LO1: Critically appraise supply chain management strategies in a global context
LO2: Synthesise and apply Supply Chain Management theories to industry practices
Assignment Brief:
This assignment requires students to read the case study and answer the following four questions.
- One debate in recent years concerning supply chain strategy has centred around the lean and agile philosophies. Critically evaluate both lean and agile supply chain strategies and discuss which would be more appropriate to manage Walmart’s supply chains effectively.
- Critically assess the vendor managed inventory strategy implemented by Walmart, how could this strategy help Walmart to achieve the expected 100% order fulfilment on merchandise?
- Facilities in supply chain include for example manufacturing plants and warehousing; they represent fixed points where goods are produced, processed, assembled, or stored. Facility location has evolved from a tactical to a strategic consideration. Critically discuss the main factors that may have influenced Walmart’s facility location decisions.
- Critically discuss the demand forecasting techniques, which technique could Walmart adopt to forecast the demand more accurately?
Case study: Walmart’s successful supply chain management
When you drop by Walmart, you are witnessing one of history’s greatest logistical and operational triumphs. According to Supply Chain Digest, this retail giant stocks products made in more than 70 countries and at any given time, operates more than 11,000 stores in 27 countries around the world, and manages an average of $32 billion in inventory.
With these kinds of numbers, having an effective and efficient supply chain management strategy and system is imperative. Over the past years the entire organisation is committed to a business model of driving costs out of supply chains and has become synonymous with the concept of successful supply chain management.
“I don’t believe there is a university in the world that doesn’t talk about Walmart and the supply chain,” said James Crowell, director of the Supply Chain Management Research Center at the Walton College of Business. “They are just so well respected because they do it so well.”
Walmart’s supply chain innovation began with the company removing a few of the chain’s links. In the 1980s, Walmart began working directly with manufacturers to cut costs and more efficiently manage the supply chain. Under a Walmart’s supply chain initiative called Vendor Managed Inventory (VMI), manufacturers became responsible for managing their products in Walmart’s warehouses. As a result, Walmart was able to expect close to 100% order fulfilment on merchandise.
Walmart also embraced technology to become an innovator in the way stores track inventory and restock their shelves, thus allowing them to cut costs. Technology plays a key role in Walmart’s supply chain, serving as the foundation of their supply chain. Walmart has the largest information technology infrastructure of any private company in the world. Its state-of-the-art technology and network design allow Walmart to accurately forecast demand, track and predict inventory levels, create highly efficient transportation routes, and manage customer relationships and service response logistics.
For example, Walmart implemented the first companywide use of Universal Product Code bar codes, in which store level information was immediately collected and analysed, and the company then devised Retail Link, a mammoth Bentonville database. Through a global satellite system, Retail Link is connected to analysts who forecast supplier demands to the supplier network, which displays real-time sales data from cash registers and to Walmart’s distribution centres.
Wal-Mart also networked its suppliers through computers. It entered into collaboration with P&G for maintaining the inventory in its stores and built an automated re-ordering system, which linked all computers between P&G factory through a satellite communication system. P&G then delivered the item either to Wal-Mart distribution centre or directly to the concerned stores.
Walmart’s supply chain management strategy has provided the company with several sustainable competitive advantages, including lower product costs, reduced inventory carrying costs, improved in-store variety and selection, and highly competitive pricing for the consumer. This strategy has helped Walmart become a dominant force in a competitive global market. As technology evolves, Walmart continues to focus on innovative processes and systems to improve its supply chain and achieve greater efficiency.
“Supply chain management is moving the right items to the right customer at the right time by the most efficient means,” Beatty said in article about his experience. “No one does that better than Walmart.”
Reference – Reference between 15 and 20 sources. MINIMUM Reference List should include 3 from journals and 4 from books.
