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The inventory management in a firm or organization highly depends on the management of resources and facilities as a measure towards economical expansion. Supply chain management depends on progressive and efficient production and distribution. In order to keep production and distribution costs at minimal levels, the organization ought to select raw materials and suppliers carefully.
Managing the supplier determines and catalyzes the flexibility and, quality of goods or services at minimal costs. The main reason why a supply chain store should work around reasonable costs is to ensure customer’s satisfaction at all times, especially during the market fluctuation periods. The main aim of a supply chain is to offer innovative dimensions and remain competitive in the market by introduction and delivery of dynamic and technologically high quality inventories into the market at sustainable costs.
Management of cost also enables organizations to build a vision or goal through recognition of performance break and thus narrow the competitive gap through utilization of available resources. Successful supply chain means that the consumer is not kept waiting after ordering and this is achievable via proper balancing of resources to meet demands (Lambert, 2008).
According to Wisner (2008), the current economical crisis means that the financial system remains unstable thus calling for critical but quick decisions regarding trade especially on money matters. Today there is need for careful inventory management and considering that utilization of technology is taking over the trading industries at a high rate, there is need to convert the physical elements of transactions to automated systems to enhance trade at the lowest feasible costs.
The high diversification of transactions means that companies need to invest in hi-tech information management urgently in order to facilitate goods transfer. +In addition, this strategy assists in compensation of the low investments rates to the international transactions. Economic crisis means low investment rates thus the need for companies to invest the available resources smartly.
Background information of Wal-Mart performance
This paper evaluates Wal-Mart supply chains. The Wal-Mart supermarket industry is among the largest firms supporting economic sector in the U.S. the firm deals with food and non-food products retail. The supermarket industry today enjoys a constant international growth of its customer base.
This kind of market growth requires an increased need to undertake effective management strategies in order to overcome the recent restrains to global economic developments. The 2007 financial crisis caused a change in consumer trends due to a lack of customer confidence, however, good inventory control ensure lower price for the products thus the current shifts in consumption patterns among households.
Today the consumers’ behaviours indicate more consumption on food items than non-food products. This is due to a reduction in the level of consumers’ disposable incomes, which has affected the financial performance of the industries. Despite the current financial crisis, Wal-Mart has managed to improve its financial performance.
During 2007, there was a general reduction in the number of shop visits by the consumers in its distributed stores. Furthermore, consumers are more concern of the safety and nutritional value of food products, which results in increased regulation within the industry by government or non-governmental organizations.
Wal-Mart Performance Statistics
Characteristics of Wal-Mart’s Supply Chains Designs and Strategies
In relation to Lambert’s writing (2008), companies use various methods of forecasting demands to manage supply chains inventory. The methods include graphical, historical or statistical elements. Graphical analysis involves many difficulties of modelling outputs, especially when the chains are many as in the case of Wal-Mart, but on the other hand, it offers clear picture of the reality and chances for expansion through clear analysis of hindrances and catalysts.
The daily demand shifts call for complex representations. However, it is possible to model systematic and similar graphs even when they call for demanding efforts. The statistical forecasting are more accurate because of defined data types compared to historical, which mainly entail predictions based on past performances.
Majority of the methods for the Wal-Mart supply chain relationships nevertheless utilizes supply situations that are a rough estimate as opposed to the current states of affairs, thus lack of exact prediction. Forecasting enables firms to learn the procedures of controlling some of the consumer’s systematic shifts such as weekly changes.
The shifts are rather much more complicated when a chain store of the company fails to carry out the observations. Forecasting enables the management to find information regarding insufficient supplies, which would otherwise be hard to note in the aim of ensuring better trading and accurate or timely supplies.
Close coordination means that the Wal-Mart chains are working as a unit, to allow uniformity especially over performance and dynamism. It is possible to avoid heterogeneity within the chain stores by synchronizing activities. The current technological change calls for intelligent systems and personnel who are able to handle the operations, research and provide system’s theories.
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In a strategy to minimize costs, they harmonize and synchronize sequences procedures to avoid waiting costs, and retain customers through timely deliveries especially for the global markets. Coordinated activities enhance the firm’s ability to deliver solutions of the complex problems through integration of various aspects from different chain stores. According to Kurtz et al (2009), globalization makes the supply chains more complex and, limited but better and more profit oriented.
There are a number of interrelations in Wal-Mart supply chains. Modulating components enables the managers to design subsystems, which assist in meeting a wide range of business requirements. The production, manufacturing and procurement of components are highly reduced, thus saving resources in material to meet future demands.
The joint planning, integration and coordination process reduces the performance cost and offers chances for business expansion to other market niche. There is increase on returns on investments such as assets, improved customer services due to specialization and, reduction on the time required for delivery.
Wal-Mart Global Sourcing and Outsourcing
Globalization of the supply chains is crucial because reduced procurement costs as well as decreases on the risks of international transactions such as purchasing behaviours.
The technological impact is forcing businesses to consider outsourcing inventory management systems and venturing into countries that are more productive. For instance, India was a rare consideration to venture into some years back, but today their advancement in technological matters makes most transactions easier, faster and cheaper compared to some of the U.S. and other western countries.
Today globalization enables the supply-chains to bid for the cheapest but best quality options through comparison of market offers. Competition requires better establishment, new ventures and proper marketing strategies thus the quests for globalized sourcing or outsourcing. Globalization brings about change for growth and that is the aspiration for every firm such as Wal-Mart (Ayers and Odegaard, 2007). Lastly, some of the market niches are only attainable through global sourcing because they require global supplies.
Some of the repercussions for the global sourcing or outsourcing trends involve higher overall costs in comparison to the traditional style of regional or remote supply chains management. According to Coyle (2009), the exchange rates, tariffs, and space are some of the extra costs incurred during the international transactions.
Beside the climatic conditions, the time factor due to regional differences may also affect the business transactions. A lot of complexity is usually involved when there are many global suppliers, thus the needs to consider the diversification. A good deal with low prices in the global markets may mean more costs especially if a firm does not consider other related factors such as time.
Ayers, J. B. & Odegaard, M. A. (2007). Retail supply chain management: Series on resource management. Florida, FL: CRC Publishers.
Coyle, J. J., Langley, C. J, & Bardi, E. J. (2009). Supply chain management: a logistics perspective. Kentucky, KY: Cengage Learning Press.
Kurtz, D. L. MacKenzie, H. F. & Snow, K. (2009). Contemporary Marketing. Kentucky, KY: Cengage Learning Press.
Lambert, D. M. (2008). Supply chain management: Processes, Partnerships, Performance. California, CA: Supply Chain Management Inst Press.
Wisner, J. D., Tan, K., & Leong K. G. (2008). Principles of Supply Chain Management. Kentucky, KY: Cengage Learning Press.