Introduction
Supply chain management is one of the most difficult tasks for organizations dealing with many different kinds of goods supplied by different vendors who are both internal as well as external and who has many outlets. The problem becomes more complicated especially if the organization has one of the biggest daily turnovers that that run into tens of millions thus making the organization one of the most popular retail outlets. One of such outlets is Wal-Mart, and for it to achieve efficiency in its operations, it has had to come up with a complicated but elaborate system of doing business that has guaranteed it a measure of success.
The first measure is to create a huge and dependable customer base that will ensure steady clientele for the goods in the stores. With a dependable clientele, there is surerity of ready market for the goods and this can only be brought about by consistently good and low prices. An assured clientele will create the confidence to open more branches and offer a bigger variety of goods and services that re sustainable.
Main body
An efficient system for inventory management such as the just in time technique that creates communication between the two organizations will provide an efficient way of replenishing goods at the store before they are completely depleted. Such a system will only work if there is a form of collaboration in communication between the vendor and the supply chain. Such a system will provide precise control of manufacturing, inventory and distribution of goods from the manufacturer to the shelves of the supply chain.
Individual firms can achieve a successful supply chain management by influencing the way vendors operate their systems, so that they operate to the advantage of the particular supply chain. This can only be achieved if there is a huge guaranteed market of their goods being provided by the said retailer and that there will be no loss by adopting the latter’s way of working. As long as the supply chain provides a big market for a particular vendor’s goods and services, they can dictate what is to be made, the sizes or the time the particular goods are to be made. This can be done through signing of exclusive rights to the goods.
Supply chains can form collaborations between them and vendors to come up with a common system that will run the business between them. In the case of Walmart, it collaborated with Procter & Gamble (P&G) to come up with a system that linked all the (P&G) goods sold at Walmart directly to the (P&G) system so that the moment sold stock reached reorder point, P&G would automatically send stocks to Walmart. Such a system ensures continuous but controlled supply of goods to the stores thus bypassing so many processes in the middle. This is a cost effective measure that allows Walmart to give its clientele low priced goods.
When the supply chain is made up of multiple firms supplying goods, then there is bound to be trouble along the line due to conflicting objectives. In the case of the harmonised operational system, supply chain management might find it difficult to convince the vendors to adopt a harmonised system as the vendors might have other clients who are on their current system. Thus changing the system would upset a whole lot of a clientele base and therefore not good for business on their side.
Harmonisation of the systems between the vendors and the supply chain always comes at a cost, and being an initiative by the supply chain, it might just have to foot the cost of the whole thing and at the end of the day, having to foot the cost for so many different vendors might be very expensive as different vendors might need different systems that suit their way of business’. Due to the dynamic nature of the technological world, systems don’t last for long and there is a continuous need to update them so as to meet the day today standards. All this comes at a cost which might eventually be forced on the supply chain management.
The entry in agreements of sole distributorship with some vendors might lock out other popular brands from rival vendors thus denying the retail store good business opportunities.
Therefore it is a kind of high risk game to run such a store with the capacity as Walmart for it needs perfect strategies that have to be followed with surgical precision for the best results to be achieved or maintained.
Benefits accrued from Walmart’s supply chain
The just-in-time techniques adopted by Walmart has allowed it to have a continuous supply of goods from all over the world without having to place orders manually. The system is also able to generate immediate statistics to show which product and in what form or colours move quickly, thus the store is able to stock almost only moving products that won’t overstay their shelf life. Such a scheme ensures that profits are there without having to raise prices of other products for the sake of recovering costs of products that did not sell, thus other products can therefore be sold at the lowest prices possible.
Through the use of cross docking techniques, goods are transported to the distribution centres by the vendors and directly loaded in to trucks bound for stores. This allows Walmart a continuous supply of goods to its stores in full truck loads thus cutting transportation cost which goes down to benefit the customers as well as make the merchandise readily available. The transportation is also made easy through Walmart’s fleet of trucks that supply the stores with goods within 48hours of being delivered by the vendors, thus eliminating the need for storage facilities leading to saving on storage costs.
Conclusion
Such an efficient system has made Walmart one of the leading chain stores in the world with a network of stores in different countries.