Wal-Mart Maximize Its Logistics Efficiency Through Facility

¶ … Wal-Mart maximize its logistics efficiency through facility location planning

Logistics today is much more than transfer or delivery of goods as the investigation of the systems of Wal-Mart would show. Logistics is intertwined with a lot of things like infrastructure, information and system planning based on the type of industry and the motives of the organization. In the case of Wal-Mart, the system has to be very cost effective and for this they take the supply side seriously. They have also put in one of the best information infrastructure and created the necessary physical infrastructure with independent management for the outlets. This with the company's planning for supplies even in extreme conditions including disasters has made its system robust.

Logistics and facility planning are intertwined. One cannot exist without the other. Facility planning is necessary for distribution and logistics is the method of taking the wares to the facility. The location where the distribution takes place has to be planned in such a way that it is cost effective -- both for the storage, distribution and delivery. In the case of Wal-Mart, it is a retailer and delivery to the customer occurs at the mall. The location of the mall has to be such that primarily the customer has to have a clear access to the mall and secondly the place must be such that access to delivery and other logistics operation is also possible.

Logistics and outlet planning go hand in hand with the company's motto. Wal-Mart's motto is to give quality goods at very cheap prices. All its operations are therefore designed to that end. Achtmeyer (2002) in the beginning era of Wal-Mart has observed that in Wal-Mart company seeks to have suppliers who offer competitive of prices. The price and cost and financial flow is also a part of the prices are important in their logistics system. Because they have to serve the globe, they have the policy of sticking to the most reasonable prices. Thus the awareness of cost, customers, and need for investing in continuous improvement and the bifurcation of the various retail units to small supplier stores as individual firms have made the logistics functions seamless and cost effective. Thus it can be seen that controlling cost and being conscious of costs is an important step that any company ought to take in planning the logistics functions. In these days of rapidly advancing technology that spans a vast array of information and also physical spheres of logistics, the use of modern technology from cell phones to satellite tracking and other methods cannot be overlooked. (Chandran, 2003)

Though the independent yet interdependent activities of delivery and distribution, storage, mall management and supplier and procuring management and other activities are designed to be cost effective, it can be achieved through integration using the most efficient logistics system. This is partly because of their ability to deliver goods manufactured all over the world to the various retail outlets all over the world. This is attributed to the firm's well structured logistics system that enables facilitation of shipment anywhere in the world within a very short time. (Chandran, 2003) Wal-Mart has the best information technology in any private company, and has an integrated IT policy. (Bergdahl, 2006)

However today companies like Wal-Mart are technology driven for the simple reason that they use automated systems that can be used for processing and for the retailer the system is important to the management of inventory, logistics and customer care. Of these order taking, logistics, delivery and stocking merchandise are important and parallel functions. This also involves vendor management, customer databases processing and marketing analysis feasibility. These along with the complex ordering processes like e-commerce have changed the way the facilities and requirement planning of the company is viewed today. Managing these, using technology has helped in the international expansion of Wal-Mart. Wal-Mart began as a small retail unit and has now grown to be the biggest international giant retailer. The company has run over other business by its sheer efficiency that comes out of its use of trading strategy and more importantly the way it approached the customer and order processing. (Goecart.com, 2012)

Taking logistics, according to a report by Chandran (2003) Wal-Mart extensively moves well among the distribution centres and this is the biggest traffic in the world. Thus Wal-Mart logistics operates a fleet of "6,500 tractors, 55,000 trailers and more than 7,000 drivers to make sure that the job is done. In one region, a distribution centre can be equipped with up to 12 miles of conveyor belts that are capable of transporting many thousands of goods in a day." (Chandran, 2003) It has conveyor belts five miles long with a 200-mile radius for each distribution centre. Apart from these facilities it has the best transportation system. The company's trucks are manned by qualified personnel and are eco friendly. The truck fleets enables the company to move goods from the distribution centres to stores within a maximum of two days. (Chandran, 2003) It has to be mentioned here that such giant infrastructure may not be required for other companies that does not have so many retail distribution centres. However the cost wise method of concentration on all aspects of the system that Wal-Mart has followed may be emulated in a lesser scale.