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Supply Chain Strategy Of Walmart

Satisfactory Essays
Wal-Mart is a world renown company that is famous for its low prices and huge selection of products and services. Wal-Mart is known as the one-stop shop where families can shop for groceries, clothes, house-hold appliances, and even car parts, all under one roof. It is also known for putting smaller, local stores out of business whenever they move to a new town, because these businesses cannot compete with Wal-Mart’s low prices. But how is Wal-Mart able to offer such low prices and still make a profit? What sets them apart from other retailers? And what technologies are they using that allows their business model to be successful? These questions and more will be answered as we take a look at Wal-Mart’s supply chain strategy. Wal-Mart’s business model might appear to be only focused on reducing costs and improving efficiencies, and the customer isn’t as important to the company. It is actually quite the opposite, Wal-Mart’s supply chain is very customer focused, which is what gives them an advantage over their competitors. Wal-Mart focus’s on the customer and employs a pull strategy, where the demand from customers is the basis for production for Wal-Mart suppliers. This gives them a unique production method, in that they do not produce based on traditional methods rather it is based on short-term forecasts of demand generated by their customers. This allows them to not only keep stock costs low, it also allows them to track demand of individual products. This results in lowered costs of advertising and promoting products because they are able to accurately track demand and can adjust their advertising based on what is selling and what is not resulting in more accurate marketing efforts. Wal-Mart employs very effective upstrea... ... middle of paper ... ...ays. “Wal-Mart is able to maintain lower levels of inventory and still meet customer demand. These lower inventory levels result in either a reduced floor plan with lower carrying costs and lower interest expense – or a greater diversity of products on the store shelves.”3 Both of these result in a significant advantage over its competitors when it comes to operations. Due to Wal-Mart’s superior ability to order inventory on demand, they are in a position to also meet customer demand better than their competitors. This is especially true with fad products, because they are only popular for a limited amount of time when they become unpopular they can leave massive amounts of inventory that nobody wants to purchase. Due to Wal-Mart’s superior supply chain and their technology they are better able to avoid carrying an oversupply of fad items, and regular items as well.
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