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The contemporary turbulent conditions have increased the need for developing more competitive strategies for business growth (Sanchez & Perez, 2007). Economies, businesses, and political environments are now subjected to unexpected discontinuities and shocks. Organizations are in an era of supply chain competition where they no longer conduct their operation in isolation, but work as a supply chain to generate value delivery processes that are more reliable and consistent, moreover, responsive to the modern markets (Christopher, 2005). Therefore, the organization’s cores competencies lie in its capacity to develop and manage its supply chain in order to allow it to attain maximum advantage in the market (Sanchez and Perez, 2007). This paper seeks to look at the supply chain strategy of Walmart stores, giving an opinion whether or not this is the best strategy for this company.
Walmart’s Supply Chain Strategy
Walmart has grown over the last ten years and is the largest in the world and perhaps the most powerful retail store, recording the highest sales per square foot, operating profit of any discount retailer, and inventory turnover (Charles, 2006). The store largely owes its development from a regional to global powerhouse to the effective management and changes in its supply chain.
Walmart started with the main goal of providing its customers with the kind of products which they required and location where they wanted them (Charles, 2006). Then it decided to come up with cost structures that would allow it to provide low daily pricing. To attain this goal, the company had to make the way which would replenish its strategy and put another strategy, which was grounded on a logistics technique referred to as cross docking. Through cross docking, the company’s goods are routed from its supplies to the warehouse, after which they are then shipped to stores without having to stay for a long time in the inventory (Charles, 2006). Using this strategy, the company was able to save on various costs significantly, which were then passed to their customers, in the form of highly competitive pricing (Nelson, 2009). Afterwards, the company decided to come up with a more advanced and highly structured supply chain management strategy in order to enable it enhances and exploit on this competitive advantage.
Besides, all of the company’s stores operate as small companies (Nelson, 2009). Store managers have been equipped with the skills to manage a store and a customer at a time. Having established close vendor partnerships with most of its key suppliers, Walmart has adopted efficient logistic solutions such as Radio Frequency Identification (RFID) which helps it to identify out-of-stocks, maintain lower costs, and boost sales (Charles, 2006). In addition, the company applies the just-in-time distribution approach to cut on its distribution costs (Nelson, 2009).
The Company’s Method of Managing its Supply Chain
Apparently, today Walmart is one of the global leaders in the market. The company has been able to take on market leadership mainly as a result of its integration of manufacturing warehousing, suppliers, and distribution stores (Nelson, 2009). Walmart’s supply chain strategy contains four main components: cross docking and distribution management, vendor partnerships, integration, and technology (Charles, 2006).
The supply chain strategy starts with strategic sourcing and help to obtain products at the best price from various suppliers who are able to meet its demand. It then establishes strategic partnerships with its vendors, obtaining products in high volumes in return for lower prices (Charles, 2006). In the next step, suppliers transport products to the company’s distribution centers, where the products are cross docked and then transported to the company’s stores. Distribution management, cross docking, and transportation management reduce the transportation and inventory costs, time and other inefficiencies (Charles, 2006).
However, it is worth highlighting that technology takes a central role in Walmart’s supply chain, as it serves as the foundation of its supply chain. The company has the largest information technology infrastructure which enables it to accurately forecast demand, manage customer relationships as well as service response logistics, predict and track inventory levels, and to create extremely efficient transportation routes (Nelson, 2009). Walmart is basically dedicated to enhancing its operations, customer services, and lowering its costs. The company’s success is grounded on its capacity to drive costs out of its supply chain and manage the supply chain efficiently (Charles, 2006).
Opinion Regarding Walmart’s Supply Chain Strategy
In my opinion, Walmart’s supply chain strategy is the best strategy as it has helped the company to attain global recognition. The company’s supply chain is perhaps one of the most cost-efficient within its industry. While the company applies transportation and inventory optimization processes to minimize costs (lean), and also it applies the cross docking strategy to respond to demand (agile) (Charles, 2006). Furthermore, the company’s supply chain strategy has offered it with various sustainable competitive advantages, such as reduced inventory carrying costs; highly competitive pricing for its customers, enhanced in-store selection and variety, and lower product costs (Charles, 2006). Basically, this strategy has helped the company to become a dominant force within the contemporary very competitive global market. Furthermore, the fact that the company incorporates technology into its strategy is something worth highlighting taking into account that the business environment today calls for innovation, something that can be easily attained through technology (Nelson, 2009). As technology continues to evolve, the company continues to concentrate on innovative systems and processes which enable to enhance its supply chain and attain greater efficiency. To sum up, I believe this is the best supply chain strategy for Walmart Stores.