WalMart Supply Chain Management analysis

Wal-Mart, a multinational retail corporation is considered to be one of the fastest growing corporations in the supply chain and retail management. Its presence in America and Latin America is huge. The ere have been numerous studies concerning Wal-Mart and its operation, the strategies and all aspects of its managements, given the fact that Wal-Mart as a corporation is considered to be a leader in the retail segment of the industry in America and worldwide.

In order to meet the global demands of their presence, Wal-Mart requires bringing into force effective supply chain management and its thinking is the call of the hour. We assume that Wal-Mart strategies are resilient enough in that regard. This report also presents some significant finding of Wal-Mart supply chain management strategies, which is a pioneer for the industry.

INTRODUCTION

Supply chain management is a complex process involving the intricacies of top of the end management practices. As we are aware with the reality, the world today in the backdrop of globalization and its impact is interlinked. Considering business manufacturing or retails units as well, it is quite obvious that corporation needs effective coordination and cooperation with suppliers as a means to ensure that products and services reaches the market without any hiccups, which further enable such corporation to serve their customer better.

It is prudent to select a company with an international presence to analyze the components of supply chain thinking and its management aspects. For that reason, the company selected for the purpose of this study is Wal-Mart, a market leader in the global retail industry. The objective behind this report is to identify the trends and strategies adopted by Wal-Mart in the backdrop of globalization and its impact, plus the effect of competitions on their inventory management practices as well as the technological shift that the company have integrated for streamlined processes in their supply chain management processes overall, which is discussed below.

TRENDS AND CHARACTERISTICS IN RETAIL INDUSTRY

In the retail industry, the most important trends and its characteristics are defined by their dependence on consumer spending habits. This is what we generally seen happens in most cases, whether during the good times or likewise. Retails industry serves it customer through their retail stores, such as grocery shops and departmental stores, which is the commonest example we can come with concerning the characteristics in retail industry.

CHARACTERISTICS IN RETAIL INDUSTRY

Global retail industry and “its range is considered to be quite huge in nature of their existence,” (RetailDirectory) which is true and factual. In term of the industry trends in the current schemes of things, retail industry in considered to be amongst the frontrunner for the top place in the global ranking. That is to say, retail industry is speculated to be the second largest industry on a global scale” (RetailDirectory) in term of revenue generations and sales encompassing their businesses and its characteristics.

TRENDS IN CURRENT RETAIL INDUSTRY SPENDING

The trends that is fast catching up today in the retail industry are in the forms of “e-commerce, for sales stores or discounted stores to be precise, rise of the mall culture and departmental stores, which are a few to name here.” (RetailDirectory)

The trends are changing all around. In US and UK, retail is a huge industry per comparison. However, after “the recession in the early part of 2009, there has been a sharp decline in retail,” (Ystats) although big retailer in the industry still have their major share of the market.

GLOBAL RETAIL CHAINS MARKET SHARES

Above mentioned discussion gives a glimpse of the trends and characteristics in global retail industry. Four major retail companies are Wal-Mart, Home Depot, Kroger and Tesco.

WAL-MART KEY SUPPLY CHAIN STRATEGY

Wal-Mart is a global leader in the retail industry, based in US. The company since its founding days has come far and wide to command a place for itself in the industry today. What has been the significant change of tide in favor of Wal-Mart can be emphasized to its supply chains strategy. Wal-Mart today is “considered to be a market leader in term of employment in the private sector. It’s been asserted by industry expert that Wal-Mart achieved the status of leader in the retail industry because of its effective supply chain management strategy.” (P Mohan Chandran)

Wal-Mart supply chain strategy is very successfully because it adapts to change and requirement of the market. “The company commitment to improve operations, lowering the cost factor and building relationship with customer in the best possible way is dome of the strategic outlook that is reliant to the company principle and its visions.” (Anonymous)

The supply chain management adopted by Wal-Mart are strategically effective, which reflect the points that “abundant concentration is given toward ‘procurement and distribution’ of its products, services and everything in the retail segmentations that are aligned to one single units. With over 40 distribution centre, Wal-Mart presence across the globe in context of its procurement and distribution is huge and influential factor. (P Mohan Chandran) Besides, the company also is very specific to meet the strategic formulation in the best possible ways, wherein its operations in the logistic segment, its distribution as well as transportation and integration of technology follows the best industrial practices. (Anonymous) These four components are what define the key strategic key of Wal-Mart.

Specific details to Wal-Mart logistic management can be emphasized to the components “encompassing fast, reliable and responsive transportation facilities. Most importantly distribution centre of Wal-Mart also are serviced by company owned transport vehicle and trucks to facilitate a fast, reliable and effective logistics from one centre to another.” (P Mohan Chandran) This is one of the biggest strategic strength that Wal-Mart boasts of as far as logistic segmentation goes in its business operational expertise.

Thus, when we look to these features as details, we feel that Wal-Mart key supply chain strategy and its adoption is the strength accumulated in four segmentation of its business, namely logistic management, procurement and distribution, inventory management and most importantly technological integrations. These four factor in the supply chain management strategy of Wal-Mart in the retail industry are the streamliner of its business operation and considered to be a strategic tools adopted by Wal-Mart, which have helped improved its business operation to a great extent.

INDUSTRY COMPARISON: SUPPLY CHAIN STRATEGY

As we have defined above, Wal-Mart supply chain strategy and its strength are composed into four factor, they are the integration of technology, procurement and distribution, inventory management and effective logistics components. In that respect, the other factor that comprised the strength of Wal-Mart in supply chain management also is their emphasis and greater force that is “concentrated in building a lasting and fostering relationship with customers, its employees, and suppliers,” (P Mohan Chandran) who the company overall comprised the stakeholder in the company in deciding its fate in the market.

Considering these facts, the major difference in Wal-Mart supply chain management to that of other corporations in the retail industry in US and elsewhere are the factor of “its cross docking operational expertise adopted by the company in meeting its supply chain management processes.” (P Mohan Chandran) As the case is, Wal-Mart “in recent time since 2000 have invested heavily in cross docking, which is its unique factor that also defines its inventory mechanism, often regard by analysts as a major factor. The main factors that have helped Wal-Mart through its unique cross docking inventory mechanism are its benefits derived in context of economic of scale and cost of sales that are reduced dramatically through such processes.” (Echeat.com)

Besides, Wal-Mart and its management also spent a “significant amount of time in meeting their vendors, suppliers, distributors as a factor to understand what goes into the cost in selling and procurement, etc which is an exemplification of an effective negotiation process that goes into the making of it.” (P Mohan Chandran)

INDUSTRY COMPARISON

As we have detailed in Table 1.1, there is a clear indication that starting from the year 2000 to the end of the fiscal year 2002 Wal-Mart was a market leader. In the current stage as well, Wal-Mart grosser is huge. Their management of the supply chain is truly an industry example of the effective mechanism taking shapes, and easing the process through the integration of technology, human understanding, building relationship and most importantly attending to the needs and wants of consumer, which is one success factor in basic economic sense and is understanding.

IMPACT OF GLOBALIZATION ON WAL-MART SUPPLY CHAIN STRATEGIES

Globalization has had both the negative and positive impact on Wal-Mart supply chain strategy and its management. However, on a greater note, we feel that Wal-Mart supply chain strategy have benefitted greatly from globalization. One example of it can be said in context of the company retail chains and its presence across national boundaries, be it in Mexico, Latin America and major part of US and Canada. Add to it, “with around 7000 stored across the globe, and 120 major distribution units globally, with an operation that span across 15 national economies, (Anonymous) is one good exemplification to reason the factor attached to Wal-Mart and the impact globalization have on it.

Some instance of globalization and impact on Wal-Mart supply chains management can be seen in context of ‘improved inventory process, technology, distribution channels and cross docking as well as sales tracking systems that are rapid in process formulation and information transfers.” (Anonymous)

WAL-MART INVENTORY MANAGEMENT PRACTICES

In the inventory segment as we have detailed, Wal-Mart adopt a streamlined measure in that regard, so as to keep a low level of inventory. In that respect “the investment made by the company in context its cross docking mechanism and its inventory. In another word, Wal-Mart cross docking inventory “and its integration have enabled the company the ease and convenience of complexities involved in the process of inventory management.” (Echeat.com)

Besides Wal-Mart “adoption of the fast transportation facilities that are serviced and backup by the company owned truck and supply vehicles that defines the effective transportation facilities overall saves a tremendous amount of time, which is often loss in transaction or shipping, which also reduces the cost in that regard.” (P Mohan Chandran) This is the benchmark of Wal-Mart inventory practices and a model for emulation in the global retail industry.

TECHNOLOGICAL TRENDS AND ITS INFLUENCE IN WAL-MART

Technology as in any other industry has it influence. The same is with Wal-Mart and their integration of technology in fostering an effective operational process in is supply chain management. It is “speculated that Wal-Mart has one of the largest IT system within its corporation structure, where technological integration and its influence is tremendously huge” (Anonymous) and play a significant part in Wal-Mart supply chain.

The main technologies adopted by Wal-Mart in its supply chain management are namely the following:-

Universal Bar Code: This is the first of its kind “technology introduced by Wal-Mart in the retail industry. The primary objective of this universal bar code adopted by Wal-Mart is to bring about a change in retail industry bar coding system for common labeling. This is somewhat a great technology adopted by Wal-Mart that enhanced its business process, given that it generates all kinds of information required which is specific.” (Wilbert)

Radio Frequency Identification Technology (RFIT): This technology used by Wal-Mart “integrates the advancement of radio frequency to pass on data and any relevant stored data within the company intranet and extranet system.” (Wilbert)

Magic Wand: This is a hand held device used by Wal-Mart in its stored around the world. This hand held device are mainly executed by the help of computers and make use of the point of sale (POS) system and its integration, which help tracking sales of product and tracking the merchandise in stores accurately. (P Mohan Chandran)

Considering these three technological advancement, we feel that Wal-Mart integration of technology in its supply chain management is huge and influential.

CONCLUSION: COMPANY PERFORMANCE

Supply chain has always been in the process of existence. But in the current scenario, supply chain thinking and its management features have undergone tremendous change and transformation, given the rise of multinational companies (MNC).

Wal-Mart case is also no different. Wal-Mart supply chain process in the current scenario is aimed at enhancing operational expertise. This has been a reality, and the sales figures that have increased since 2000 till the current years shows the change in company standing. Besides being the world 2nd largest retailer in term of sales says a lot about Wal-Mart performance in term of sales, strategy, and success factor and brand image.

Surprisingly, retail and its market cap in Asia have risen dramatically in recent times. Research carried out by global research company, Ystats.com came to the key findings that “retail spending in major market where retail command a place on the global scale have declined, that is in UK and US market. The trends thus have shifted to Asian market, such as China, India and Japan in the current time.” (Ystats)

RECOMMENDATIONS

It is recommended that in the current time Wal-Mart should take more approach towards:-

• Enhancing their associates and building relationship, so that it helps the company to further expand.
• Given the trend in Asian retail growth in the current, it’s a good idea for Wal-Mart to expand their retail chain in Asians market, be it in India, and China.
• Improvement of their process always calls necessarily.
• Continuous improvements and learning’s.
• Emphasizing on diversity programs.
• Employee’s commitments and their concentration on employees with special needs.