Abstract
The supermarket industries are among the largest economic upholds in the U.S. The expansion of the customer base is a noticeable consistent growth of the supermarket industry that deals with diverse products. The global expansions plans require enhancement of more effective promotional strategies in order to overcome the economic challenges. Comprehensive financial predicaments affect the consumer behaviours and, therefore these end-users tend to change their purchasing styles due to a lack of trust and confidence.
Financial strains also causes the consumers to demand for lowering of prices and at times the situation causes shift of the consumption patterns, for instance the expenditure tends to incline more on the food products over the non-edibles. This is mainly attributable to the reduction of disposable income, and eventually such kind of trend affects the industry’s financial performance. This report focuses on the performance of food industries with a special attention to Wal-Mart as a global retailer.
Overview of Wal-Mart
Recent financial recessions affected the economic routine of Wal-Mart, but the firm came through and managed to improve the economic global presentation. The reduction on the number of clients visiting the stores globally during the financial crisis of 2007 did not pull back the overall performance.
According to Hoovers AD &B Company (2010), Wal-Mart stores were still able to pull out a marginal sales growth of 0.7%. This resulted to only a minimal reduction in the firm’s financial performance. It equally came about due to the consumer trust, but one of the major concerns that various global stores must deal with connects to the safety, quality and value of the edible products.
Different states’ administrations as well as the nongovernmental organizations have had to heighten the food regulation policies within the industries. A good example is directive that governs refrigeration, which ensures that firms in the food retailing industries observe various environmental concerns. Extra tax policies are also set to ensure compliance with new guiding principles.
Six Components of Wal-Mart’s Supply Chains
Information
The effectiveness of a supply chain depends highly on the accuracy and speedy flow of information from the consumer to the production line. The competitiveness in the food industry has seen Wal-Mart incorporate technology into its operations as a measure of enhancing operational efficiency. Innovation demands for a streamlined information flow through computer networks as a measure of enhancing proper movement of inventory as per the demands.
Information also entails implementation of the accounting systems, inventory management systems, systems for planning resources and global communication networks. Wal-Mart growth also has a connection to its ability of soliciting and facilitating online transfer of goods and services. This enables the firm to provide the customers with the right products as per the demands at the right time.
Production
To attain a competitive advantage, Wal-Mart differentiates some of the food products according to categories for instance, the stores ensures differentiation according to buyer’s age. One question the industry has to answer is what does the consumer want or demand? The key importance of addressing production falls upon the quantity and type of products. The firm has to know which and how many parts of production require outsourcing form competent suppliers.
The firm must face up to needs of finding the exact or approximate quantity required for each of its stores without a compromise on quality and customer satisfaction. The resource planning team can be of great assistance in this case since there is need for proper schedule to meet demands, control of quality, and balance of the workload beside the overall maintenance of the production line.
Supply
The resource planning system of the industry is strongly required to ensure enhancement of supplies. To guarantee that supply strategy succeeds, Wal-Mart invests in market research. The strategy makes certain that there is continuous value addition to the firm’s products and that the supplies go as per market demands.
Repetitive customer market research enables Wal-Mart to identify the varying consumer tastes and preferences particularly in connection with food products. Supply management also requires value analysis since changes on demands require products analysis and equivalent adjustments. The main challenge in this case is the ability to attain as well as maintain competitive edge by ensuring supplies integrates to demands especially on matters concerning tastes and preferences.
Inventory
Inventory management is ability to determine the amount of products required in the warehouses. The challenge that Wal-Mart must deal with in this case involved management of the right quantity of inventory. Too much inventory means more costs, while too little can sabotage firm’s growth due to lost consumer trust, therefore the firm must meet demands.
Management of optimal stock levels at each supply chain store ensures satisfaction, thus enhancing trust and fluctuation of demands as required in retailing industries. A resource planning system at the order points can assist in monitoring of levels to control supplies. Inventory levels are critical since excess production or supplies can affect other business operations mechanically or financially.
Location
The global investment requires close monitoring of the demand trends and preferences. Wal-Mart has strategized its production and supply units to support distribution and inventory management.
Long-term plans of a retailing industry such as Wal-Mart requires practical strategic location of production and stocking facilities, for instance the light and non-technical products can be closer to the end-users. Heavier products demands for bigger production and supply units thus must be closer to the raw materials. The decisions concerning location also require a resource planning system for close analysis especially during global distribution.
Transportation
According to Levy and Weitz (2001), transport decisions have a close relation to inventory management and consumer demands. Various means of transportation differ in terms of cost, cargo quantity and speed. A good percentage of the production cost fall within the transportation schedules; therefore, use of the right channel is critical. The transportation mode must meet the inventory measures for effective supply as per the demands. This is often a strategic operational decision that ensures smooth supply of goods.
Global Operation Processes of Wal-Mart
Currently, there are high hopes over future performance of the industry considering that there are notable improvements of the global economy after the 2007 recession. Wal-Mart is a global retailer with global reach of potential clients and ability to monitor as well as react on time to overcome possible economic crisis. Global accomplishment also enables the firm to financially strategize and hence recover its other financial sectors.
Wal-Mart’s Approach to Solving Operational Problems
One of the main challenge the firm faces is ability to form a financial defence over its ability to attain global reach through expansion of retail stores to different countries.
Financial commitment and strategies guarantees the attainability of global expansion. The firm must ensure that the chain stores acquisition strategy meets the quality policies. Wal-Mart formulates acquisition of stores through analysis of demands at the domestic markets. The global expansion increases financial recovery while picking a strategy that lowers the financial costs.
Globally, Wal-Mart has had financial difficulties over remittances for operations due to the fluctuation of the foreign exchange rates. The drop on Wal-Mart’s financial growth in the recent years is therefore attributable to reduced financial performance. However, stability of the foreign exchange rate causes the global economic recovery of the industry (Wal-Mart annual report, 2010).
A resource planning system can monitor the economic recession by finding possibilities of future reductions on consumers’ disposable income, thus reduced levels of consumption. The system can also assist to monitor consumption trend among the end users and consequently advice on upgrading choices (Levy and Weitz, 2001).
Wal-Mart’s Performance Chart
The financial performance of Wal-Mart has been on an upward trend for the past three financial years. There has been a steady increase in the revenue level, resulting in an increase of the firm’s earnings per share. The table and chart below indicated the performances.
Source: Financial reports: (Hoovers AD &B Company, 2010)
Wal-Mart’s global expansion strategy causes the net sales to rise.
References
Hoovers AD &B Company. (2010). Wal-Mart Financial Records. Web.
Levy, M. & Weitz, B. (2001). Retailing Management. New York, NY: Irwin/McGraw-Hill Publishers.
Wal-Mart annual report. (2010). Wal-Mart Performance. Retrieved from http://c46b2bcc0db5865f5a76-91c2ff8eba65983a1c33d367b8503d02.r78.cf2.rackcdn.com/6c/20/87b0b3df469ebee838a2630c2c1a/2010-annual-report-for-walmart-stores-inc_130221021765802161.pdf