Detailed discussion on Walmart’s supply chain management
Your report needs to include the following:
- a brief overview of the organisation and its supply chain within the select scope. You can delimit the scope, for example, by focusing on a set of products/services or by addressing a part of the supply chain. Here you are also required to provide a high-level map of the supply chain using simple tools available in MS Word. (i.e. no need to use special software).
- critical analysis and evaluation of the following three areas within the supply chain of the organisation:
- supply chain complexity
- supply chain risk management, and
- supply chain sustainability
- three well-justified recommendations to improve a set of supply chain performance measures based on your analysis and evaluation above (i.e. one for each), plus discussion on how each recommendation could be applied.
- a discussion section on how the future of the organisation’s supply chain should look, reflecting on what we learn from the ‘supply chain of the future’ sub-topic (e.g. see ‘emerging mega-trends’ or ‘seven major business transformations’) or ‘managing the global supply chain’ topic.
Supply chain is analyzed as the process of suppliers needed for creating the specific product for the organization. Walmart’s supply chain management is considered to handle as well as optimize the process of supply chain which includes the goods and services. It is considered as important in the commerce. The effective strategies are required to be followed for the supply chain management. The report includes the analysis of Walmart’s supply chain management. In supply chain, the three areas which are supply chain complexity, supply chain risk management and supply chain sustainability will be discussed in the report. The recommendations to the organization will be provided to improve the set of supply chain performance measures.
Overview of the organization and its supply chain in distribution
Walmart is engaged in wholesale and retail business where they maintain a various outlets and warehouses across the world. The company provides various goods and services at low prices every day. It operates from various business units like Walmart USA, Walmart Sam’s Club and Walmart International. The US division of Wal-Mart is a purchaser of consumer products. Under the walmatrt, they have Wal-Mart, Walmart neighborhood markets, along with walmart.com and other brands in e-commerce market. Walmart International manages various hypermarkets, supermarkets, super centers, warehouse clubs, and cash and withdrawals outside the US. The Sam Club section includes the membership of samclub.com and warehouse club. The company was founded in 1945 by Samuel Moore Walton and James Lawrence Walton and having their headquarters in Bentonville, Pennsylvania, USA.
Wal-Mart earlier has a small share in the logistics and supply chain industry. The American retailer has a stock of products that came from 70 nations across the globe, has more than 11,000 outlets, and manages a huge inventory worth US$33 billion. From household furniture to clean food, Walmart has every type of stock. As per many experts, the technology used by Walmart allows them to forge such a vast network. Walmart has commence their chain from 1962 and keep on updating their technology to improve the business and customer base on recurring manner. Companies in their supply chain synchronize their expected sales through planning, collaboration, forecasting and replenishing systems.
Walmart’s supply chain management
Each chain is connected by the database system which is centrally organized and a sale system which is store level linked along with a satellite system (Golicic aand Smith, 2013). When implementing their supply chain strategies, the company does not engage in the business of cooperating and sharing information with other parties. Walmart has truly changed the retail industry through its collaborative approach of exchanging the information among their suppliers, distribution centers and stores. In order to provide a seamless experience of shopping and provide the functions necessary to promote growth, it is making tremendous efforts, from changing the appearance of the store to implementing novel technologies for its employees (Dao, et al., 2015).
Source: (Dao, et al., 2015)
What are the three areas of Walmart’s supply chain management?
In the Walmart’s supply chain management, the various areas are included which are required to be analyzed for the achieving the objectives. The three major areas which are evaluated in the Walmart are supply chain complexity, supply chain risk management and supply chain sustainability.
Supply chain complexity
The complexity of the supply chain is caused by multiple factors, which are usually the result of increasing customer hope for faster delivery times, customized experience and expanded products. These determinant force owners of the brand to provide customers with more unique orders in their entire supply chain, need to strengthen cooperation with business owners, improve the management of inventory with supply vendors, and have deep visibility and control in all steps involving supply chain. An answer to why complexity exists in the supply chain is that expectations of the customers have turned out greatly over the few years in the past (Christopher, 2016). Buyers are eager to maintain transparency and flexibility in the process of their purchase, and make unique fulfillment idea a necessity, majorly for organisation that want to maintain or grow their commerce with their existing customers. Some of the expectations include are mentioned in below paragraph.
Whether it is B2C delivery on the same day or B2B order-to-order fast delivery, It is observed that the delivery cycle has been greatly shortened to meet customer needs. Although this can act as a source of advantage among its competition a few years back, it is a must in the economy of today. Walmart has maintained and improved its delivery cycle to create the image among customers. Moreover, customers want to track the status of the delivery of the order made by them where they need an effective tracking mechanism. They do not expect a fast delivery but wanted to maintain accuracy regarding the timeline within which the order is going to deliver. Walmart had also faced such issues in their delivery mechanism and need to involve an effective technology to support such requirement. Furthermore, business expectations greatly affect the complexity of the supply chain. Most of the corporates do not desire to keep the status quo, but want to go beyond it. The world post internet provides huge opportunities for every company to expand its business scope and cover a larger and wider customer base. However, this growth has greatly increased the complexity to satisfy new consumers. Some of its factors includes the expansion of market where in order to increase more turnover, business need to increase its reach to different market, involving new supplying vendors, faster delivery modes and customer satisfaction. Acquisition of other business is also a way to expand where business purchase another business in same line in order to remove the competition and enhance the customer base (Mangan and Lalwani, 2016). Walmart have followed the same approach in order to reach its business existence in various parts of the world and have remarked its position in the market. Apart from this, the relationship between suppliers and partners is essential to expand your influence among existing customers and reach new customers. However, maintaining such relations that are critical to satisfaction of customers and evaluating, negotiating, and optimizing these affairs that add on complexity. Collaboration between suppliers and understanding of partners is critical to success. The company keep on facing such issues in Walmart’s supply chain management and have enrolled various managers to mitigate such complexities (Negi and Anand, 2014).
Supply chain risk management
In this, there are various aspects which needs to identify to mitigate the evolving risk. Such components are mentioned below.
Operational Coordination: This includes cooperation between suppliers and company by aligning the supplier's product flow with the speed of retail. Walmart, the largest retailer in the United States, achieves this goal through supplier-managed inventory. By this model, Walmart enables suppliers to access the data related to point sales, and with such data, the vendor is responsible for maintaining shelf inventory. They send products automatically on inventory and sales. Although this poses risks to suppliers, it also has benefits (Tan, et al., 2018). First, it helps in avoiding over inventory and easy stock outs, which can lead to the need for discounts. Second, through various sales promotions, they can predict the sales and demand. This mechanism also helps Walmart to keep the everyday low prices and maintaining its value.
Push mode: Traditionally, the cost of production is optimized by pushed mechanism. If the prediction is wrong, it will push up the inventory efficiency, but it is risky, and due to obsolescence, reduction, and storage, one cannot understand the actual cost of inventory. Switching to the pull system that responds to customer needs will affect efficiency of production and increases its effectiveness, thereby diminishing the risk of overstocking (Barney, 2012).
Determining the risk appetite of operations: It usually does not adequately address the degree of risk that the company is willing to accept or pursue its goals. If an organization knows it, then it can have conflicting and multiple views from various individuals and departments within the company. The top priority of the organization is to manage the efficiency and risk (Waters and Rinsler, 2014).
Design of supply chain: Walmart’s supply chain management operates in various ways, reflecting the characteristics of product, capabilities of vendor and customer needs. The design of supply chain does also involve various mechanism to support the transportation of products with optimized transportation, promote reverse mechanism to repair of dispose products. The design of its supply chain must be created on the equilibrium between operational risk and performance. Walmart has strong logistics mechanism and sometimes faces issues which they keep on updating through various channels (Allen, et al., 2014).
Assessment of resilience of operation: Resilience means the capability to recuperate from a disaster or adapt to hardship, rebound from an incident, and reach a stronger condition than previous to the interruption. Its value came from predicting the duration and cost of harm and taking steps to reduce both. Here the cost is computed from the inaction. Company will be able to increase the layer of effective risk only when the disruption cost is more than the cost to reduce risk (Van der Vorst and Beulens, 2012).
Supply chain sustainability
A truly sustainable supply chain will not cause damage to social or natural systems, and at the same time will generate profits over a longer period of time. If customers are willing to establish a truly sustainable supply chain, continue to do business, a supply chain sustainability is calculated by the triple base line i.e. planet, profit and impact on people, which is considered as major component of supply chain.
Supply chain act as a linkage between a output function and input function in Walmart. In addition to conventional challenges, like reducing costs, ensuring punctual delivery and shortening a time of transportation, new challenges facing environmental friendly goods also include new measures that are conducive to logistics management. This change in paradigm normally reflects people's understanding that profitable supply chains can only come through sustainability (Nguyen, 2017). When considering sustainability, various organisation consider business operations of their own. As a result, the correct cost pertains to environment cannot be computed out. It is also possible that the waste remain untouched in the supply chain. Now, the sustainability of the supply chain can be computed out, and the supply chain can formulate a sustainable action plan. Walmart’s supply chain management needs cooperation to establish a successful and sustainable supply chain. Through collaboration, the supply chain can share allocations, so half of the empty vehicles would not return back to the destination. Similarly, the products pertains to same address can be delivered on the same truck. They can also jointly invest in canals, airships etc. through some methodology, thereby reducing the impact on environment and reducing costs.
There are 3 levels of sustainability achievement criteria where the first one is called a base level where all the organizations take a small steps in reducing costs such as switching the lights off, recycling paper, switching the idle systems off, etc. Some of measures including technology like teleconferencing, procurement of staff centrally, etc. are addition initiatives taken by the management in this level (Meredith and Shafer, 2019). Another one refer to thinking sustainable where companies have begun to realize the need to incorporate their sustainability into the operation pertains to supply chain and review their stage within the scope of local operations. The supply chain involves rationalization and optimization of distribution and manufacturing, product design and supplier management, etc. The last level is called scientific sustainability where companies use tools such as benchmarking and audits, which offer a structure for managing the operations of supply chain. In this way, the impact of the environment on the agility, cost, and flexibility of the supply chain network can be clearly assessed. Walmart’s supply chain management highlight green operations and promotes operations to standardize organisation and operations of the government (Chen and Yu, 2014).
The corporate team in management of Walmart has been struggling for most of the past, focusing only on operational efficiency, profits and growth. But now, the company broadened its horizons and established a network of employees, non-profit organizations and various agencies of government. They are collaborating and establishing contacts with different NGOs to enhance the sustainability factor of their supply chain. They will not add costs related to sustainability to customers (Green, et al., 2012).
Below are the three recommendations to improve the performance of the supply chain.
Distribution network: The distribution network of the Walmart is the operational hub which company should build. Distribution affects all aspects from tracking of delivery to sales strategy. The major purpose is to enhance the distribution network, which Walmart can achieve through a cluster view or holistic approach which is required for the supply chain complexity. Using the holistic approach, company can check the basic parts in the network of distribution and willing to compute out how the assessories work in synchronized way. If the efficiency is not what Walmart expect, they can determine where the company need to make changes. Unlike the holistic approach, the cluster view combines diagrams, graphs, and other detailed information to help you focus on the flow of company-specific functions. It will help in making the process effective.
Monitoring Cash flows for supply chain risk management: Cash flow monitoring is considered as the basic tool used by various businesses for enhancing supplier management. It is analyzed as essential for tracking the payments of the different department in the process of supply chain and developing tbhe effective plans for understanding the technologies which are usef=d for transferring the money (Christopher, 2016). Simply put, the company is required to understand the process of payments to vendors and logistics companies, how often they are paid, the means of payment, and any fees transferred to consumers. In case of supplier management, payment technology is included for pay bills to the suppliers, like POS machines, electronic pads used by warehouse workers when receiving goods. This can be very good mechanism for Walmart in improving the tracking of their cashflows.
Mapping of supply chain for sustainability: Walmart is required to prepare and follow the map for the challenges which are faced in the supply chain sustainability. The steps includes the inventory suppliers, identification of environmental and social challenges and prioritizing the suppliers efforts. They can adopt the CHSM Hill for the supply chain sustainability strategy for evaluating the products and completing the procedure of supply chain. Effective sustainability requires the communication which is required to be done with the suppliers.
Supply chain of the future
Walmart’s supply chain will have a broader outlook for future which are defined below.
Fulfillment centers will become a novel kind of store: Company is of view that retail supply chains used to be one-way, but they are now more like spaghetti leading in every direction. This is largely due to organisation changing the way they handle the fulfillment of an order.
The future Walmart’s supply chain management will be digital which will also include the collective strategy development and win- win thinking. It will include the strategic vendor partnerships by constructing the communication as well as relationships with the suppliers to improve the material flow with the low inventory level.
The future supply chain will include the new model which involves to create the virtual network and customer value oriented. Walmart’s future supply chain will be transformed from the supplier-centric to customer centric. In order to face the challenges, the Walmart will be transformed from the functions to the processes of the organizational structure (Christopher, 2016).
The effective technology will be adopted in the future supply chain which is essential for the supply chain strategy. The Radio frequency identification tags will be used which includes the codes for tracking the products. Walmart’s supply chain management strategy can delivers the business with a number of sustainable competitive advantages, containing reducing product costs, reducing inventory costs, improving in-store varieties and choices, and providing consumers with highly competitive prices. The strategy provides help to Wal-Mart for becoming a dominant force in the highly competitive market across the world. With the development of technology, Wal-Mart is required for focusing on innovating process and system for improving the supply chain and increasing the efficiency (Sarkis, 2013).
Digital transformation is considered as the biggest future of Walmart’s supply chain which includes to bring the change in technologies, techniques in the process of supply chain. Walmart can adopt the latest technologies for bringing the change in the supply chain. By using the EDI with suppliers, Walmart supply chain in future will help in cutting the various transaction costs. It will help in linking with the suppliers effectively and maintaining the relationship for the growth and delivering the products.
At the end, to conclude it is analyzed that the Walmart adopt the various strategies for managing the supply chain of the business. The key areas of supply chain are analyzed in the report which is supply chain complexity, risk management and sustainability. It is analyzed that in Walmart the areas are required to be evaluated for measuring the performance and increasing the productivity of the organization. The three recommendations are provided for improving the set of supply chain measures. In Walmart, the future of Walmart’s supply chain management which look digitalized by implementing the SCM system. In order to manage the global supply chain, they are required to bring the inventory innovation.
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