chain has been considered to be a major source of competitive advantage for the
company and a crucial part of their growth since the launch in Arkansas. They
were one of the original companies to use data to make operational decisions.
Such as, sharing sales data with their merchants, to use bar codes, create
installing computerized point of sale systems, and monitoring their trucking
fleet. Wal-Mart has worked to create a supply chain that is a united industry functioning
to create beneficial relationships for the company, as well as strategic and
operational consumer relationship management.
The companies supply chain capabilities are still a source of
competitive advantage, continuing with their non-unionized labor has allowed
them to not be altered by external impacts, complimenting Wal-Mart’s low-cost
strategy. Wal-Mart had realized that their stock loads were not being restocked
on their shelves at a fast-enough rate, and shifted their business model
accordingly. Resulting in their “high velocity” food distribution centers to be
in full affect, improving their supply chain by keeping inventory on shelves at
all times. They have a competitive supply chain network because of their
integrated levels of in-store inventory management. They monitor and use technology
to communicate their information from store to store, allowing them to review
their current sales data and regulate their inventory levels better than most
of their competition.
Wal-Mart doing? How does it compare to its competitors?
Walmart being the
world’s largest retailer, could be doing better in relationship to its
competitors. Wal-Marts effective supply chain management and low-cost approach
has created their historical success and competitive edge, but with the
improvement of technology and competitor’s online presence their completion has
risen. From fiscal year 2006 to fiscal year in 2011, they had decided to open
fewer supercenters, down to 113 new stores within that time period which was
significantly lower than its competitors. Although Wal-Mart achieved inventory
turs of 11.5 in fiscal year 2011, while company’s such as Target Corp. and
sears had inventory turns 8.7 times and 4.7 times. They have attempted to close the performance
gap between their competitors, such as Dollar Stores and Amazon.com that are
becoming larger threats. The increased online competitors, has created a major risk
Wal-Mart, due to the fact that these companies offer more convenience than an
instore experience. Looking at Exhibit 3 within the years 2002 to 2011 Wal-Mart
there is positive movement of net income, as well as a consistent gross profit
margin throughout these nine years. Wal-Mart has the greatest sales turnover in
comparison to the current competitor, as well as the highest level of net profit
margin, with superior margins.
Dobbs, Wal-Mart’s executive vice-president (EVP) of logistics, where would you
spend your money or focus your energy?
As Jonnie Dobbs,
Wal-Mart’s executive vice-president of logistics, I would spend my money and
focus my energy on Project One Touch, Multi-channel Strategy, and Global
Sourcing. These are three noteworthy initiatives that would improve the supply
chain as the firm continues to increase in carried number of store types and
grows in global operations. Global Sourcing would change the way that the
product is acquired, by interrelating with other key merchants in global
markets it opens new doors for Wal-Mart. Based off of the success they have had
Wal-Mart has the potential to expand into new markets such as other countries
that are still developing, would allow them to still oversee the operations and
communicate. As for the multi-channel strategy, Wal-Mart had attempted to build
a “continuous channel approach” to improve their physical store and their
distribution center infrastructure, which would result in growing their online
presence. They need to work to find ways to improve their sales by using the
physical stores and hourly sales force to drive the online business. Wal-Mart
needs to emphasize improving their management of logistics in order to
coordinate their online and in store operations. Looking at Project One Touch
it had effectively improved Wal-Marts inventory management, by allowing them to
reinvest $2 billion in cost reductions into reducing prices at store level.
They should work to lower labor costs within the physical stores by unpacking
the merchandise from the warehouses. Perfecting the supply chain all the way
down to the customer as smooth as possible is the goal, by improving the
processes at store level and transportation operations would generate savings
and develop the supply chain.