Supply Chain Management at Wal-Mart

¶ … Improvement at Wal-Mart Stores

How can the logistics processes be improved in your organization?

The logistic process of Wal-Mart provides results that have propelled the retail giant to the top income earning company in 2007. They are the first store to assume the first place in sales in the Fortune 500 magazine, exceeding giants in the energy sector: Chevron and Exxon Mobil; and manufacturer: General Motors. Wal-Mart's growth is based on the organizational structure established on logistic excellence, and logistics are vital. Logistics is about supply chain; having the right supply chain is no longer just an interesting opportunity. It is a survival skill. The fallacy is that Wal-Mart is in the retail business, but in reality, it is in the distribution business. Wal-Mart is obliged to bring products from the docking station to the client's doorstep in less than 72 hours and calls for the highest efficiency level in its supply chain process.

Cross-docking can help revolutionize the logistics process of Wal-Mart. Cross docking is described as the practice in logistics of unloading goods from an inbound trailer and directly loading the goods into outgoing vehicles with little or no storage space in between the processes of transfer. Tactically, this process will help change the type of conveyance, thereby helping to sort out products designed for different places. It is also a procedure to merge products from two or more different routes into one vehicle or container with the same location. The cross-docking tactic will assist Wal-Mart to improve its logistics from the point of origin to destination. Ultimately, it will reduce the cost of handling goods, cost of operation and drastically reduce the cost of inventory storage.

The fast growth of Wal-Mart makes it necessary for the company to have a good communication system. From this perspective, Wal-Mart must establish its own satellite communication system to help them supervise each transaction in their shops at any given moment. This will ensure that any unproductive stock is as less as possible because they will permit individual stores to handle their own inventory. This will help them to reduce package size across many different products and appropriate price discounts. In addition to the two techniques mentioned, they can also use standard information technology infrastructure to make more stocks available for their customers. In the quest to make their logistics system more effective and efficient, Wal-Mart must launch the cross-docking tactic. The system will allow them to monitor the movement of goods across all their distribution facilities and shops.

Wal-Mart workers will use the Magic wand, which is connected to their in-store devices through a radio frequency System that keeps continuous monitoring on their stocks in shops, supply and back-up products in stocks at their various facilities. The management of their merchandise and replenishment of their inventory can be implemented with the assistance of a conventional information system. All these techniques and their real-time centralized database program will help them in their cross-docking technique. Wal-Mart can use staging areas where incoming products are categorized, combined and stored until the outgoing container is very ready for shipping.

What have you learned in the course that might help that improvement effort?

As I have learned, a successful logistic process can lead to lower product prices and extremely competitive price for the buyer. Wal-Mart can become the world's biggest and probably most powerful store with the highest sales per inventory turnover and operating profit than any discount store. Wal-Mart can transform from a local store to an international giant by adopting an efficient supply chain management system.

Wal-Mart has an objective to provide customers with the goods they desire when and where they want them. The company then focuses on creating cost components that allow it to offer low-pricing every day. The key to accomplishing this objective will be to make the way the entity replenishes stock the focal point of its method, which depends on a logistic system known as cross docking. I have discovered that by using cross docking, products can be directed from providers to Wal-Mart's distribution centers, where they can then be delivered to stores without sitting for an extended period in storage. The method will reduce Wal-Mart's expenses significantly, and those savings can be passed on to their clients with extremely competitive prices. Wal-Mart focuses on creating a more extremely advanced and structured supply chain to improve and exploit this competitive advantage.