Wal-Mart is one of the most successful and the best retailing company in the world which owns a chain of hypermarkets, department stores and also grocery stores. It has stores based in the US and other 1,170 stores across the world. The business also sells goods on the internet where customers order goods through the company’s website, walmart.com. The company was started in the 1940s by Walton with a small retail store where he managed to run a successful business and open other retail stores in other small towns.
Analysts affirm that Wal-mart achieved its success and first role in the retail industry because it established efficient and reliable supply chain management process. Wal-Mart supply chain management focused on consumer needs and cost reduction. It was known for selling and supplying a variety of quality products which were offered at a low price and delivered promptly. These offers were made possible because of Wal-Mart’s highly automated distribution centers and its computerized inventory systems. More specifically, this paper discusses the logistics and distribution system adopted by Walmart, how the use of IT tools benefited Wal-Marts logistics and inventory systems, the supply chain management processes adopted by Walmart and lastly, how Wal-Mart benefited from their efficient supply chain management practices.
A fast and very responsive means of transportation was one of the most crucial and beneficial features of Wal-Mart’s logistics infrastructure that led to the success of the business. They used over 3,500 trailers or trucks that supported transportation of goods from their distribution centers to the stores in forty-eight hours and fill in the stores weekly. Wal-Mart hired experienced and reliable drivers who could deliver goods on time. They carried products with the trucks from a specific Wal-Mart distribution center to a retail store serviced by a certain distribution center. Wal-Mart adopted a logistic technique known as cross-docking which brought about efficient and reliable distribution of products.
Cross-docking allowed delivery of goods directly to their customers. In this system, finished items were delivered directly to the customers without further storage which resulted in the elimination of distribution centers. In this system, requisitions made for various goods were treated as procurement or purchase orders which were then taken to the manufacturers who confirmed whether they would produce the goods in a given period. If the manufacturers were capable of producing the goods, the manufactured items were forwarded to a staging location where they were carefully packed and organized according to the orders, and then they were immediately sent to the right customers.
Wal-Mart adopted the use of innovative information technology tools that brought a great impact and essential benefits to their supply chain management. They used IT and communication systems to track sales and also product inventories more effectively. Information technology helped the business to create more inventories available for the goods that were on demand while reducing the business inventory levels. Wal-Mart was able to connect directly to its suppliers through their computers. They linked their computers at the stores and those at the distribution centers with P&G systems. These systems were programmed to identify goods that were low on stock and if that was the case, they immediately sent a signal to P&G and apply for a re-supply order to the nearest P&G factory. In essence, Wal-Mart used IT to monitor their stock levels constantly and also identify items that were selling fast. They used barcoding devices and radio frequency technology to ease their daily processes and operations and also create accurate inventory. Computers and other technological tools used in the business enabled quick and efficient services to their customers, stockholders, suppliers and trading partners.
To succeed, Wal-Mart adopted various supply chain management processes that helped to sustain their business. The business believed in maintaining their customers; therefore, they emphasized on purchase cost reduction and offering the best prices for their customers. Wal-Mart’s distribution centers supported the supply chain by ensuring that there was a good flow of goods in their stores and warehouses. After order was received, the goods or the items were delivered within forty-eight hours to the right customers. They used trucks for transportation of goods which enabled them to deliver goods on time to people in different parts of the country. Wal-Mart used IT and other innovative communication systems to help in tracking and respond to any alerts on the supply chain. These processes ensured that goods were ordered, manufactured, carefully stored, distributed, received, and paid for at the end of the supply chain.
Wal-Mart derived substantial benefits from the use of efficient supply chain management practices. Some of these benefits included accurate inventory estimations, faster or quick inventory turnover and it also there was available storage space in their warehouses. Additionally, efficient supply chain management minimized errors and personnel training costs by eliminating the distribution centers. Efficient supply chain management practices resulted in effective and reliable operations, and also, it provided better customer services. These practices have helped in maintaining a sustainable competitive advantage in the company by constantly eliminating old stocks and maintaining quality goods which attract more customers.
Chandran, P. M., & Gupta, V. (2003). Wal-Mart’s supply chain management practices. ICMR Case Collection, 1-13.