 2003).
The main logistic problem was lack of stocks as the previous stocks were run –out. The reasons were poor weather and increased tax rates which prevented the stocks to be delivered on time. So, as an executive vice president the primary aim is to restock products as fast as possible as this problem will decrease sales and revenue (Chopra & Meindl, 2010). As an EVP, the main focus is to invest the money and energy to hire more staff to monitor whether the product is on the shelf or not and if not then restock the item ("Walmart Fights Logistical Problem of Keeping Shelves Stocked", 2017). There were problems with the suppliers as Wal-Mart had tight relations with them so energy is to be spent to make the relationship better to get the supplies on time and increase the number of trucks to get the products delivered and maintain the stocks(Chopra & Meindl, 2010).
Wal-Mart introduced RFID (radio frequency identification) in 2003 to keep track of the inventory and had shortcomings. There was huge demand of the RFID tags but suppliers were unable to deliver it, it did not function properly and many suppliers did not know about it. Money is to be spent on the training of the staff members and suppliers to know about RFID and understand the benefits of it that will help in supply chain. The information and communication system of Wal-Mart is poor compared to other retailers. It is information technology averse and slow in adapting new technology. In supply chain, it is important to implement information technology to track and communicate with the suppliers. Hence, money is to be spent to implement new technology to manage the logistics and get the products delivered at correct time and fill up the stocks (Chopra & Meindl, 2010).
References
Chopra, S. & Meindl, P. (2010). Supply chain management (1st ed.). Upper Saddle River, N.J.: Prentice Hall.
Lu, C. (2017). Walmart's successful supply chain management. Tradegecko.com. Retrieved 1 January 2017, from https://www.tradegecko.com/blog/incredibly-successful-supply-chain-management-walmart
Chandran, P. (2003). Wal-mart's Supply Chain Management Practices (1st ed., pp. 1-13). ICFAI Center for Management Research. Retrieved from https://mohanchandran.files.wordpress.com/2008/01/wal-mart.pdf
Walmart Fights Logistical Problem of Keeping Shelves Stocked. (2017). Supplychainbrain.com. Retrieved 1 January 2017, from http://www.supplychainbrain.com/content/industry-verticals/retail/single-article-page/article/walmart-fights-logistical-problem-of-keeping-shelves-stocked/
