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basic concept & philosophy of supply chain management
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Supply chain management (SCM) can best be described as link or connection between suppliers, manufacturers, distributors, and customers. Supply chain doesn't only apply to materials being moved but also applies to information being moved. In practice, it's moving items from supplier to manufacture to distributer to retailer and finally reaching the customers. The Supply chain method of shipment or way of business hasn't all ways been around in fact it rose to prominence during the late stage of the 20th century. The introduction of trucks, airplanes, computers and the internet has changed everything. The Supply chain's goals are too reduce cost, save money and make forecast by determining the demand so that supply is matched. If the supply doesn't match the demand then there is waste and waste is synonymous with money lost. The importance of reducing cost through well planned strategies shouldn't be glossed over because lower costs and saved money leads to lower prices. A good Supply chain management leads to cost reduction and cost reduction leads to money saved and the money saved leads to lower prices for the consumer and lower prices are attract new customers. Before Wal-Mart, Kmart and Sears were the giants in their respective category. Wal-Mart’s electronic mindset to data collection can be attributed to the company's rise. In 1975 Wal-Mart brought in IBM 370/135 computer system to control inventory in store and delivery of items electronically (Waligum, 2007). Wal-Mart focused on the "hub and spoke" system where the hub was the distribution centers and the "spoke" was the local stores (Waligum, 2007). By putting multiple distribution centers in close proximities, Wal-Mart was able to reduce the distance of shipments an... ... middle of paper ... ...e and waste is synonymous with money lost. The importance of reducing cost through well planned strategies shouldn't be glossed over because lower costs and saved money leads to lower prices. Works Cited Michael, (2010). Bullwhips and Beer: Why Supply Chain Management is so Difficult. retrieved 2014 Feb,3, from http://www.decisioncraft.com/dmdirect/cpfr.htm Waligum, T (2007). 45 Years of Wal-Mart History: A Technology Time Line. retrieved 2014 Feb,3, from http://m.cio.com/article/147005/45_Years_of_Wal_Mart_History_A_Technology_Time_Line?mm_ref=https%3A%2F%2Fwww.google.com%2F Russel, R & Bernard w. Taylor (2006). Supply chain management- operations management- 5th edition. retrieved 2014 Feb,3, from http://is.ba.ttu.edu/faculty/ch10.ppt Song, H (2012). Tourism supply chain management. retrieved 2012 feb,03, from
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.
Operations management, by russel and Taylor, chapter 8 hr in operations management, pages 332-333, accessed on the 5th of February 2013
There are always great distribution systems behind the successful supply chain management, and the same goes to Walmart. Walmart owes much of its past success and expectations for future growth to an ability to self-distribute merchandise from a vast network of modern distribution centres served by a private truck fleet. It has a developed distribution system that allows company to satisfy customer needs quickly. In the Walmart’s distribution system, the distribution centres are the most important part. Walmart has many distribution centres located at different geographical locations within a certain distance that enable each store to receive replenishment within a day. Each store can choose a number of delivery plans. Walmart also has own warehouses which can directly supply 85 percent of the inventory, as compared 50-65 percent for competitors. Therefore, Walmart can provide replenishment quicker than competitors. It takes only 2 days while others need at least 5 days. Running own distribution centre reduce not only distribution time but also shipping costs. Each distribution centre is divided into different sections on the basis of the quantity of goods received and is managed the same way for both cases and palletized go...
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.
This is a result of the company’s ability to coordinate a complex information management and distribution network and to efficiently manage supplier relations, through the use of new technologies and the seamless flow of information. Wal-Mart’s extensive communications network connects all stores, warehouses, offices and suppliers. This enables Wal-Mart to not only provide value to its customers by offering a wide variety of goods at the lowest prices, but also to provide value to its suppliers as a large, ever present channel for the sale of goods. This channel also provides a highly efficient feedback loop on unit sales, demand and inventory, facilitating a just in time supply management system and an effective needs-based position. Through careful bargaining and sheer size, Wal-Mart has power over the suppliers, and can purchase goods cheaper than the competition.
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.).
Supply chain management is basically refers to the fundamental supply chain analysis of the organization which predominantly describes functionalities from source to the delivery point. In this process of delivery, supply chain management framework divides in four categories: In Planning the products and suppliers evaluated and selected, Sourcing pull the information process including contracting, ordering and expediting, Moving is a physical process from suppliers to end user and Paying is the financial process including payment and performance measurement.
‘Supply chain management integrates supply and demand management within and across companies. It encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, thir- party service providers, and customers’. (Web: Council for Supply Chain Management Pr...
Lean manufacturing and just-in-time processing are great business strategies that can severely stress a supply chain. The supply chain and supply chain management is a critical operations management element for any major company to succeed and remain competitive in the global market. The supply chain is one of many pieces critical to maximizing value to the end customer and requires close management to minimize external impacts. If a company is relying on another company to supply the raw materials needed for their production line, then impacts to this other company could impact their supply chain. Careful risk management is needed to optimize performance. As a company expands into global markets and global suppliers, this risk and management challenge is multiplied. The global nature of the company could impact important activities such as transportation, funds transfers, suppliers, distributors, accounting and information sharing. Disruption to the supply chain can significantly reduce revenue, cut market share, inflate costs and threaten production. A major disruption would have obvious impacts to profit, but could have additional intangible impacts to the credibility of the company if products are not delivered on time.
Supply chain management has been defined as that process that involves the management of information, materials, and all the finances that are handled within and across the entire supply chain process (Christopher, 2016). The management is usually done through out the entire supply chain management from that moment when the suppliers are involved through all the manufacturing activities, different distribution activities, and the way that the products are served to the final product consumer (Turban, et al., 2002). The process also includes all the activities that different organizations offers to their customers as after sale services for purposes perfecting their services and products towards their highly valued customers (Christopher,
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.
Since the opening of its first stores in 1962, Walmart has taken steps to revolutionize and fundamentally alter the world of retail. Sam Walton’s entrepreneurial genius took Walmart from a single store to the embodiment of modern retail. “Everyday low prices” and “Saving People Money, So they can Live Better” became the foundation for domestic business success. Accompanied by premier supply-chain management systems with one of the most expansive logistical networks, Walmart has the ability to reach the world’s consumers, for lower prices. The retail giant opened its first international store in 1991 as a joint venture in Mexico and has now emerged in twenty-six countries outside of the United States and over 6,000 international stores (Walmart,
This is the activity carried out by organizations that own production sites, and their performance has a major impact on product cost, quality, speed of delivery and delivery reliability, and flexibility [8]. As it is quite an important part of the supply chain, production needs to be measured and continuously improved. Suitable metrics for the production level are as follows. Order lead-time, the total order cycle time, called order to delivery cycle time, refers to the time elapsed in between the receipt of customer order until the delivery of finished goods to the customer. The reduction in order cycle time leads to reduction in supply chain response time, and as such is an important performance measure and source of competitive advantage [9]. It directly interacts with customer service in determining competitiveness. Range of product and services: According to [8] a plant that manufactures a broad product range is likely to introduce new products more slowly than plants with a narrow product range. Plants that can manufacture a wide range of products are likely to perform less well in the areas of value added per employee, speed and delivery reliability. This clearly suggests that product range affects supply chain performance. Effectiveness of scheduling techniques is another important measure of supply chain effectiveness. Scheduling refers to the time or date on or by which
Wal-Mart has one of the best technologically advanced and efficient supply chain systems. Another cost effective strategy in supply chain strategy is that the regional distribution centres have been located at places which has lower labour costs and transportation costs. Also a centralised data base is maintained by Wal-Mart sharing with the suppliers where in the point of sales and real time sales data are recorded so that the suppliers know when the stocks are getting over and when to supply next.
Coyle, J., Langley, C., Gibson, B., Novack, R. and Bardi, E. (2008).Supply Chain Management: A Logistics Perspective. 8th ed. Cengage Learning, p.366.