Wal-Mart has been able to be one of the leading businesses in the world due to their efficiency in their supply chain management practices. They have been able to grow at an unexpected rate due to their focus on the needs of their customers. At the same time they have been able to reduce costs through supply chain management practices. Wal-Mart has been able to offer a wide range of products at some of the lowest costs when compared to competitors. All of this is due to the highly automated distribution centers that Wal-Mart has and their computerized inventory system.
Wal-Mart has always focused on reducing costs and being able to offer the best price for its customers. They purchase goods directly from the manufacturers and negotiate until they know the products are not available for a lower price anywhere else. Wal-Mart is big on establishing long-term relationships with their vendors. Wal-Mart's warehouses directly supply 85 percent of the inventory and are able to provide refills within two days.
Each of their distribution centers are divided into sections based on the quantity of goods received. Inventory turnover rate is very high for this company. About once every two weeks most goods are refilled. About 85% of the goods that are available at your local store passed through the distribution centers. The Wal-Mart distribution centers make sure a constant flow of products are continually being supplied. With advanced technology, each employee is able to access information about the inventory levels within the distribution center. They use a hand-held computer device to track different information such as product location and product identification. This technology also helps make sure that products and goods are properly packaged. This helps reduce costs by enabling the supervisors and managers of these distribution centers to access all packaging and shipping information pertaining to all products. The level of efficiency is very high for these distribution and help Wal-Mart maintain a level of excellence when it comes to customer satisfaction.
An important feature of Wal-Mart's logistics infrastructure was its fast and responsive transportation system. The distribution centers are serviced by Wal-Mart's own company owned trucks. These trucks allow for the shipment of goods to stores. Since they go directly from the distribution centers to the stores within two days, each store is able to refill at least twice a week. Wal-Mart puts an emphasis on their truck drivers to carry out the same qualities that are expected of any other Wal-Mart employees. They must maintain cooperation with the retail stores when delivering and unloading goods. The drivers are also expected to deliver goods in a timely manner and bring back an empty trailer in order to maintain productivity.
Wal-Mart uses cross docking in order to increase efficiency within the distribution process. The goods are picked up from the manufacturer and then sorted and directly supplied to the customer. This eliminates the use of distribution centers and storage costs. The demand for goods from a store was changed into a procurement order. From there the manufacturer could notify them if they were able to fill that order within a certain time frame or not. If they were able to fill the order, the goods were packaged accordingly and sent directly to the customer. Changes had to be made by Wal-Mart's approach in order to maximize efficiency when using cross docking. The focus now has to be from the demand chain instead of the supply chain. Since customers can now pull products instead of the retailers pushing the products, control is no longer the same. Wal-Mart has still been able to maintain their effectiveness due to the cooperation among all stores, centers, and suppliers.
Wal-Mart has been able to meet the unique needs for each of its stores. They have seriously invested in technology systems that all them to track inventory levels on merchandise and also sales throughout all of their locations. The idea to set up this communication system has proved to be essential with their rapid growth throughout the past decade. They have been able to cut back on unnecessary inventory by allowing each store to manage their levels of stock. Since inventory is dictated by the stores, it allows Wal-Mart to make more goods available based on what the customers want. At the same time they are reducing the overall inventory levels. Wal-Mart is also networked with its suppliers through these computer systems. This allows Wal-Mart to monitor its levels of stock constantly and also recognize goods that are moving out faster than others. Wal-Mart has been successful in providing continuous service to everybody because of this advanced technology.
Wal-Mart has strongly believed since being founded that its most important relationship is that with the customer. Since then they have made every effort to cut down on costs and take advantage of every cost saving opportunity. The savings from there have always been passed on to the customers thus continually adding value to the company. Their transportation costs remain low due to the fact that they have their own transportation system. This allows Wal-Mart to refill their shelves four times faster than their competition. Their pricing of goods also benefits from them being able to purchase mass amounts of goods at a time. This made it possible to price their goods competitively and let the costumers enjoy the benefits of lower prices. Wal-Mart has offered lower pricing which guarantees that the sales volumes were constant and reliable. By having an efficient supply chain management, Wal-Mart has been able to obtain the benefits. They have incredibly fast inventory turnover and are among the best at accurately forecasting their anticipated inventory levels. They have more space due to be efficient and they have a lower lead time than most companies. They have more capital to work with and they have eliminated stock-outs. These practices have also led to better customer service. Also by implementing cross docking, Wal-Mart has been able to save on storage costs, labor costs, and handling costs.
