Logistics In Supply Chain Management In Walmart Management Essay
Wal-Mart is the one of the largest supermarket chain in the US and globally. Their main activities are to offer groceries, Non-foods, home supplies, electronics, Jewellery and Pharmacy. In order to operate a retail store, Wal-Mart pushes their products to the consumers. However, Wal-Mart is striving to gain competitive advantages through bringing the price affordable to customers by selling in volume. Wal-Mart took direct control of its factories in January 2003, for direct bring in products. Therefore, Wal-Mart changes their strategy to empowering their suppliers and developed inventory management. In order to uninterrupted supply to all their stores which are spread in all over the US, they have established own private fleet to deliver the products to the stores smoothly. They have got 6,900 driver and 5,600 truck in 48 states( www.wal-mart.com) as well as essential transport for Wal-Mart logistics with their logistics partners Wal-Mart’s logistic partner SAM’S Club. Furthermore, Wal-Mart’s private fleet provides delivery with efficient transportations and devoted services to the stores. At present, the Wal-Mart private fleet transportation operates in 28 states with 36 transportation office.
The warehousing and transporting of Wal-Mart has 30,000 associates divisions and they have handled more 2 billions cases of freight which is worth of $85 billion. Wal-Mart is having 20 regional distribution centert for freight distrubutions across the country such as Tennessee, Shelbyville, Georgia, New York, Florida and Carrolton etc. The truck drivers of the Wal-Mart move thier trailers with the products from the warehouse or distribution centres to the retail stores. In order to efficiency in thieir logistics, they have set the timing of arrival and departure of the truck. The process of the timing usually at night which will not make any inconvinience to the customers.
In order to efficiency in thier logistic, they have brought new track device to track thier truck to find out wherabout, Furhthermore, the RFID (Radio Frequency Identification Tags) is imbedded in each product which will provide a signal to the ware house about its presence or sold out. Therefore, logistic within the Wal-Mart is very efficient includes proper plan, manage , movement of goods with the flow of information can optimize the whole supply chain management which enhance custoemrs satisfaction.
ii)How improving procurment practices and logistics
Logistics can be defined as it is the maintenance, procurement, replacement of materials and distribution, it means final product at the right time, at the right cost and at the right place. In addition, according to CSCMP., (2005), Logistic is termed as the implement, plan and controls of the flow of storage goods, services move forward or reverse and associated information between the delivery and consumption in order to fulfil consumer’s needs. One of the enabling factors of effective logistics management is the effective use of information technology. The goal of the logistics manager within Dell’s, therefore must be to link the end customers, the channels of distribution, the production processes and the procurement activity in such a way that customers’ service expectations are exceeded and yet at a lower total cost than the competition (Closs, et. al., 1997).
“Information has always been central to the efficient management of logistics but now, enabled by technology, it is providing the driving force for competitive logistics strategy.” (Hammant, 1995).
As a retailer, Dell’s experiences margin erosion and the need forever improving levels of customer service are both instrumental in increasing the levels of IT investment to support supply chain improvements. Recent investments in technologies such as electronic data interchange (EDI) and electronic funds transfer (EFTPOS), have facilitated further reductions in supply chain stock levels and forged stronger supply chain linkages between both their suppliers and customers (Closs, et. al., 1997).
As a worldwide company, Dell’s have experimented with global sourcing and JIT processes, which further contributed to the need for investment. In particular, Dell’s has invested in technologies to support product ordering, enjoying a low lead time of 2 weeks. However, this practice is not spread throughout the organisation, as interaction with smaller suppliers requires manual orders to be processed.
There are a variety of technological trends and innovations which have an impact on the use of technology in logistics, which may be grouped into three themes:
Integration and flexibility
The following figure proposes the total logistics information system:
Figure 8 : Logistic Information system
(Source: Wolf, 2005)
iii) Recommendations to NewG
The competitive environment for the firms has changed dramatically in the past 10 years. Customers in geographically dispersed, emerging and established global markets now demand higher quality products at lower cost in a shorter time. As a result, firms have been forced to reorganize their logistics activities and realign their global strategies. Organisations have moved from a centralized, vertically integrated, single-site facilities to geographically dispersed networks of resources. The following are the recommendations to NewG to improve procurement and logistics practices.
NewG’s needs to implement a companywide POS system that is accessible by senior management in all parts of the world. This strategy will enable the company to track sales and forecast demand and NewG can procurement their products. In turn, management at all levels will be able to establish stock needed.
A systematic use of a generic EDI system will allow NewG’s to interact with suppliers, as well as enable instantaneous order placement, to ensure little expense is spared, in line with JIT practices in place.
In order to efficiency in thier logistic, they could have usied new track device to track thier products to find out wherabout, Furhthermore, the RFID (Radio Frequency Identification Tags) is imbedded in each product which will provide a signal to the ware house about its presence or sold out. Therefore, logistic within the NewG is very efficient includes proper plan, manage , movement of goods with the flow of information can optimize the whole supply chain management which enhance custoemrs satisfaction.
‘NewG Furniture – Supply Chain Strategy, 2011 and beyond’
how the strategy will improve NewG’s supply chain
Supply chain strategies are undergoing tremendous changes in response to these pressures. Outsourcing and partnering with other enterprises are becoming more commonplace as companies seek to share the burden of demand for more complex products and more responsive services (Prokesch, 2010). With the enablement of new technologies such as the Internet, new channel structures have rapidly emerged to satisfy these demands. Companies are recognizing that supply chain innovations can be not only be a driver of cost reduction, but importantly, a catalyst for revenue growth by achieving greater levels of customer satisfaction(Bitran et al, 2007).
As we look into the post 2000 era, we see another major evolution in supply chain strategy supply chain design and operations will drive, as well as continue to be driven by corporate strategy and shareholder value. We call the new generation of supply chain strategy, Synchronized Supply Chains.
Synchronized Supply Chains encompass three major structural changes in how NewG could improve and manage supply chain operations:
Companies will collaborate with supply chain partners and synchronize operations
Technology and the world wide web will be key enablers of innovative supply chain strategy
Supply chain organizations will be restructured and reskilled to achieve these goals
Synchronized Supply Chains will have a major impact on creating value for a company and supply chain partners. This will be accomplished by increasing shareholder value through profitable revenue enhancement, cost reduction and improved asset productivity by synchronizing company and channel partner’s supply chains.
Success in designing and implementing a Synchronized Supply Chain strategy requires a coordinated set of actions involving all relevant supply chain partners (Coyle et al, 1996). Unlike traditional supply chain strategies which focus on improving operations inside a company, Synchronized Supply Chain strategies require coordinated crossfunctional and multiple partner decision making throughout the entire supply chain (Figure 5 details the four key building blocks of a successful strategy). Like any other large scale change, it is important to build the business capabilities not just in the business processes, but also to support them with changes to the organizational structure and enabling technologies. Only then can the strategy be effected. Likewise, the strategy and the initiatives chosen need to be in alignment with capabilities that can be realistically achieved in each of these three areas. The core competencies with which a firm begins must be taken into account(Hammer, 2001).
Figure 9: Synthesized supply chain
(Source: Free, 2008)
Assess how a supply chain improvement strategy will benefit overall business performance of NewG
The main reason for Wal-mart’s success is their incorporation of new technology into their supply chain. Not only did Wal-mart pioneer the use of new technology, as they grew they demanded the implementation of technology throughout their supply chain. Therefore, information technology is one of factor behind supply chain improvement strategy and will benefited the following business performance of NewG:
This technology’s specific purpose is to eliminate the need for NewG to manage its inventory. The way it works is as follows: As soon as a UPC is scanned at the register of a NewG anywhere in the world, the technology driving the supply chain is started. At the point-of-sale NewG’s computer databases are updated immediately to reflect a change in inventory. At the same time electronic data interchange (EDI) sends the sales data over the internet to the respective suppliers of the goods sold.
An early benefit of supply chain improvement efforts included project work by teams that reduced purchasing costs, inventories, logistical costs, and freight costs. As the focus is placed on specific supply chain projects such as mainly clerical, order-pacing activities and in which personnel tend to adopt only a short-term, hand-to-mouth approach, merely reacting to contingencies as they arise.
The benefit of SCM for manufacturers is the quick change in supply chain and introduce new products to meet the turbulent conditions of the market. Inventory becomes obsolete. In the long run, there seems to be general support for the view that in rapid changing world markets, product innovation is an essential ingredient in the capability of firms to sustain a competitive advantage. Linkage with suppliers and the relationships that are forged with them can help to stimulate technological changes that can benefit both parties.
Explain how barriers will be overcome in NewG Furniture when implementing a supply chain improvement strategy.
NewG has main objective to sales furniture through cost effective solutions and selling through its direct sales model. NewG’s stock configurations will not command their accustomed price premium while sitting on retail shelves because they are insufficiently differentiated from competitors’ offerings. Worse, NewG will experience a sizable increase in its capital costs, as it has to maintain finished goods inventory for the channel, whereas before it needed no finished goods inventory.
However, there is a bright side to it as well as company’s reputation will help it to gain retailer confidence and form strategic relationships with them. Additionally, being a furniture company, it is not difficult for the company to invest in and to maintain a high standard product innovation team to meet its deliberate strategy. In addition,
As customer needs are constantly changing, markets are getting more difficult to predict and consequently hitting the target group’s desires become more challenging as well. Organisations have to respond to their changing environment while maintaining a focus on a long term idea of integrating core competencies into the supply chain. Possessing core competencies are no longer enough to obtain a competitive advantage, in fact only the adequate implementation of the core competencies into the supply chain will be able to make a company sustainably competitive and bring out the maximum gaining’s of time and cost. Hence, the NewG furniture company would benefit through the proper implementation of the supply chain management.