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Wal Mart Supply Chain Management

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WAL MART SUPPLY CHAIN MANAGEMENT Introduction Supply chain management is the process that an organization uses to "improve the way the company finds the raw components it needs to make a product or service and deliver it to customers (www.supply-chain.org 2006)." There are five basics components of a supply chain management system-plan, source, make, deliver, and return. Planning is the "strategy for managing all the resources that go toward meeting customer demand for the product or service (www.supply-chain.org 2006)." The source components are "the suppliers that will deliver the goods and services the organization needs to create the product or service (www.supply-chain.org 2006)." Make applies to manufacturing the product or the activities necessary to provide the service to the customer. Deliver is the logistics, getting the product or service to the customer (www.supply-chain.org 2006). The last component is return where quality assurance comes into play (www.supply-chain.org 2006). The goal of this paper is to identify the existing supply chain management processes with Wal-Mart as a comparison to other supply chain practices in an effort to recommend changes to the current system. Wal-Mart's Supply Chain Management Wal-Mart is one the largest retailing companies in the world. Due to its proficient supply chain management practices, Wal-Mart has been recognized by analysts for its ability to achieve leadership-status. Its supply chain management is backed by the need to meet the demands of customers while reducing costs. ...read more.


Wal-Mart has been able to use the new system to reduce excess inventory with more effectiveness than the control stores (Healthcare Purchasing News 2005). To this day, using its detailed supply chain management system Wal-Mart has been able to achieve respectable leadership in the retail industry. Organization Function Wal-Mart is a huge and very powerful company and therefore uses its competitive edge as a core competency. Walton, the founder and entrepreneur behind Wal-Mart, opened a retail store with the goal of "offering significant discounts on product prices to expand volumes and increase overall profits (ICFAI 2004)." Walton discovered a value-creating strategy and made it a huge success. Sam Walton realized consumers wanted 'low prices everyday, customer satisfaction guaranteed, and hours that were realistic for the way people wanted to shop.' Sam Walton quoted, "People think we got big by putting big stores in small towns. Really, we got big by replacing inventory with information." One of its core functions proved to be Wal-Mart's success; the company was able to reduce costs through efficient supply chain management practices, and push these savings onto the consumers. Customers Served As Wal-Mart offers discount savings its consumers are typically low-income single mothers. "Wal-Mart customer's average incomes are below the national average. Some analysts estimate that more than one-fifth of Wal-Mart's customers have no bank accounts (Welton 2006)." ...read more.


The only recommendation I can make is for Wal-Mart to stay pro-active. It is argued that its success is based solely on it ability to create efficiencies through supply chain. There are many activists groups who attack Wal-Mart for low wages, and its target of low-income consumers. Many activists have realized that supply chain is the best way to hurt Wal-Mart and challenged distribution center employees to unionize against them. With a heavy reliance on supply chain management, Wal-Mart needs to analyze all aspects of its supply chain management and proof it as much as possible against attacks or uncontrollable changes in the environment. Human capital is very essential as a resource to a company, Wal-Mart might need to evaluate its morale of employees and ensure that they are satisfied; else supply chain management can prove to be its weak link. Ethics is about avoiding the appearance of conflict of interest, not just the conflict itself. Wal-Mart has been able to maintain an exceptional relationship with suppliers, and customers adding employees to mix will aid to its core competencies. Conclusion Wal-Mart pioneered "just-in-time" inventory in the retail industry. The 'Wal-Mart model' is the leading retail strategy to emerge since the 1970s. "This model features a super-efficient production process in which each component of the supply chain management system is linked to the next in a continuous 'just-in-time' chain (Benson 2006)." Wal-Mart's passion to hold the lowest feasible inventory level while avoiding the risks of stock outs has been its competitive advantage. ...read more.

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