Wal-Mart Stores, Inc. is a renowned retail goods superstore that sits atop the Fortune list at number one. It would be very difficult to find an individual who is unaware of Walmart’s position as the largest brick-and-mortar retail chain in the world. The company has thrived over the past few years and is continuing to grow by effectively managing its store operations and distribution strategies. One of the major contributors to the business consistently meeting market expectations is directly attributable to their management approach. Walmart has revolutionized the way retail companies manage their supply chains in more ways than one. But, perhaps the most revolutionary was the practice of unprecedented coordination with suppliers (Chekwa, The gross profit during the year 2015 was actually a $10 billion increase from their fiscal year 2014 (University of San Francisco, 2015). Over the past six years, Walmart continues to generate these types of numbers, representing increases in growth, time and time again. The company’s income was generated by more than 4,500 stores in the United States alone which is supported by a supply chain that moved from number 14 to number 13 on research and analyst company Gartner’s annual ranking (University of San Francisco, 2015). Many business professionals have analyzed and interpreted Walmart’s supply chain management approaches, making it apparent which elements of their strategy have proven effective. These major supply chain components that have shaped Walmart’s success over recent years are their buyer bargaining power (one of Porter’s Five Forces), focus on the overall customer experience, and investments in emerging technologies along with the implementation of these technologies in their business Over the past couple of years, Walmart has boosted its e-commerce operations and bringing in a large portion of revenues from online sales (Aronow & Burkett, 2015, p. 20). Gartner Inc. describes Walmart as a “supply chain pioneer” that has continued its push into e-commerce and has expanded investment in multichannel drive-thru pick-up centers and a ‘click-and-collect’ grocery service offered at some of its stores (Aronow & Burkett, 2015, p. 20). One of the components of Walmart’s supply chain in which their success is heavily relied on is the continuous improvement of their supply management as a whole, particularly within their e-commerce division. According to an article on the website logistics company Cerasis, “Not only has Walmart excelled over the decades in traditional supply chain management but… is also focused on continuous improvement by investing more into emerging technologies to capture more of the e-commerce market…” (University of San Francisco, 2015). A concept that our class had discussed time and time again throughout the semester was the concept of continuous improvement. Any given organization or business is constantly focused on continuously improving their business for the better. For Walmart, they believe that the anticipatory action of investing in emerging technologies will help differentiate themselves from the competition
As seen in Exhibit F, Best Buy has 1,055 main locations that consist of their standard large format stores, and 406 Best Buy Mobile locations that focus on mobile device sales. To supply these locations, Best Buy has 23 distribution centers located throughout the country. Comparatively, Wal-Mart has 4,625 stores stocked by 158 strategically located distribution centers. This puts Wal-Mart at a huge advantage in a couple of ways. Not only is Wal-Mart much more likely to have a store nearby any given customer, they are also better equipped to keep its products in stock at all times. This means more customers visit, and due to stocking, more customers can make the purchase they want. On an international level, Wal-Mart also exceeds Best Buy’s few hundred stores with 6,308 stores in over 11 countries. This furthers Wal-Mart’s availability to customers and puts them at an advantage over Best Buy. Additionally, the increased scale of Wal-Mart’s retail and distributive operations make them extremely competitive on pricing, a major aspect of purchase decisions for high-ticket items like consumer electronics.
In the United States and all over the world, the entry and operations of big retailers like Wal-Mart into a small town sparks great controversy within the community. The fact that people contemplate on the fact that the policies and actions of Wal-Mart are destructive to a small town’s economy is not new. Most small town’s economies are run by subsistence and self-reliant traders. With time, the traders embrace the division of labor and specialization of skills in accordance with the trade, production and manufacturing needs of the community. In such a market, a simple move like a decision by the producers to sell directly to the consumers may spark
Wal-Mart’s competitive environment is quite unique. Although Wal-Mart’s primary competition comes from general merchandise retailers, warehouse clubs and supermarket retailers also present competitive pressure. The discount retail industry is substantial in size and is constantly experiencing growth and change. The top competitors compete both nationally and internationally. There is extensive competition on pricing, location, store size, layout and environment, merchandise mix, technology and innovation, and overall image. The market is definitely characterized by economies of scale. Top retailers vertically integrate many functions, such as purchasing, manufacturing, advertising, and shipping. Large scale functions such as these give the top competitors a significant cost advantage over small-scale competition.
In order to succeed, managers have to realize that they cannot do it alone and they must work together on a daily basis with the whole organizations in their supply chains. Because supply chain management involves all functions within an organization, managers need to know what a supply chain is, why it is important, and the impact of supply chain management on the success and profitability of their organization. Today, Wal-Mart topped the list of the America’s biggest companies on the Fortune 500 list, “with sales of almost $345 billion — more than a quarter of a trillion dollars” (Forbs). Wal-Mart’s supply chain management is becoming recognized as a core competitive strategy.
Understanding the changes in the market and the growth of e-commerce prompted the organization to invest heavily in its supply chain management forecasting and management system. The development of a network of distribution centers and Direct Fulfillment Centers to position the company to capitalize on the growing e-commerce market indicate a strong understanding of the need to adapt to changing market forces. The company spent over $300 million on new distribution center facilities in 2014 alone, and continues to expand to maintain efficiency in product movement (Cassidy,
According to Greenspan (2016) Walmart’s tactical path is founded on the firm’s responses to the Five Forces in its industry environment. The company has by and large prospered in attaining the top position in the retail industry. Despite the foregoing, the external factors in the industry levy pressure that ought to be dealt with; that is, the firm needs to put in place additional strategies that take care of some aspects of the bargaining power of shoppers and suppliers. Further, potent strategies are required for Walmart to endure the threats of alternates and new entrants (Greenspan, 2016). That being said, please find below Porter’s Five Forces analyses in respect of Walmart.
Roberts, Bryan. Berg, Natalie. Walmart: Key Insights and Practical Lessons from the World's Largest Retailer. Kogan Page Limited, 2012. Print.
Walmart is a retail giant that just about everyone in America has purchased something from them. It is a one stop shop for anything that a person could ever need. Walmart stores can be found anywhere in fact most people are less than an hour drive away from a Walmart store. Walmart’s success has put many companies out of business. The chains success is primarily from low prices and using an information technology system to meet customer demands giving them a competitive advantage. Walmart’s first major use of information technology came in 1975 when the company leased an IBM computer system to track inventory in warehouses and distribution centers. Computers have come a very long way since this time and are used almost everywhere. But in 1975 this was cutting edge technology and gave Walmart the competitive advantage over other retailers. Another thing that Walmart used to be revolutionary in their supply chain was the use of scanning barcodes in 1983. Before barcodes objects had to be read by a skilled cashier. With barcodes all that was needed was a quick scan and the computer would do all the work. This greatly sped up checkout time and made tracking inventory and data collection much faster and easier for both customers and the employees. Since this time it has become an industry standard for products.
The world is constantly changing every day. With new businesses popping up all over the world, though there are also old businesses that are still in operations, and leading the market. One of the stores that is leading the market today is an old business that was founded in 1962, in Rogers, Arkansas, the store is known as Wal-Mart (Wal-Mart, Inc., “History”, 2014). Walmart’s history, competiveness, employees, and saving money for the average person is what makes it unique (Wal-Mart, Inc., “Sam Walton”, 2014). Though it leads others wanting to compete to beat Wal-Mart prices and gain there customer bases.
In 1945, Sam Walton opened his first variety store and in 1962, he opened his first Wal-Mart Discount City in Rogers, Arkansas. Now, Wal-Mart is expected to exceed “$200 billion a year in sales by 2002 (with current figures of) more than 100 million shoppers a week…(and as of 1999) it became the first (private-sector) company in the world to have more than one million employees.” Why? One reason is that Wal-Mart has continued “to lead the way in adopting cutting-edge technology to track how people shop, and to buy and deliver goods more efficiently and cheaply than any other rival.” Many examples exist throughout Wal-Mart’s history including its use of networks, satellite communication, UPC/barcode adoption and more. Much of the technology that was utilized helped Sam Walton more efficiently track what he originally noted on yellow legal pads. From the very beginning, he wanted to know what the customers purchased, what inventory was selling and what stock was not selling. Wal-Mart now “tracks on an almost instantaneous basis the ordering, shipment, and delivery of literally every item it sells, and that it requires its suppliers to hook into the system, enabling it to track most goods every step of the way from the time they’re made and packaged in the factories to when they’re carried out store doors by shoppers.” “Wal-Mart operates the world’s most powerful corporate computing system, with a capacity (as of late 1999) of more than 100 terabytes of data (A terabyte is 1,000 gigabytes, or roughly the equivalent of 250 million pages of text.).
The financial performance of Wal-Mart continues to be strong. It delivered another record year in 2008 as total net sales increased 8.6 percent to $375 billion. Yet, earnings growth rates and same store sales have slowed. And, the company faces a number of challenges to its operating procedures, reputation and growth prospects. Given the company’s stated objectives of “growing operating income faster than sales” and increasing shareholder value, the strategies we recommend will directly affect the company’s ability to overcome present challenges and meet these primary financial objectives.
Wal-Mart is known to beone of the best supply chain companies in the world. Throughout the years Wal-Mart has adapted strategies that keep up to their name. Unlike many retailers, Wal-Mart purchases goods directly from manufacturers, skipping a few steps of the supply chain cycle. Buyers use advanced negotiation skills to make sure they are receiving the best price on purchases. Wal-Mart also has their own trucks picking up from warehouses, reducing the price significantly on transportation. Long term relationships with vendors are extremely emphasized to understand prices and cost structure. These practices build Wal-Mart to its name and keeps low prices for retail customers all over the world. Supply Chain studies have shown that in 1998, Wal-Mart would fill up stock in 2 days compared to their competitors which would complete it in 5. Part of the reason Wal-Mart would replenish so
This essay describes how Costco has undergone evolutionary changes from its inception to present through its value chain model to become a success story. For example, in its distribution system, Costco utilizes the cross-docking technology to help in the conveyance of products in the different locations. This ensures that there are no product delays in the respective markets (Guo, 2016). Accordingly, Costco can attract more customers who prefer the warehousing services provided by the company.
From the manufacturers’ warehouse to the shelves, the business must orchestrate a symphony of the right products to the right places at the right times. Walmart serves customers and members more than 200 million times per week in retail outlets, online and on mobile devices. The company is able to offer a vast range of products at the lowest costs in the shortest possible time (Chandran, 2001). The main reason for this incredible growth of Walmart is because its distribution centers are highly automated.
(Slack. et al, 2013) The roles of technology and talents are involved with continuous improvement. For the technology role, “If you think expensive technology changes are the gatekeepers for continuous improvement, think again”(Keller, 2011). Continuous improvement focuses mainly on quality, cost, delivery, and services in business processes. After that identify and improve the processes that contribute these factors. There is no doubt that generally technology cause the occurrence of continuous improvement; however, the company can improve these processes without absolute needed of technology. The company could improve the business processes with continuous improvement tools and techniques. Technology role is essential in the processes such as production, design, and information system (Keller, 2011). On the other hand, talent appears to be more essential than technology. Gonsalvez (2014) claims that although technology and talent are the key factors in the quest of continuous improvement, technologies grow in the faster pace than companies able to adapted and perceived those new technologies. The knowledge of supply chain from talent emerges to be more important. Talent is needed to coordinate technology and knowledge along with effectively operates this combination in the company (Gonsalvez, 2014). To be talent in supply chain management is required more than supply chain knowledge “ modern-day supply chain management is about much more than coordinating the physical movement of goods from one point to another. It encompasses procurement expertise, supplier management, knowledge of international trade trends and regulations, information-technology prowess and customer-relationship management, to name but a few key aspects of the discipline ” (Bowman, 2013). Also there are demanding skill that needed to be in supply chain management role. Supply chain management is not just math. This