Wal Mart 's Business Optimization Model

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Student’s Name: Professor’s Name: Course Code: Date: SCM 4385: Optimization Tools Wal-Mart’s Background The retail industry is one of the most promising industries, as more retailers continue venturing into the global market. According to Blanchard, Comm, and Mathaisel, Wal-Mart is the largest retailer in the world as a result of its efficient supply chain (166). Wal-Mart deals with groceries, apparel, and music among other retailer goods. Since Wal-Mart is a giant retailer, it deals with products manufactured or processed by other business. On the same note, the e-commerce is becoming an attractive avenue for retailers as they continue expanding their operations. The online platform provides a level ground for retailers to compete for the global market. Wal-Mart is one of the multinational companies that have taken e-commerce seriously. This paper examines Wal-Mart’s business optimization model. In particular, the paper analyses Wal-Mart’s optimization tool in improving its supply chain and ensuring the availability of the products in its stores across the globe. The thought behind understanding the products that Wal-Mart deals with is to understand the importance of its optimization model. Wal-Mart’s Competitors Wal-Mart has to compete with other multinational retailers at the global front. In particular, Wal-Mart competes with other well-established online retailers such as Amazon. For online competitors, Wal-Mart differentiates itself by optimizing its supply chain and ensures that consumers can access the goods they need conveniently and promptly. Wal-Mart’s idea is to collaborate with its vendors by allowing the providers to manage their products in its warehouses. The program, known as Vendor-Managed Inventory (VMI)... ... middle of paper ... ...ory. Working with a relatively lower inventory has given Wal-Mart a competitive edge since the company can divert its capital to other areas such as expansion. Thirdly, the vendor-managed inventory has given Wal-Mart an opportunity to cut its transportation costs (Basker 179). In other words, the arrangement has transferred the cost of transportation to the vendors. It is worth noting that vendors tend to deal with several stores. Therefore, transporting goods meant for Wal-Mart stores together with products destined to other stores cuts down the transport costs since the vendor can use a single truck or van. With reduced operation costs, Wal-Mart has managed to increase its profit margin while at the same time reduce its functioning capital. The financial performance of the giant retailer provides enough evidence of greater profitability. Customer’s Satisfaction

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