The Global Operations of Wal Mart

Global Operations

Introduction

The supply chain enables the delivery of services and goods to final consumers promptly with minimal costs to meet their demands and enhance cost-effectiveness for the external and internal parties involved (Collison, 2021). Nonetheless, due to the competitiveness of the global economy, businesses must reevaluate their supply chain to align to the current trends and take advantage of the global market.

One of the global largest retailers is Wal-Mart which Sam Walton first opened in 1962; after that developed over 10000 different stores and retail outlets across the globe. Wal-Mart is a retail corporation with several hypermarkets, grocery stores, and discount department stores. An adequate supply chain is one of the significant contributors to the success and growth of Wal-Mart in the retail industry. More particularly, the success of Wal-Mart retailer has been accorded to the retailer’s highly integrated supply chain, speed, and cost-effectiveness. Moreover, Wal-Mart has competitive advantages like the supply chain and retail management strategies over its competitors, thus, allowing it to accelerate its growth.

On the other hand, Zara is also one of the successful global brands in fashion retail. Rosalia Mera and Amancio Ortega founded the brand in 1975 to introduce a dramatic concept known as ‘fast fashion’ retail. Zara continues to target the establishment of passion for fashion among a wide range of consumers across multiple age groups and cultures. Though several factors have contributed to Zara’s success, putting customers first is the crucial strength that enabled it to become a powerhouse of global fashion (Collison, 2021). Zara has extreme care for its customers, thus, establishing the brand’s culture and the company from the start. Their clientele includes women, men, children, teenagers, and younger women.

Walmart’s Supply Chain

According to Freeman et al. (2020), Wal-Mart is a business and technology leader with a coordinative technique for collaborative replenishment, forecasting, vendor-managed inventory, and planning. This has enabled the company to lower demand data distortion and coordinate the business plan with various supply chain partners. Lowering inventory is treated as a way of improving a competitive advantage that is sustained in the field of cost minimization. Due to proper inventory management, Wal-Mart lowers costs like insurance costs and inventory taxes, which are motivating parameters for the organization in search of profitability and efficiency (Toptanc?, 2021). Nevertheless, cooperation by suppliers dramatically influences the ability of Wal-Mart to capture the competitor advantage.

One of Walmart’s strategies is using a logistical process known as Cross-docking to replenish inventory efficiently. This refers to direct movement of goods and services from outbound or inbound truck trailers minus the need for surplus storage, through offloading products from incoming railroad cars or semi-trailer trucks and directly loading those items into outbound rail cars, trucks, or trailers without any storage in between. Cross-docking ensures transportation and inventory costs are minimized, eliminating inefficiencies, and reducing time taken during transportation (Bal & Pawlicka, 2021). For instance, Walmart suppliers deliver items to distribution centers where cross-docking takes place and is delivered to Walmart storage facilities.

The fleet of truck drivers at Walmart delivers products to distribution centers continuously. After that, the products are received, repackaged, and distributed minus staying at the storage centers. Products cross from one dock to the other within less than 24 hours. The unsold MerchandiseMerchandise is returned by the company trucks (Toptanc?, 2021). The strategy has significantly reduced the costs incurred by Walmart, enabling the company to use those savings by offering favorable pricing to consumers, hence highly competitive pricing.

Moreover, due to its tireless desire for affordable consumer prices, Walmart endorsed using technology to innovate how storage facilities could track inventory and carry out restocking, enabling the company to cut costs. In Walmart’s supply chain, technology plays a critical role in acting as the baseline of the supply chain strategy (Bal & Pawlicka, 2021). Consequently, Walmart owns the most extensive state-of-the-art information technology infrastructure and network design across the globe, enabling it to predict and track inventory levels accurately, forecast demand, logistic service response, manage customer relationships, and establish highly efficient transportation routes.

Also, the company has allowed the consumers to pull MerchandiseMerchandise to storage facilities through demand instead of pushing goods onto shelves. This has been through tracking customer demand and purchases by Walmart’s supply chain (Toptanc?, 2021). Walmart’s use of Radiofrequency identification tags has facilitated the tracking of Merchandise’sMerchandise’s pellets along the supply chain even from a distance due to the use of numerical codes; finally, the use of smart tags that can be read by handheld scanner has enabled the staff to promptly detect items that need replacement or stocking, enhancing close watch of the inventory and consistent stocking of shelves.

Zara’s Supply Chain

Zara’s initial store displayed low-price products but looked like popular high-end clothing fashion. Subsequently, Zara’s business model and fashion dimension slowly developed traction with consumers in Spain. Hence, resulting in more stores within the largest cities in Spain. The creation of ‘instant fashion’ that included new manufacturing, distribution, and design processes enabled Zara to respond to new trends promptly and reduce the lead time (Berbiche et al. 2020). This was duty enhancement in information technology and groups rather than individual designers.

Currently, one of Zara’s market competitiveness strategies is changing the company’s design on their clothing every two weeks, while their competitors change clothing design within two to three months. Nonetheless, its success is also accorded to its highly responsive supply chain. The company developed an advanced automated distribution center for the company’s supply chain. Zara’s particular supply chain strategies make it the apparel industry leader and profitable (Luz et al., 2021). The company has established principles that sustain its distinctive, affordable, fashion-forward brand and increase its net income.

Consequently, Zara’s prompt response to demand follows a pull model in supply chain and inventory management. Every month, the company creates over 1000 designs based on current trends and store sales. Customers’ spending within the stores is monitored to understand and determine the most consumed design types and, accordingly, double-check the proceeding designs. Also, Zara’s production in small batches ensures faster turnover for every product. Thus, enabling the company to promptly understand the type of successful designs in the market. Production in small quantities also allows the company to explore current and trending designs and determine its market acceptance (Berbiche et al. 2020). Hence, minimizing the risks of overstocking the market with products that do not meet consumers’ tastes and preferences. Zara uses the same materials but in different ways to optimize the cost of investing in different designs.

Furthermore, Zara has central distribution centers with solid systems of information technology backing its distribution. For instance, all the clothes are transported to the central location in Spain. They are distributed across the globe to various countries and storage facilities depending on the requirements of a given locality and individual needs. Besides, Zara adopts a work cell organization where every new item has its development team with production planners, designers, procurement, and sales, thus streamlining its internal communication (Luz et al., 2021). Also, Zara strictly controls scheduling; for example, a manager can place an order twice a week, while shipment and delivery are executed within 24 hours for the clients in Europe. Equally, the items are displayed on the exact arrival date. As a result, waiting time is significantly minimized.

Differences and Similarities of Walmart’s and Zara’s supply chains

Both Walmart and Zara have adopted technology within their supply chain to improve efficiency. For instance, Walmart uses technology infrastructure and network design to accurately predict and track inventory levels, forecast demand, logistic service response, manage customer relationships, and establish highly efficient transportation routes. Also, Zara enhanced the use of technology at the central distribution center enabling shipment of all clothes to the central location in Spain (Berbiche et al. 2020). They are distributed across the globe to various countries and storage facilities depending on a given locality’s individual needs.

Also, both Walmart and Zara ensure prompt and swift transfer of their products to various clients across the globe. For example, Walmart uses Cross-docking, which refers to the direct movement of goods and services from outbound or inbound truck trailers minus the need for surplus storage, through offloading products from incoming railroad cars or semi-trailer trucks and directly loading those items into outbound rail cars, trucks, or trailers without any storage in between. Cross-docking ensures transportation and inventory costs are minimized, eliminating inefficiencies, and reducing time taken during transportation (Bal & Pawlicka, 2021). For instance, Walmart suppliers deliver items to distribution centers where cross-docking takes place and is delivered to Walmart storage facilities. At the same time, Zara strictly controls scheduling; for example, a manager can place an order two times within a week, while shipment and delivery are executed within 24 hours for the clients in Europe. Equally, the items are displayed on the exact arrival date in the stores. As a result, waiting time is significantly minimized.