Wal-Mart's Facilities Are Designed for Logistics Efficiency Essay

  • Length: 5 pages
  • Sources: 2
  • Subject: Business
  • Type: Essay
  • Paper: #67614982

Excerpt from Essay :

Wal-Mart's facilities are designed for logistics efficiency

In a business world where lack of sustainable infrastructure leads to unorganized logistics and primeval warehouses, Wal-Mart has embraced a revolution. Wal-Mart is the leading global retailer that has set benchmarks for its competitors. The store is expanding at a rapid rate. Its stores are well-known for their tough negotiation with suppliers; this forces the competitors to lower their prices. All this is in the hope that their customers will get quality products at the cheapest price. Wal-Mart has been successful in establishing its presence in the global markets through their cash and carry stores. The retailer is still expanding in other countries such as India (Bonacich & Wilson, 2008).

According to the company's senior manager, logistics efficiency remains at the heart of the company's operations for the purpose of achieving the top position ahead of its competitors. Wal-Mart owns the most sophisticated supply chain and management practices in the world. Such practices have forced the competitors to upgrade their systems so that they can remain competitive. Wal-Mart's facilities are designed in a way that goods are replenished directly from the warehouse of the manufacturers to the shelves of the stores in less than 48 hours; this speed is far much ahead compared to its competitors. The company owns the largest private fleet in the world. It has also invested in a private fleet driver handbook that has strict rules of conduct. Anyone whose practices violate these rule and regulations is automatically terminated from the company (Bonacich & Wilson, 2008).

The company intends to make some improvements in its organized logistics sector considering that it has allocated too much work to the unorganized sector. This is because the unorganized sector does not encourage efficiency in the logistics of the company. Transportation at Wal-Mart is largely organized, has adequate skills, updated machinery, acquisition of technological knowledge and competitive prices at the company's facilities are some of the key factors driving the logistics sector of Wal-Mart.

The management for the company admits that the logistics sector is at its peak with the presence of well organized warehousing coupled with unlimited capabilities of the operators in terms of infrastructure, processing, and IT capabilities. Many experts in the industry believe that the logistics sector of Wal-Mart has brought a makeover in the industry. Wal-Mart has brought significant changes in the game. The progress of the company has been facilitated by its ability to study every aspect of logistical efficiencies. The company has been a vital catalyst for changing the world's logistics scene for retail. It has been the pioneer for the possible introduction of the concept of Mega Distribution Centers in the world (Lee & Lee, 2006).

Wal-Mart owns the largest private distribution operations in the world. The company has over 40 Regional Distribution Centers each measuring more than one million square feet in size. The centers operate 24/7 to ensure that their fleet of trailers and tractors continues to rolls. In each Distribution Center, a series of conveyor belts are responsible for moving more than 9,000 different lines of merchandise. Every center has to support between 75 and 100 stores located within a radius of 250-miles (Mentzer, 2000). Any supply chain needs an efficient distribution and Warehousing system. As with Wal-Mart, the warehouses match the sophistication of the international warehouses. This sector has increased the shelf life of products through maintenance and picks efficiency thus being ahead of the industry standards (Lee & Lee, 2006).

Wal-Mart operates upgraded warehouses whose operations bring superior visibility on the stock. This has helped in increasing the availability of stock at the shop floor available to be sold, reducing the stockholding costs, and reducing the inventory in the warehouse through ensuring that stock moves rather than remaining in the warehouse. Research shows that Wal-Mart's warehousing is dominated by appropriate infrastructure and proper deployment of handling, monitoring and stacking technologies thus making Wal-Mart the most efficient retailer in the world (Lee & Lee, 2006). At Wal-Mart, logistics is the backbone for growth. The company is concentrating on its core competencies thus setting standards for world class warehousing. This has made many companies outsource their warehousing requirements and concentrate on their core competencies.

Wal-Mart is improving the experience of customers and becoming more efficient in and out of the store through improved flow of Merchandise. The company is achieving this by emphasizing on a merchandise replenishment cycle that does not exceed forty-eight hours. The company has adopted processes that are more efficient such as cross docking which has increased throughput, reduced operating costs, eliminates unnecessary handling and storage of products, and reduces inventory levels. In addition, the company's Zero Waste Facilities have enabled it to ensure that there is sustainability at the stores. This has promoted the company's green policies. The company is focused towards maximizing its efficiency from the phase of raw materials to the manufacturing stage, from suppliers to distribution centers, from distribution centers to stores, from stockrooms to shelves, from shelves to consumers, from stores to homes, from pantries to consumption. All these are being achieved with the company's ultimate goal of Zero Waste. Concerning Supply Chain Transformation at Wal-Mart, the company is working to ensure that it maintains efficiency in its supply chain and especially in its transportation system. This has brought some success for the company such as an increment in fuel efficiency (Mentzer, 2000).

Moreover, sales at Wal-Mart have increased by U.S.$287 million. This has been made possible by the company's ability to fix its inventory problems using the new radio frequency identification (RFID) technology. The company is the world's top driver of RFID technology. The company's inventory problems have been solved through adoption of RFID tags and forklifts at the retail stores. Through sticking of RFID tags on its products, Wal-Mart can locate different products in the stores and quickly pick them. So far, the company has introduced RFID forklifts and tags in 975 Wal-Mart stores, in North America. After the installation of the new technology in these stores, the company's sales have significantly gone up (Mentzer, 2000).

With RFID, Wal-Mart has achieved substantial improvements in its inventory accuracy. The company's products are getting to the shelves faster than before. This has reduced lost sales, and cases of missing merchandise have become a phenomenon of the past at the company. Going forward, Wal-Mart has introduced RFID technology to its suppliers. This has enabled the company to work closely with its suppliers. Currently, over 600 of the company's top suppliers have embraced RFID tags at their own expense. This is for the purpose of being compliant with Wal-Mart's initiative.

Many businesses have never understood why Wal-Mart has managed to make profits with cheaper products in the market. Variety of factors in the company's business model has enabled the company to achieve this. Among them is the company's ability to adapt to the dynamics of the market. Some businesses have criticized the efforts of Wal-Mart to offer quality products to customers at cheaper prices, in the real sense; the company has been able to use its strategy of efficiency in logistics to deliver low prices. This efficiency has been evident in different areas. The most critical area is the company's ability of manufacturing products in global established outlets. This has been made possible by the company's logistical system that allows shipping of products anywhere any time (Bonacich & Wilson, 2008).

Wal-Mart has a system of logistics that are effective due to the company's flexibility in choosing suppliers. When the company is holding negotiations with suppliers, it ensures that the suppliers are aware that the company will only consider suppliers whose prices are competitive in the market: because of the fact that it is extremely easy for Wal-Mart to find an alternative supplier of the same…

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