Wal-Mart’s historyis one of success, innovation and leadership. Wal-Mart was founded by SamWalton, who is owned several Ben Franklin franchise stores before opening thefirst Wal-Mart’s. It started with a single store in Rogers, Arkansas in 1962and has grown to what is now the world’s largest and arguably, the mostemulated retailer.
Some researchers refer to Wal-Mart’s as the industrytrendsetter. Wal-Mart’s is a retailgiant stocks products made in more than 70 countries and at any time, operatesmore than 11,000 stores in 27 countries around the world, and manages anaverage of $32 billion in inventory. Wal-Mart operates each store, fromthe products it stocks, to the front-end equipment that helps speed checkout,with the same philosophy: provide everyday low prices and superior customerservice. Lower prices also eliminate the expense of frequent sales promotionsand sales are more predictable.
Wal-Mart’s has invested heavily in its uniquecross-docking inventory system to replenish inventory efficiently. Crossdocking has enabled Wal-Mart’s to achieve economies of scale which reduce itscosts of sales. Wal-Mart’s leverages its buying power through purchasing inbulks and distributing the goods on it’ own. Wal-Mart guarantees everyday lowprices.
Wal-Mart’s supply chain management has their own strategy toprovided the company with several sustainable competitive benefits. As we know, todayWalt-Mart’s being a success supply chain. What is the strategy that make thecompany being a success in supply chain? Walt-Mart’s has their own strategy toimprove their company. There are some strategy or tips that make Walt-Mart’s beinga success company in logistic.
Firstly, tips that make Wal-Mart’s being successis Wal-Mart have their own mission that is Wal-Mart’s want to give customerswith the goods they wanted at any time and wherever they wanted them. It makecustomer like the company and being faithfulwith the company. It also can increase the demand. Customer will be happybecause easy to get anything that they want. Second strategy is thecompany then want to offer low everyday pricing by developing the coststructure. As we know every people want to save their money, always want a goodproduct with a low cost, and other. Save money is very important thing to makesure we have emergency money and it also to make sure we have better life inthe future. In addition, after that Wal-Mart’s focused on developing a many highlystructured and a good supply chain management strategy to exploit and enhance thiscompetitive advantage and be market leadership position.
Moreover, Wal-Mart’sstrategy is use a fewer link in supply chain. Even it still early, Wal-Mart’ssupply chain management can give a success target. At Rogers, Ark in 1962 isthe first start of Wal-Mart’s. The story is Sam Walton is owned of several BenFranklin franchise store before opening first Wal-Mart’s. Wal-Mart’s modernizationbegan with the company to cut out a little of the chain’s links. 1 For cut cost and more efficiently manage thesupply chain is by Wal-Mart’s workingdirectly with manufacturing, In 1980.
Wal-Mart’s have their own warehouse.Vendor Manage Inventory(VMI) who is being responsible tomanaging Wal-Mart’s product in Wal-Mart’s warehouse. So it can save a cost.
Forthe result, Wal-Mart can expect 100% order fulfillingmarket in trading. Wal-Mart’s be Retailer of the Decade in 1989 by savecosts estimate at 1.7% of its cost of sales. After that, the company becamemore active.
Strategic vendor partnerships is also one of the Wal-Mart’sstrategy. Strategy to find supplier who can give the best price and get demand.Then Wal-Mart’s be partnerships with the vendor and promise to buy in long-termwith best price. Furthermore, Wal-Mart’s improve their material flow by createda network to align the global suppliers, warehouses, and retail stores in oneorganisation.
“Wal-Mart’s whole thing was collaboration,” Crowell said. “That’sa big part of what made them so successful.”.
In addition, strategy Wal-Mart’sbe success in supply chain is by cross docking as inventory tactic. Cross docking is means as the ways in logisticsmanagement to not waste the time to unloading the material from an incomingtrailer trick and straight to loading the materials into outbound trucks with asmall or no storage in between the transfer process. This process helps tochange the type of transport, this helping to sort out goods intended fordifferent locations. It is also a good ways to combine from two or moredifferent place into one transport container or in the same place. Thisstrategy can save time and money. Cross docking strategy help Wal-Mart tostreamline the supply chain from the started point until the final point. Crossdocking has reduced the operating cost, handling cost and maximum reduce theinventory storage cost.
It has also help Walt-Mart’s to deliver the productfaster to their customer. So the customer will get their product fast and ontime. Technology is athing that make our work ease. It makes process and operation being easy in an organisation.So in this case we must know what is the innovation that Wal-Mart’s do toimprove their operation and process? Wal-Mart’s use technology to cut cost by make technology become aninnovator in the way stores track inventory and restock their shelves.Thechnologyis the key for Wal-Mart’s to be the larger retailer, Wal-Mart have the larger informationtechnology. The company was a pioneer in bar code scanning and analyzing pointof sale information which was housed in its massive data warehouses. Wal-Martlaunched its own satellite network.
Strategic systems such as Retail-Link, 2 spearheaded by industry luminary Kevin Turner,enabled data integration and sharing between Wal-Mart and its suppliers. Thesesystems also enabled the concept of vendor managed inventory. However, notevery technology project in which the company invests significant resourcesturns to gold as Wal-Mart encountered missteps with its RFID technologyinitiative. Despite the less than stellar ROI and supplier adoption rate ofRFID, that effort demonstrated the willingness of its technology to push theenvelope in exerting tremendous changes on business processes not only withinWal-Mart but throughout the industry. Storm clouds are on the horizon asconsumer preferences change from “big-box” brick and mortar stores to onlineretail platforms such as Amazon.
To counter Amazon’s online dominance, thecompany must continue to invest in its digital know-how. Adding newcapabilities to its online presences and refreshing its digital properties willbe a requirement in order to keep pace in a shifting industry dynamic.Technologymakes, Wal-Mart continues to focus on innovative system and process to maketheir company be more better in its supply chain and achieve greaterefficiency. In the past, Wal-Mart’s inventory operation and supply definitelyprovides valuable learning points that businesses can take and apply to theirown operations.
Even Army Col. Vernon L. Beatty, who commanded the DefenseDistribution Depot in Kuwait, spent a year with Wal-Mart as part of themilitary’s Training With Industry program.Inmy opinion, our local retailer not suitable to follow Wal-Mart’s strategy.
Thisis because have many factor of problem that make our local retailer can’tfollow Wal-Mart’s strategy. Research conducted by Ali et al (2008) on thelogistics industry in Malaysia found several constraints that limit thelogistics development in this country. Among the constraints were lack offollow up actions after certain meetings or issues raised, lack ofsophisticated management techniques among the supply chain companies, problemsin information technology (IT) system with regard to the costly EDI pricing andcharges due to in transparent marks-up by freight forwarders and overallperformance and functionality of the system, lack of skilled and trainedmanpower, no single established source of logistics data and informationincluding lack of information of the industry players, facilities, services andcapabilities of the sectors, lack of research and development of the industry,lack of regulatory forms to facilitate the industry, lack of dissemination ofinformation with regard to the development and expansion of the logisticsindustry.
This information was important because through the informationobtained, the practitioners could then suggest on how they could participate inthe new business opportunities (Thong, 2007). Also, one of the main 3problems faced by the localservice providers is the inability to participate in international logisticsactivities as a result of limited IT linkage, overseas corporate network andcapital investment (Ibid). Logistics plays a vital role in economic systems andin everyday life. Given the significant cut back in manufacturing and labourcosts, reducing logistics costs has become an increasingly important task formanagers. On account of the complex supply chains and globalization, the costof logistics operations could comprise as much as half the value of generalcommodities. However, technological development offers new cost cuttingopportunities (Dianwei 2006, 591). According to Bowersox, Rodrigues (2005), global logistics costs in the year 2002 were estimated at USD6,732 billion, and corresponded to 13.
8 per cent of the world’s GDP in 2002(Bowersox et al. 2005, 9-10) .The level of logistics costs is heavily dependenton the industry, but in general tends to be high in logistics-intensive operationssuch as food, metal, chemical and paper manufacturing (Memedovic et al. 2008;Farahani, Asgari & Davarzani 2009, cited in Rantasila and Ojala 2009)Inconclusion, after Wal-Mart founded and opened in 1962, it was growntremendously. Until it become a good giant company in logistic. This companyhave their own strategy to be a good company in logistic. Wal-Mart’s companyhas uses a good pricing strategies to keep profit increasing and to keep consumerswalking in their door.
By makesure their three important strategies successfully, Wal-Mart has become from asingle store until be a biggest company and the biggest retailer in this world.Wal-Mart was create an operational model from the lowest cost which willincrease the margin of profit on the financial statements, this is the costmanagement strategy by Wal-Mart .Inaddition, the growth management strategy had expanded radically around thedistribution center and dragged Wal-Martinto the right direction of investment. Lastly, by creates a great workplaceenvironment which full of self-improvement, respects and competition and allassociates to work more efficiency also the one people management strategy.
Italso for created an opportunity for people to build-up experience from thelow-rank position to the high-rank position. Furthermore, strong management inthese three plans had changed Wal-Mart be the great company in the world withthe highest of employees worldwide and had also give advantages to millions ofpeople around the world by change unnecessary cost into low-cost products