To begin with, Wal-Mart’s overall business strategy is composed of goals, core activities, and product-market focus (Heizer & Render, 2011). The goals of the company are to dominate markets, utilize low cost systems, promote high growth, and to do it the Wal-Mart way (Krajewski et al., 2009).
The core activities of the organization are to integrate logistics, manage them intensely, and to tailor them according to the local situation. The product-market focuses entails provision of branded general merchandise, value oriented customers, develop easier markets first, and to work from regional hubs. All these contribute to the value proposition of the organization (Stevenson, 2008).
The supply chain strategy of the organization entails purchasing the goods and materials that the company uses for the lowest prices available in the market to them to retail at customer friendly prices. The organization is known to bypass intermediaries and middle men and to negotiate intensively during purchase of goods, services and materials (Heizer & Render, 2011).
The organization is also known to prefer local manufactures as well as preferring the manufacturers that demonstrated transparent cost structures. The organization then establishes long term relationships with these types of manufacturers. The organization’s logistics are among the most efficient in large businesses today (Stevenson, 2008).
Distribution centers are served by a fleet of not less than 3000 trucks that are owned by the organization. These are for the purpose of transporting goods to the Wal-Mart outlets twice every week due to the high flow of goods from the organization’s individual stores. These are supervised by a coordinator.
The organization employs cross-docking for the purpose of managing the acquisition of goods from their suppliers. In addition, decisions concerning merchandising, pricing, and promotions have been decentralized and left to the market forces; this is managed by stores, distribution centers, and suppliers (Krajewski et al., 2009).
The organization has instilled information technology and communication systems to aid their inventory management and set up its own satellite communication system in the 1980’s. The satellite connected the organization’s numerous stores as well as the organization’s suppliers to the organization.
This was done for the purpose of enabling the organization to attend to the individual needs of individual stores in a timely manner and to enable the workers to update themselves on all aspects of the inventory in stores, deliveries, and back up merchandise at the organization’s distribution points (Heizer & Render, 2011).
The organization’s supply chain enables the organization to meet its goals that have been outlined earlier in this essay (Krajewski et al., 2009).
Due to establishment of an ICT system specifically for the organization, the organization has successfully managed to reinforce their relationships with their customers, employees, individual stores, and their suppliers. This has enabled the organization to have value-oriented customers, to have an integrated logistics system, ensure that their stores always have sufficient stock, and thus promote the business as reliable to its customers, employees and suppliers alike.
The organization’s ability to search and engage only the lowest cost supplier as well as having their own transportation has paid dividends as well (Stevenson, 2008). The low costs were passed on to the customers as well and this added value to the organization’s every step and process.
In addition, the ownership of its own fleet of vehicles also lowered costs and enabled prompt availability of the goods to their customers. This has resulted in the domination of markets by the organization, high growth, friendly prices for their goods and availability of these goods at all times (Krajewski et al., 2009).
In conclusion, this organization’s supply chain and overall strategy has enabled the organization to realize shorter time in inventory turnover, prompt and correct prediction of inventory levels and enabled utilization of working capital among other benefits (Stevenson, 2008). The Wal-Mart model is touted as one of the best in supply chain management owing to the benefits it has accorded the organization and given it an edge over its competitors (Heizer & Render, 2011).
Heizer, J. & Render, B. (2011). Operations Management (10th ed.). Boston, MA: Prentice-Hall.
Stevenson, J. (2008). Operations Management. London: Continuum.
Krajewski, L. Ritzman, P., & Malhotra, K. (2009). Operations Management (9th Edition). New York: Academic Publishers.
Supply Chain and Overall Strategy Of Wal-Mart