Introduction In recent times, businesses have become global, hence necessitating an effective supply and logistics management system. This is an inevitable platform in trade that encompasses different aspects which leads to a successful global business. An effective logistics management system helps Wal-Mart stores to effectively distribute goods to different locations.
Logistics management is the process of planning, organizing and controlling the logistics system (Ghiani et al., 2013), encompassing aspects in personnel, planning and organization of the whole system for timely and orderly distribution of goods. The business mainly utilizes elements in forecasting as a means of estimating the capacity of goods required in different store locations. Other essential elements are in supply, storage and distribution. Supply is a decision based area concerning the logistic activities that involve purchasing of raw materials, semi finished goods or services. Storage and distribution entail aspects of warehouse planning and storage, as well as the allocation of products at different product points. Distribution assists in vehicle routing consolidating shipping orders to different locations on a global scale. This has been made possible by an established fleet of trucks that assist in optimal delivery of goods to various locations. There are staffing needs for an effective distribution system. This ensures product movement is not hindered in any way, and at the same time purchasing and supplies control to ensure the availability of raw materials that the business may use to produce the end product. Studies have also shown that operations research is a vital element of logistics management. This allows one to calculate durations for effective scheduling. Some leading brands have a well established logistic system that helps in achieving the overall corporate goals.
One such famous company being Wall-Mart stores. Wal-Mart stores was founded by Sam Walton and his brother James in Arkansas in 1962. The company has since grown steadily, and by 1970, it had 18 stores with a $44 million sales revenue base, with the key element that made the organization be in the limelight being its logistics system. The company has one of the outstanding competitive position based technique, in which its unique interaction in the logistics and distribution system, superior information and communications technology (Kneer, 2009), derives its success from. Wal-Mart’s logistics facts Wal-Mart employs the use of certain advanced strategies like the Site to Store strategy, which enables the company to differentiate itself from even most online retailers. It uses this strategy to have goods shipped free of charge to other near local Wal-Mart stores. According to its fact sheet, close to 90 percent of customers buy from Wal-Mart stores in a month. Wal-Mart utilizes the strategy to ensure maximum utilization of its 147 distribution centers. It connects its logistics system with over 50 transport offices, 53,000 trailers and over 8000 drivers. Recently, the company established a distribution center to manage foods imports, on the other hand, using other multi-faced strategies to remain the leader in stores and distribution management. Wal-Mart was founded by Sam Walton and his brother James in Arkansas in 1962. It grew steadily, and by 1970, it had 18 stores with a $44 million sales revenue base. A success story that made the organization be in the limelight was its logistics system.
Global supply chain strategies intertwine with business strategies, in companies that are global. Wal-Mart store is a company with stores globally in major countries of the world, with China and United States being evidently seen.
One success story of Wal-Mart in the global arena is the logistics management, with the organization having a well organized and entrenched system cutting across foreign markets. The main aspect has been on business strategy with an effective supply chain system that has propelled this corporate brand. Wal-Mart’s Logistics system – The heart of the company Wal-Mart’s logistic system is at the center of the company’s operations. It is the main reason that keeps the business goods moving to every store, with some of the best known trade practices. The Company’s distribution center blends with a variety of products from fashion, jewelry and grocery. The company has one of the best private and safest fleet with over 2.2 million preventable miles accidents. Wal-Mart distribution centers employ over 800 associates to oversee its daily operations, serving over 90 stores, all within a radius of 250 miles. The company has one of the best grocery distribution centers equipped with ice cream and banana freezers to facilitate proper storage of foodstuff. These unique features set the pace in Wal-Mart’s operations. Closest rivals such as Kmart have never been any near of competing with the company. Kmart’s founder Harry Cunningham admits this. The working of Wal-Mart’s supply chain management systemCompanies use technology to streamline and synchronize the supply chain system as per demand levels. They use collaboration and replenishment mechanisms, to link their processes to a main central server. Supply chain management refers to the process of coordinating a network of distribution points that helps in the procurement and distribution of products till the destination. For this system to effectively work, there are key components that include procurement, inventory control, logisticsand distribution. An example in this case is the connection of Wal-Mart stores with Proctor and Gamble. The two companies have integrated their systems with the meeting point at the Wal-Mart’s distribution center. This helps Wal-Mart to monitor the inventory and supply levels, which in turn triggers an alert in case replenishment is needed. Wal-Mart store also monitors its stores in real time by using satellite links. On the other hand, an IT infrastructure is crucial for Wal-Mart’s operations. The company makes use of different technologies such as sophisticated servers that are faster and processes large amounts of information. This helps the company in inventory control to ensure reliable data is maintained at all times. Emergency backup systems are connected to a centralized database that assists in incremental backups to the organizational wide data center. This supply chain system also helps in locating a product on transit. On arrival, goods are recorded, and the inventory system is updated in real-time. Wal-Mart’s supply chain management system, drives on a strategy based on four key elements.
The four components being vendor partnership, cross docking, distribution management, technology, and integration. In vendor partnerships, Wal-Mart uses three principles with the first being the concept of providing value and service to customers in order to remain the most distinguished company in service provision to its customers around the globe. Wal-Mart considers its customers to being a key element with most remaining loyal. On the other hand, Wal-Mart stores uses cross docking strategy. This is a form of just in time distribution (Bergdahl, 2004). It has helped the company in streamlining the supply chain from the initial to the final point of sale, and at the same time reducing handling costs, operational costs, the overall inventory storage cost and worth being noted being helping until in the final delivery of goods tothe consumer. This concept helps Wal-Mart to distribute products within the shortest lead times, with up to 85% of Wal-Mart’s goods utilizing the docking system. Wal-Mart utilizes another concept known as the hub and spoke system, which allows goods to be delivered within a day’s drive (Radhakrishnan, 2001). In this kind of system, goods are centrally purchased in large quantities and assembled at a large warehouse called a distribution center. From this point, goods are then dispatched to various stores spread across the entire country, with the procurement being done solely by the company. On the other hand, another key aspect in supply chain management system is technology. This plays the central role in Wal-Mart’s supply chain system. Wal-Mart’s logistic and supply chain system relies on technology to drive the overall corporate goal. The store has the largest information system among the private company’s of the world. As such, this gives the company an advantage which allows it to plan for demand based on forecasting to help in predicting inventory levels, create effective, efficient supply, transportation routes and to manage a cost effective and manageable customer relationship management system, with over 3000 vendors connected on this system. Apart from this, the company has its own satellite communication system which directly sends point of sale data directly to other key players within the company distribution network.
On the other hand, key pieces of communication equipment that have video conferencing facilities are installed in each store where each store manager directly communicates with other personnel who are based at the corporate headquarters concerning daily store activities like wanting to know which products are selling and vice versa.
Wall-Mart Supply chain strategyAn outstanding strategy employed by the company is in stock replenishment. Goods are routed to warehouses and further shipped to stores in order to reduce inventory time. The strategy enables the company to develop a more structured and well established supply chain management system. Its supply chain management focuses on inventory management, forecasting, demand planning and simulation to help in controlled movement of goods to different locations, with another key aspect being in demand planning which is central to the business logistical goals of shipping goods to different store locations. Supply chain innovation and people strategy. Wal-Mart stores create value for customers with a highly efficient and innovative supply chain management operation. This strategy utilizes the concepts of low cost procurement tactics, leading information edge systems for faster processes. This enables the company to computerize and link their suppliers and other stakeholders to allow for an effective planning and execution. On the other hand, a data interchange system assists suppliers to receive purchase order information and supply invoices electronically, thereby lowering expenses at the same time increasing productivity. The company has strict lead times and other time based shipping requirements based on technology and operational procedures. The logistics team also utilizes an internet based transportation link system to help in moving goods (Hitt et al., 1997). Stores Segment Strategy This strategy aims at improving the return on investment, in order to develop customer relevancy. It also utilizes the concept of rental space to rent out its store space to other well established brands like McDonald and Subway. This guides the company in marketing and merchandising decisions since it attracts loyal clients of other well established brands who become customers, hence deepening brand penetration. Wall-Mart Distribution Infrastructure Wal-Mart distribution center traces its root in the Manhattan, United States. It’s first logistic infrastructure and warehouse operation was opened in 1970 but has evolved currently to 157 distribution centers in the United States alone. The key strategy being to stock other merchandise distribution centers, and at the same time ensuring that each is reachable. The company has distribution centers that primarily distribute electronics, health, beauty products and other appliances.
The company has a distribution network to move a variety of goods. The concept utilizes the network strategy that allows goods to be positioned near retail stores and others at distribution points. This strategy enhances the company’s ability to position itself strategically in product movement. Products that are constantly being bought generate the most volume hence can support other stores. The company also has distribution centers that manage a variety of goods such as grocery and fashion items. The distribution centers are central to expansion strategies adopted by the company. Hybrid structures connect to data centers to help in the overall management of information systems that support the whole network. In each distribution center, there is between 70 to 110 stores located within a 200 mile distance. The centers act as a storage location for the goods to enable goods to gradually saturate the area in order to increase efficiencies through re-optimization, which cuts down the movement of trucks in a sense that they don’t have to travel to other retail stores to deliver goods. Trucking network and trucks management
Wal-Mart has a trucking network covering over 80 distribution centers throughout the country. These areas are served by over 2000 company owned fleet of trucks, which helps the company to ship and move goods from its warehouses to stores in less than 48 hours. This is key in the movement of goods across strategically placed distribution centers and warehouses. The organization maintains a fleet of trucks that transports goods to specific locations. This helps in timely distribution of goods to allow for consistent and planned inventory system. Trucks regularly ship goods, with the distance between distribution centers and stores being achievable. The team of truck drivers is one of the best managed, and fleets of trucks being regularly monitored. Wal-Mart store is one of the first companies that pioneered the use of hub and spoke system to effectively manage their logistics and distribution network. Not only in efficiency, it also helps the company to save on costs as a result of savings that rise from purchasing goods in huge quantities.
Radio Frequency Identification Wal-Mart also uses Radio Frequency Identification, which uses a numerical code that is scanned to track merchandise as it moves along the supply chain. On the other hand, Smart tags are also used and read by a scanner, which allows employees to ask for replenishment when stock limit is below the accepted standard. This is a wireless technology that uses electromagnetic fields to transmit data in order to automatically identify and track tags attached on objects. This is made possible through the presence of electronic information stored inside the object. This technology is applied in a variety of ways, and mostly used in automobiles to track the position of a vehicle while on transit.
Wal-Mart stores employ’s this technology to effectively monitor its trucks on a 24 hour basis. The technology brings about changes in the logistic system of Wal-Mart stores. It is used by the company to accurately and transparently promote stock usage. The company uses it to check its historical sales records in order to facilitate accuracy in stock. On the other hand, it also reduces loss of stock since it helps store managers to track every commodity, from purchase, distribution to when the sell is made. The company uses this technology to manage its warehouse by ensuring that goods that are stored at the warehouse are constantly monitored. When a particular good is collected from the store, a record is made and storage information updated for consistency purposes. RFI Infrastructure This RFID system is connected to an enterprise system, designed to communicate through some wireless medium. It consists of basic elements such a data management device that helps to synchronize information as received from the tag readers. This device interacts with other motion sensing devices at specific bands. The technology brings about mobility. Overall business Strategy in Logistics Management Wal-Mart utilizes a business strategy such as focus Strategy, differentiation strategy and overall cost leadership. The focus strategy aims at focusing a product to a given market segment. The differentiation strategy helps in uniquely differentiating a product in a market dominated by other players. The other strategy known as overall cost leadership employs cost tactics in order to drive a product into the market. Wal-Mart stores employ the use of cost leadership to penetrate newer markets while at the same time build a customer base and to have a loyal base of customers.
This is turn has an effect on the overall logistic system of the organization. The company is known to be one of the successful, with large customer base, that is driven by their slogan- spend less build more.
Procurement system. The organization uses an electronic data interchange system to connect its computer systems to its suppliers who are then linked to Wal-Mart’s main backend system. The electronic data interchange system allows suppliers, and other vendors to obtain sales information that they can use to plan for the supply of manufactured goods to the store. In conclusion, Wal-Mart successfully employs different marketing strategies that directly impacts on the logistic system. The company has evolved as one of the well-known organization differentiating itself in the cost structure and has been successful despite market instability and the recession that hit the world in 2008. However, it still faces threats from competitors in the retail industry and has weaknesses to be improved in the future. Wal-Mart store has evolved to be one of the largest enterprise in the US history. This is due to the well composed and organized logistic system that is key in distributing goods for sale by a company. The principles of cross docking, backhauling and satellite technology create significant competitive advantages for the largest store.
The company employs the use of technology in controlling the movement and timing of the product being delivered to its stores. In this, Wal-Mart leverages its economies of scale using its own fleets of trucks and cross docking techniques to reduce the steps in product handling compared to warehousing of products. This increases the speed in the distribution which allows goods to turn over more quickly in the stores, reducing out of stock scenarios. This concept that Wal-Mart stores employs in their logistics management reduces handling hence less volume of damaged goods. Wal-Mart’s different approach is because of sophisticated technology in distribution. It has successfully adopted and implemented one of the best technologies and an overall computing platform that drives all the key systems. It is one of the most admired successful companies around the globe.
References:
Bergdahl, M. (2004). What I learned from Sam Walton: How to compete and thrive in a Wal-Mart world. Hoboken, N.J: John Wiley & Sons.
Ghiani, G., Musmanno, R., & Laporte, G. (2013). Introduction to logistics systems management. Hoboken, N.J: Wiley.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (1997). Strategic management: Competitiveness and globalization : cases. Minneapolis/St. Paul: West Pub. Co.
Kneer, C. (2009). The Wal-Mart Success Story. München: GRIN Verlag.
Radhakrishnan, P. (2001). Proceedings of the 1st international conference on logistics and supply chain management. Allied Publishers.
