Supply chain strategy is one aspect of business strategies among various others. It is inherently tied to the overall business aims and objectives and is therefore a central determinant of the success or failure of the organization. Supply chain strategy is defined as designs and plans of the organizations’ route of delivering products that enables the organization meet customer demands at the lowest possible price (An & Fromm, 2010).
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The focus of this study will be Wal-Mart warehouses where the author has worked in the past. Wal-Mart is a company based in the United States of America but which has grown and opened 8500 franchises in 15 countries on the globe under various names such as Asda and Seiyu among others. As a result, it is credited as one of the largest employers on earth whereby about two million people are said to work for the organization.
The Company is involved in retail of food, drugs, and even clothes among other things (Schoenfeldt, 2008). Their ultimate aim is to provide to the customers goods and services in a timely manner and at the lowest possible cost (Scott et al., 2011). The company is divided into several operating divisions that are known as Wal-Mart Stores U.S., Sam’s Club, and Wal-Mart international, Vudu, Private Label Brands and Entertainment (Hugos, 2011).
Wal-Mart warehouses are numerous within the United States of America, over 40, and each warehouse stores a specific kind of merchandise which the organization sells.
Thus there are warehouses that deal with foodstuff, drugs, clothing, and general merchandise among others (Jacoby, 2009). As a result, there are numerous warehouses that are concerned with the same products or merchandise all over the country (United States of America). In total, more than 80 000 items are stored in these warehouses which are also known as distribution centres.
Most warehouses are located far from each other but they are all strategically placed in regard to the distance between the warehouse and the store. Most of them are actually within six hours by car from the nearest Wal-Mart stores which enables the company to save on the costs of advertising and distribution. The warehouses are responsible for delivery of 90% of what is available in the retail stores of Wal-Mart).
The company’s stores are able to stock items in their retail stores within two days while the competitors are able to do so in about five days on average (Scott et al., 2011). Each warehouse is divided into different sections depending on the amount of goods that are delivered to the centre. Goods that come into the warehouses are packaged in either pallets or reusable boxes or cases (Jacoby, 2009). Some of the merchandise that is sometimes delivered includes automotive and pharmaceutical.
One of Wal-Mart’s business strategies and a reason for their continued success as retailers is their ability to provide goods that are available all over the country but at markedly lower prices in relation to other retailers n the United States of America (Hugos, 2011).
This is done by acquiring goods and merchandise directly from the manufactures as opposed to procuring the same through middle men and intermediaries. The company, in the course of procurement negotiates intensively and it only agrees to enter into a contract with a producer or a manufacturer only when sure the goods and merchandise that they are procuring are not offered elsewhere and at lower prices (Schoenfeldt, 2008).
The company takes its time in the course of establishing relationships with manufacturers and producers of goods and other merchandise (Cohen & Roussel, 2004). This is done in order to establish and understand the cost structures of the manufacturers and the producers whereby Wal-Mart assesses the efforts that the vendors have put into minimizing the prices they are offering for their products (Hugos, 2011).
When this has been done, Wal-Mart then enters into contract with these companies. This is done with all the companies that Wal-Mart enters or wishes to enter into contract with regardless of the status of the organization (Jacoby, 2009). The company however prefers to business with small, local and regional suppliers as opposed to multinationals.
To begin with, Wal-Mart establishes good business relationships with its suppliers. The company is engaged with numerous small and medium sized companies that are in the business of acting as suppliers for various goods. However, the organization is only involved with suppliers whose three quarters of clients are any others apart from Wal-Mart (Jacoby, 2009).
The organization offers the option of a resource known as “supplier development team” which is meant to enable new and inexperienced suppliers to establish and sustain long lasting and beneficial relationships between the suppliers, the managers, and buyers. In spite of this resource being optional, suppliers that take time to go through it are almost assured of renewed contracts with Wal-Mart (Hugos, 2011).
Once a new supplier has made a contract with Wal-Mart, they are required to deliver their goods to 50 of their warehouses as a test run; this is done to assess the reliability and the marketability of the products that the specific supplier is selling and if successful, the suppliers’ products are availed to Wal-Mart warehouses and stores throughout the country.
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The company receives about one delivery for each type of merchandise about every two weeks; this is more than any of their competitors are able to procure in the same amount of time (Cohen & Roussel, 2004).
This calls for efficient management of these goods while at the warehouses before their distribution to the organization’s retail centres. The company’s warehouses are able to Management of the company’s warehouses is done through bar code technology and computer systems; some of which may be held by hand and then updated to the organization’s servers (Cohen & Roussel, 2004).
This has proved to be economical, easy besides enabling any employee that may be interested to have information concerning inventory of any goods at the warehouses. It is possible to trace any item in their retail stores and warehouses by the pallet or stock or case, location where it came from, and the bin or shelf where it is in the delivery centre.
These hand held computers are also utilized in the departments in the course of packaging to display all the information concerning the product about to be packaged such as storage, transportation including shipping among other aspects of the product which reduces the time and investment to be done on paper work besides making the information easy to retrieve.
These devices also enable the supervisors at the warehouses to monitor the movements of their employees such as truck drivers as well as their progress in the course of their activities. In case problems arise in the course of their transportation, the earlier they are detected the earlier they are resolved. This ensures that the operations of the warehouses flow smoothly and that the organization achieves its goals of providing goods and merchandise for their customers in a timely manner (Schoenfeldt, 2008).
Each warehouse is equipped with facilities where staff can undertake their ablution, meetings, feed, sleep and physical fitness exercises (Cohen & Roussel, 2004). Meetings and paper work can also be done within these premises. The truck drivers of Wal-Mart are able to benefit immensely from these facilities among other members of Wal-Mart staff.
The transportation systems of Wal-Mart are an important and integral part of the company’s supply chain strategy. The company’s warehouses are facilitated by more than 3000 trucks that are part of its responsive and fast logistics system (Cohen & Roussel, 2004). The vehicles are for the purpose of moving goods from warehouses to the individual retail centres of the same organization and from manufacturers to the company’s warehouses at times.
There trucks consistently move goods from the warehouses to the retail centres within two days every two weeks. The drivers of these trucks are recruited on the basis of their experience of having driven for 300 000 or more miles without being involved in any accidents and in addition, have had no traffic violations (Hugos, 2011).
The role of these trucks is to transport goods and merchandise from the company’s warehouses to the respective retail centres which are regarded as customers of the warehouses. The drivers are supervised and closely monitored by their supervisors and coordinators in the course of these delivery trips (Schoenfeldt, 2008).
This is done to ensure that they encounter no problems in the course of their work and that they do not get into any mischief. The activities and movements of their drivers are monitored through a tool known as “Private Fleet Driver Handbook” which additionally provides the drivers with education concerning their conduct, safety and procedure while working at Wal-Mart (Jacoby, 2009). The drives work most closely with the coordinators to whom they report frequently even when en route.
Coordinators are additionally charged with the task of determining which merchandise should be transported, when and where it should be transported, with regards to the amount of time that is available and the vehicles available (Hugos, 2011). Drivers are expected to deliver merchandise at the retail centres and return to the warehouse with empty trucks (Schoenfeldt, 2008).
Delivery trucks arrive at the retail stores in the afternoons and in the early evenings. The driver is sometimes required to spend nights at the retail centres as the trucks are only unloaded at the pre scheduled time (at night) within two hours between each two trucks no matter how early the driver arrives.
Wal-Mart, in their process of procuring goods and other merchandise, additionally employ a logistics tool known as cross docking whereby complete products are obtained from the manufacturer or producer’s factory or industry directly, sorted, and then delivered to the Wal-Mart retail centres directly. This actually removes the warehouses from the supply chain and minimizes the risks and expenditure that comes with handling and storage of complete goods.
In the course of Cross Docking, requisitions are translated into purchase and procurement orders which are then forwarded to the manufacturers or suppliers who then communicate their ability to deliver the goods within the stipulated amount of time. Where the manufacturer is able to provide the goods within the stipulated time, goods are collected by Wal-Mart trucks from the staging area within the supplier’s premises (Schoenfeldt, 2008).
The finished goods are then packaged according to the needs of each individual Wal-Mart retail store and then set to the location of these stores (Cohen & Roussel, 2004). The cross docking approach is closely related to the company’s pricing mechanism. The control over merchandising, pricing, and promotions has been decentralized and these processes are mostly determined by the customer through their demands.
The supply chain strategies of this company are flexible which enables their individual retail stores to benefit from a number of delivery plans that are available (Cohen & Roussel, 2004). One of these systems enables retail stores that are located within certain distances to receive supplies within the day.
The organization has also invested heavily in supply chain strategies and management through information technology and communication tools (Hugos, 2011). This includes the hand held computers and the bar coding that was described earlier and the fact that the company was among the first in the whole world to establish their own satellite communication system in 1983.
Al these and other tools that have been made available in the organization enable all aspects and divisions of the company to be in constant communication with each other. These enable the management of the organization to understand the problems that specific stores are experiencing immediately as well as to communicate urgent news to their staff throughout the United States of America (Schoenfeldt, 2008).
Management of supplies within the organization’s distribution and retails stores was further facilitated by allowing individual stores to manage their stocks in ways that they consider best. Through this action, redundant inventory for supplies was also avoided.
For maximum benefit, information communication and technology tools and appliances were combined with this decision. Individual employees were also able to obtain and transmit information such as merchandise stock levels, deliveries, and even the back up stocks that are within the warehouses (An & Fromm, 2010).
An, C. & Fromm, H. (2010). Supply Chain Management on Demand: Strategies and Technologies, Applications. Kansas: Springer.
Cohen, S. & Roussel, J. (2004). Strategic Supply Chain Management. New York: McGraw-Hill.
Hugos, M. (2011). Essentials of Supply Chain Management. 3rd edition. Boston: Wiley.
Jacoby, D. (2009). Guide to Supply Chain Management: How Getting it Right Boosts Corporate Performance. New Jersey: Bloomberg Press.
Schoenfeldt, T. (2008). A Practical Application of Supply Chain Management Principles. Indiana: ASQ Quality Press.
Scott, C. Lundgren, H. & Thompson, P. (2011). Guide to Supply Chain Management. Texas: Springer.