Walmart Supply chain
Date of submission
The Walmart company is and American multinational retail corporation. The company mainly runs large chains of warehouses and departmental stores. The company came into existence in the year 1962 and it has its base in Arkansan-USA. The founder of the company is Sam Walton. The success of the company is an attribute to the employment of IT in large scale in the organization. The firm is widely known for its innovativeness in the business sector. It is one of the first companies in the retail line to introduce a centralized distribution system. It is in the forefront in ensuring the employment of information technology in the management of the supply chain process. The business and supply chain strategies that the Walmart employs have a significant impact in the operations of the retail firm (Thomas, 2010).
The new technology integration by the company is very wide. This includes the use of EDI that perform a number of potential functions. Such include the provision of daily, weekly, and monthly sales data analysis. This helps the management in the determination of the sold products and the respective quantities. In addition, it gives the knowledge of the correct merchandize at the most appropriate time and having it at the right place in good time. The use of IT in the management of supply chain enhances effective handling of activities in logistics and warehouse management. This enables the company receive commodities and dispatching them to relevant sections within 24 hours. This has brought effectiveness in locating and replenishing of goods (Hitt, Ireland, & Hoskisson, 2007).
The GPS system is in place in the trucks ferrying goods from the retails shops or warehouses to the customer destination. It is for communication purposes making the work easier and effective to save on time. It also enables easy location of the trucks wherever they go. Additionally, there is the integration of a system that allows interaction of the driver with the staff after activation (Hitt, Ireland, & Hoskisson, 2007).
The superior performance realized in the supply chain is because of having in place an effective business strategy. Therefore, in the context of business, one can assume the strategy as being the business environment. This covers a very wide scope of factors ranging from the business functions down to the long term planning horizons. In light of the above information, the definition of strategy is evident. The business strategy refers to creating a map-like structure to enable understanding of challenges in conducting a potential business. The strategy gives a clear route essential to arrive at the desired destination without much effort (Batten, 2008).
The Walmart organization has in place strategies to enhance effective delivery in its service to the public. Since nothing comes easy in any business that is thriving. Many innovations have to be in place to ensure that success is the ultimate goal for the firm. Some of the business strategies that the company has employed include the use of customer-focused strategy. This includes the fashion forward appeal. In the need to broaden the appeal of the company with that of the customers, Walmart acts fast in rolling out the fashion forward appeal. However, Walmart has slowly shifted from this strategy in the recent past (Thomas, 2010).
The other strategy entails the localization of selections because of store neighborhood demographics. This has continuously driven various store changes though it creates a warning. In order to attract different demographics, the company saw the establishment of at least six different types of stores. This was in the year 2006, and the areas of concern were the inner city residential. This extended to suburban areas and then to the rural parts of the population. The last strategy is the general appeal to the three existing universal types of customers seeking low prices. The customers normally shop at Walmart often and the strategy largely guides the marketing and merchandizing solutions. The appealing strategy is the best strategy for the company (Hitt, Ireland, & Hoskisson, 2007).
The stressing of Walmart on the “EDPL”-Everyday Low Prices-philosophy of pricing is effective in running the organization. The pricing of items at low prices build and seeks to maintain potential customers because they trust in the pricing. The organization makes use of ‘clicks and bricks’ and also ‘bricks and mortar’ methods to market products. Through this strategy, the consumers get to choose their products either the traditionally or online at any given time. The trust in Walmart by its customers has had an effect of elimination of advertising in its business as opposed to its competitors (Thomas, 2010).
Supply chain strategy
The past years have seen the Walmart Company dominate the world retail market mainly because of the effective supply strategy. It has ensured the efficient integration of manufacturing, warehousing, suppliers, and distribution to the stores. Its supply chain strategy contains four elements, that is, vendor partnerships, distribution management, technology, cross docking and integration (Leeman, 2010). Walmart supply starts with sourcing strategically to find quality products at the best prices. This has to be from those suppliers who can produce to meet the marked demand at any given time. Therefore, the company ensures the establishment of calculated moves with majority of their vendors thus giving them the potentiality for long term and high volume purchases in exchange for low prices. The suppliers then ship the goods to Walmart’s distribution outlets for cross docking. Thereafter, the products are delivered to Walmart stores (Hitt, Ireland, & Hoskisson, 2007).
The technology plays a very significant role in Walmart’s supply chain. Thus, it serves as the primary foundation of the chain. This is possible through giving priority to the effective use of practical IT and its application to building efficiency in planning and task execution. The key to achieving the best possible results for Walmart is the intensive employment of new technologies. The technologies are an aim towards customer satisfaction as it is the main playing factor seeking attention by all competitors in the sector. It has a great focus on system development that has earned the company prowess making it have a competitive advantage over competitors (Thomas, 2010).
The company has seen numerous achievements in the past years of operation resulting from the advent of the IT systems. The systems have also had an impact on its suppliers. Such systems include the introduction of bar codes and the devices for scanning. This also includes the invocations of data that is electronic in nature and the Radio Frequency Identification. The company has shown in the sector for fully exploiting the IT sector for approximately three decades now. If the manufacturer helps dominion over the economy, they would make adjustments because of their own assessment of the market demand. This would in turn give room for offloading merchandise onto the retailers using their terms and at their own convenience (Hitt, Ireland, & Hoskisson, 2007).
The SCM project at Walmart is the largest IT infrastructure owned by a private company in the globe. The state of the art network design and technology offers Walmart the opportunity to forecast, demand, predict, and track inventory levels. This is essential in achieving a high and effective transport routes and managing the customer relationships and response in service logistics. The typical demonstration of IT integration in Walmart is the Farlan’s grid. It has useful help systems for store associates making it cheap for warehouse personnel to locate products quickly. This is partly because then storage area in the warehouses is very large. Walmart gives realistic data around sales and figures from the lowest level of single product category. This runs up to the highest product category that includes the country sales. The Walmart Company makes use of very few resources in the use of IT applications. This is because most of its applications are built in the house. Although Walmart has a big size, it is in a position to go across technologies such as the bar code and RFID to its vendors. This is helpful in tracking inventories and making management easy thus making work become more efficient (Radhakrishnan, 2001).
Alignment of business strategy with the supply chain strategy
Strategic alignment refers to the intense business redesign process where the strategic goals get an alignment. This also includes the business models and processes in addition to the company’s culture. The factors integrate core values and key business purpose in the organization. The alignment may also mean how an organization may create a sustainable advantage that is competitive. This is achievable through linking of the business strategy to the core competencies. The latter shows that the organization is able to achieve superior performance through gaining alignment between the environment, core competencies, strategy, and organizational structure. Various frameworks can have advantage in this framework to assist the management to build high performance in an organization such as Walmart (Wisner, Tan,& Leong, 2011).
Recommend strategy or tactics to improve strategic alignment
The company has to improve strategic alignment in order in order to achieve effectiveness in the organization. Some of the possible recommendations suitable to improve the strategic alignment in Walmart include:
Supporting of the strategic goals-the annual system diagnostic ensures alignment of present technology with the evolving business organization strategic goals. Therefore, the organization has to take time in understanding the strategic goals. In addition, it has to identify its position in the market existing gaps and steps that are essential in optimization of the available resources.
Staff empowerment- staff empowerment is a key ingredient to ultimate success in any organization. If Walmart will take the initiative to empower its staff, then it is likely to maximize the alignment of the employees towards improving the performance of the firm.
The firm should shift towards the use of sophisticated technology to increase its command of the market though fast and efficient handling of goods. This will make the customers confident in the services of the company.
The flaw in the classic RFP process; effective RFP process reflects the strategy typically. It also gives consideration on the objectives of the business and gives the provision of detailed requirements of the business. Therefore, the suppliers have a chance to propose appropriate solution covers. The RFP process and system implementation aligns the existing technology with the business organizations goals if done successfully. Therefore, Walmart is at the periphery to receive the alignments.
The company should consider a shift to diversifying its market supplies. This is through advertising for tender supplies from oversea countries to increase the varieties of goods availability for the customers. This alignment to having international supplies is essential, as the procurements will be on large scale. In addition, there will be increased discounts thus creating favorable returns on sales.
The efficient supply chain management at Walmart has had a great positive generation in the industry. It has ensured the provision of various competitive benefits for the company. Such benefits include the lowering of cost of products and the reduction of inventory carrying. It also has a contribution to improvement in store variety and the selection of quality goods. The strategy has made a great contribution to Walmart becoming a very dominant key player in the competitive global market. The improvement in technology has a great contribution to the company focusing on innovative systems and processes. This is in the need to improve the supply chain and enable the achievement of greater efficiency (Radhakrishnan, 2001).
The study of the supply chain at Walmart is a very interesting experience. The growth of the organization is dominates as the world’s leading organization in retail supply operations. The fundamental ingredient to its success is its tagline. The tagline suggests low price for goods plays an essential part in fulfilling operations at each level. The procurements and outsourcing departments work tirelessly in negotiations of long term contracts with suppliers. This creates a commitment to have high volume of supplies to the organization. In addition to demanding the best prices for products, it also pushes for innovativeness on the suppliers. This causes a reduction in prices in the subsequent annual contract negotiations (Hitt, Ireland, & Hoskisson, 2007).
The suppliers to Walmart have offices in Arkansas that are significant of the extent of negotiations that take place. This shows the degree of dedication and determination to the suppliers. The distribution network of Walmart fleets of trucks is among the best in the world. The effective loading and offloading operations have helped cut on many costs in addition to ensuring smooth running of the tasks (Wisner, Tan, & Leong, 2011).
The integrated investment in information technology has helped Walmart to have global connections. Its fragile culture in IT is visible in the market. The company works on simple rules, for instance, running an information system that has central organization for worldwide operations. This also includes a common system and operations, in addition to technology priorities. Walmart realizes a high, efficient, and reliable run Engine through its clear goal definition and aims set for each element in supply chain. The Run Engine helps the company save millions of cash besides being responsive to the customer demands. In the end, customer satisfaction is fundamental in any organization success and this happens Walmart’s success secret (Radhakrishnan, 2001).
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