Supply Chain Management at Wal – Mart Case Solution
Threat of new entrants
Departmental stores have the advantage of getting all the wholesale items at their retail stores, however this action acquires intensive investment to the business. Moreover, at workplace, efficiency of logistics, suppliers and proper distribution channels are required which are heavily equipped with the advanced technologies. Nonetheless, multination companies such as Walmart, Cisco and Albertson are competing in the industry with the huge capital investment. New competitors, thus, would have to analyze the severe industry situation. It is said that the threat of new rivals is difficult and is assumed to be low.
Threat of substitute
The industry is not only accounted with the departmental stores retailer, but it possesses major retailers and internet retailers as well. However, Walmart and Costco being international retailers are known as the biggest retailers globally. Furthermore, customers are reluctant of purchasing online, however major retailers are present near the customers’ homes as a result, the threat of substitutes is high in the industry.
Communication Network at Wal – Mart
Walmart possesses information of its suppliers, distribution centers of Walmart and every point of the salesthrough POS (Point of Sale) implementation. As a result, this has led Walmart towards cross docking of the products at every step of the sales made.
Walmart comprises of such networking communicationbymanaging its satellite that provides insights of POS to its approximately 4000 suppliers.
Walmart has the benefit of managing its inventory through collaboration with its suppliers. Its inventorycontrol policies that comprise identifying reorder quantities, order points of optimum level, safety stock levels and stocks at the point of sales of Walmart’s purchases and distribution.
Information Sharing Risk
Although Walmart has collaborative approaches with its key suppliers, however, the sharing of information in order to maintain and supply inventory may be at risk for Walmart.
Moreover, Walmart has concise information sharing approach to the maximum level in which supplier is required. However, it should not include unnecessary information to be shared with its suppliers.
For regression analysis, the net sales of Walmart at the year 2006 has been taken as dependent variable (DV) and its sales growth is considered as independent variable (IV). Hence, the results analyzed through the Analysis of Variance depicted that F stats is significant as its value is 1.97 (F<2). Multiple R square is 0.995 and adjusted R square is used to define variables deviation is 0.99. Moreover, Walmart has increased its profit margin throughout from 2000 to 2005 and after that its profit margin started to decline (Exhibit 1).
Real – Time Information
Walmart usesreal time information system which is why it came up with push strategy. Exhibit 2 demonstrates the retail items of Walmartby 2006. In 1990s,retail link data was established by Walmart, and it helped to develop civilian database. Retail link data was shared with the suppliers of the Walmart, and this provided the suppliers to know their sales as well as, anticipation acquired wouldfurther help them to manufacture the products.
Vendor Managed Inventory (VMI)
Vendor Managed inventory (VMI) was adopted by Walmart that involved the supplier to process the inventory to the distribution centre of the company in order to manage the level of inventory.VMI implementation was mainly brought by Walmart to provide replenishment of the products. Moreover, lead time saving is also present through information sharing to vendor which prepares the truck’s arrival of Walmart for distribution, last minute changes or defected goods.
Radio Frequency Identification (RFID)
Implementation of the Radio Frequency Identification (RFID) at Walmart was one of the major technology adoptions for the company. It was an automated data collection using electronics. RFID is not used as scanner, as it is used to read. Through RFID, many tags can be read to identify. Tags can be read through if they are are on pallets, product or stuck on exterior case………………
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