The supply chain management tends to integrate the customers’ logistic requirements, the distributor and the supplier of a particular business entity into a single cohesive system. It is basically a collection of the individual physical entities, for instance, the plants where goods are manufactured, the centers of distribution, retail outlets, the conveyances, personnel and information, all the entities are linked together through the consumption of goods and services. Most of the organizations including the Walmart stores value the supply chain management because it tends to decrease time and also the final costs incurred by the customers in the purchase of goods and their affiliate services in addition to this it is essential in offering a firm competitive advantage in the commerce and trade industry (Cox, 1999).
Walmart is a good example of an organization that utilizes the supply chain management systems in the most effective way. This way the organization is able to maintain low prices for its customers while at the same time it ensures that the stores and the shelves are appropriately stocked, this way the company has become a leader in the retail industry especially within the U.S. The success is also attributed to the maintenance of a constant inventory level through a unique system of inventory replenishment aided by the point of sale purchases. The system of continuous replenishment is used to request for new goods directly from suppliers immediately after the customers have purchased the goods within the stores (Appelbaum & Lichtenstein, 2006). There is terminus referred to as the point of sale which records the individual barcodes for every item that is checked out at the counter. It sends the transaction of purchase directly to the Walmart headquarters and specifically to a central computer and the computer places orders directly to the suppliers for the replenishment of the goods sold (Cox, 1999). However, the suppliers are also accorded the permission to access the organization’s inventory and sales data by using the web technology. This way Walmart is saved the hustle and costs of having to maintain huge volumes of inventories for the goods within the warehouse.
Infrastructure: Globally there are about 2485 stores belonging to Walmart, the figure includes about 457 Sam’s clubs, 683 supercenters, 5 neighborhood markets and approximately 1000 units under Walmart international. Globally Walmart serves approximately 100 million customers each week. In addition to this there are approximately 1030000 associates and this makes Walmart the largest employer in the private sector in the U.S. all the activities of Walmart are centralized in such a way that it is run from a national headquarter which is responsible for taking care of the orders ("Wal-Mart Stores, Inc.", 2007). This, therefore, means that all the local stores must report to the national headquarter. At the local level, the local stores take the responsibility of satisfying their local customers. Each of the associates is charged with the responsibility of reducing the costs of operations, for instance by reducing the paper usage. The cost reduction is meant to ensure that the company saves on the operational costs which translate to low costs of goods for the customers.
The Human Resource: About 60% of all the Walmart managers in various stores are said to have joined the company as hourly associates. Therefore, Walmart as a company offers its employees with opportunities for advancing their career as part of value addition ("Wal-Mart Stores, Inc.", 2007). First, all the employees are always encouraged to suggest new ideas, communicate freely, confront risks, have fun and generally strive for excellence in everything they do. Despite the pressure for the company to maintain low prices for the customers, the employees are offered comprehensive benefits as well as comparatively competitive salaries. The comprehensive benefits are for both part and full-time employees, the benefits include, stock purchase program, profit sharing, medical insurance, vacation, holiday and leave allowances as well as scholarship and private counseling programs (Cox, 1999). During the recruitment of new associates, Walmart initiates a comprehensive program of recruitment within a target community where a store is to be located for the identification of candidates. This program is extensively publicized for the purpose of making it more competitive and comprehensive, this ensures that the company is able to source the most competent employees. Once the candidates have been recruited to the company, they are informed of two key statements, the first is that the customer is always right and the second is that in the instance the customer is wrong, then the first rule is applied. This is meant to increase the competitiveness when it comes to the value creation with reference to the customers.
Technology: Most of the operations in Walmart are based on technology that is computer-based. All the products on the Walmart store shelves have a barcode. Whenever a particular barcode on any of the products at the stores is swiped at the checkout isle, the information is immediately transmitted to the company’s main warehouse data system. The warehouse data system indicates whenever a particular product/good ought to be replenished and it also proceeds to place an order directly to the supplier/vendor or the center of the distribution. The importance of this particular inventory management system is that it minimizes the overhead associated boxes of unnecessary goods piling in the stock rooms and the warehouses (Appelbaum & Lichtenstein, 2006).
Ordering: The application of goods for all the Walmart stores is under the national headquarter. All the barcodes for every single good are registered in a central computer. The central computer at the headquarter collects all the orders emanating from each of the Walmart stores and then it proceeds to transmit these orders to the suppliers. Walmart collaborates with its suppliers for the purpose of identifying means of cost reduction without profits reduction. The collaboration results in package costs reduction and it also streamlines the systems of distribution, this way the net cost of the product is reduced.
Marketing: Most of the sales made at the different stores are a result of the merchandise which have been advertised nationally. Walmart sales include its own brands as well as other brands which have already been licensed. The company purchases merchandise from the regional and local suppliers as opposed to making the purchases from other places which might be considerably be priced lower (Appelbaum & Lichtenstein, 2006). The innovation network for the company tends to encourage new ideas as well as products. This way the company is able to offer the inexperienced entrepreneurs as well as investors with professional advice for the determination of the commercially potent products which might still be in their early stages of development, this includes those goods with a sales history of less than half a year (Ullah & Kane, 2010). The process is necessary for the identification of risks involved with introducing the new products into the market. It also aids in offering referral to the government or even the university economic development organizations which might aid in further product’s development, production techniques and even marketing strategies for the new products.
Services: Majority of the Walmart stores operate between 7.00am and 11.00pm for six days weekly and on one day which is mainly Sunday they operate between 10.00am and 8.00pm, all of the stores have uniform prices except in regions where the stores have to further reduce the set prices to locally compete effectively with other retailers. To minimize the expenses and maximize the sales volume and inventory turnover the sales are mainly self-serve based on the cash and carry system. The stores also allow the bank credit card programs to operate without any form of recourse to the company. The system of replenishment aids the stores in the adjustments to meet the customers’ demands. The organization of the Walmart Stores is similar globally for easy identification to the customers (Ullah & Kane, 2010).
Operations: The Company values the recycling of some of its materials such as plastics, aluminum cans, cardboards and all the paper-made products. This is for the purpose of reducing the wastage and it goes a long way in making the suppliers cut on the packaging material. To reduce and regulate the costs of energy the company has set in place advanced systems of energy management. The company focuses on providing a safe shopping experience for the customers and a safe environment for all the associates (Ullah & Kane, 2010).
Logistics: The method used by Walmart is the last in first out (LIFO) in the stores section. For the international segment, other cost methods are utilized, however, the cost LIFO is applied in the Sam’s Club section. In 1999, about 84% of the supercenters’ and discount stores’ purchases were obtained and shipped from 43 distribution centers of Walmart, nine of them were from the grocery centers of distribution and two were from centers of import distribution. The balancing of the merchandise bought was shipped from the suppliers directly to the stores ("Wal-Mart Stores, Inc.", 2007). The global is involved with export consolidation facilities particularly in Laredo, Seattle and Jacksonville in supporting the product flow to the Asian, Mexican and the Latin America markets. The facilities of distribution are based in Brazil, Argentina, Canada, Mexico and China and these outlets flow and process both the domestic and imported products to the operational units. The main focus is cross-docking the products while at the same time minimizing and maintaining the inventories in store (Appelbaum & Lichtenstein, 2006).
Walmart Supply Chain Illustration.
Adapted from, “Competing on Capabilities: The New Rules of Corporate Strategy,” Harvard Business Review 70, no. 2 (March-April 1992): 60-61. (Stalk, Evans, & Shulman, 1992)
References
Appelbaum, R. & Lichtenstein, N. (2006). A New World of Retail Supremacy: Supply Chains and Workers' Chains in the Age of Wal-Mart. International Labor And Working-Class History, 70(01). http://dx.doi.org/10.1017/s0147547906000184
Cox, A. (1999). Power, value and supply chain management. Supply Chain Management: An International Journal, 4(4), 167-175. http://dx.doi.org/10.1108/13598549910284480
Stalk, G., Evans, P., & Shulman, L. E. (1992). Competing on capabilities: the new rules of corporate strategy. Harvard Business Review, 70(2), 57–69. http://doi.org/Article
Ullah, H. & Kane, V. (2010). Value cycle model: managing value through stakeholder management. International Journal Of Value Chain Management, 4(1/2), 153. http://dx.doi.org/10.1504/ijvcm.2010.031807.
Wal-Mart Stores, Inc. (2007). Mergent's Dividend Achievers, 4(4), 307-307. http://dx.doi.org/10.1002/div.6530
