Wal-Mart’s supplychain has been considered to be a major source of competitive advantage for thecompany and a crucial part of their growth since the launch in Arkansas. Theywere one of the original companies to use data to make operational decisions.Such as, sharing sales data with their merchants, to use bar codes, createinstalling computerized point of sale systems, and monitoring their truckingfleet.
Wal-Mart has worked to create a supply chain that is a united industry functioningto create beneficial relationships for the company, as well as strategic andoperational consumer relationship management. The companies supply chain capabilities are still a source ofcompetitive advantage, continuing with their non-unionized labor has allowedthem to not be altered by external impacts, complimenting Wal-Mart’s low-coststrategy. Wal-Mart had realized that their stock loads were not being restockedon their shelves at a fast-enough rate, and shifted their business modelaccordingly. Resulting in their “high velocity” food distribution centers to bein full affect, improving their supply chain by keeping inventory on shelves atall times. They have a competitive supply chain network because of theirintegrated levels of in-store inventory management. They monitor and use technologyto communicate their information from store to store, allowing them to reviewtheir current sales data and regulate their inventory levels better than mostof their competition. 1. How isWal-Mart doing? How does it compare to its competitors?Walmart being theworld’s largest retailer, could be doing better in relationship to itscompetitors.
Wal-Marts effective supply chain management and low-cost approachhas created their historical success and competitive edge, but with theimprovement of technology and competitor’s online presence their completion hasrisen. From fiscal year 2006 to fiscal year in 2011, they had decided to openfewer supercenters, down to 113 new stores within that time period which wassignificantly lower than its competitors. Although Wal-Mart achieved inventoryturs of 11.5 in fiscal year 2011, while company’s such as Target Corp. andsears had inventory turns 8.
7 times and 4.7 times. They have attempted to close the performancegap between their competitors, such as Dollar Stores and Amazon.com that arebecoming larger threats. The increased online competitors, has created a major riskWal-Mart, due to the fact that these companies offer more convenience than aninstore experience. Looking at Exhibit 3 within the years 2002 to 2011 Wal-Martthere is positive movement of net income, as well as a consistent gross profitmargin throughout these nine years. Wal-Mart has the greatest sales turnover incomparison to the current competitor, as well as the highest level of net profitmargin, with superior margins. 2.
As JonnieDobbs, Wal-Mart’s executive vice-president (EVP) of logistics, where would youspend your money or focus your energy?As Jonnie Dobbs,Wal-Mart’s executive vice-president of logistics, I would spend my money andfocus my energy on Project One Touch, Multi-channel Strategy, and GlobalSourcing. These are three noteworthy initiatives that would improve the supplychain as the firm continues to increase in carried number of store types andgrows in global operations. Global Sourcing would change the way that theproduct is acquired, by interrelating with other key merchants in globalmarkets it opens new doors for Wal-Mart. Based off of the success they have hadWal-Mart has the potential to expand into new markets such as other countriesthat are still developing, would allow them to still oversee the operations andcommunicate. As for the multi-channel strategy, Wal-Mart had attempted to builda “continuous channel approach” to improve their physical store and theirdistribution center infrastructure, which would result in growing their onlinepresence. They need to work to find ways to improve their sales by using thephysical stores and hourly sales force to drive the online business. Wal-Martneeds to emphasize improving their management of logistics in order tocoordinate their online and in store operations.
Looking at Project One Touchit had effectively improved Wal-Marts inventory management, by allowing them toreinvest $2 billion in cost reductions into reducing prices at store level.They should work to lower labor costs within the physical stores by unpackingthe merchandise from the warehouses. Perfecting the supply chain all the waydown to the customer as smooth as possible is the goal, by improving theprocesses at store level and transportation operations would generate savingsand develop the supply chain.
