Research Operation Report

Supply chain management

In Wal-Mart Industry












Name: Liu Gen
Course: BMO6508 Operation Management
Tutor: Dr. Nick Billington
Due Date: 24/03/2014
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2013 2nd semester

EXECUTIVE SUMMARY

This report analysis the very important issue of business management that WAL-MARTs supply
chain management. Takes WAL-MART as the object of study, Supply chain management is an
important element in the management of the company or industry. Supply chain management is a
new level service to customer, to meet certain conditions, in order to make sure minimum the whole
supply chain system cost. Supply chain management, including planning, procurement,
manufacturing, delivery and return. The huge pressure of modern business environment, not just
selling products to customers, but also to provide satisfactory service for them, to get enhance
customer satisfaction. Kotler said: "the customer is God, without them, all enterprises cannot survive
must focus on customer retention and customer satisfaction." In order to get more customers,
synergistic reaction in domestic and overseas market will unavoidable inevitably prompt and flexible
requirements of enterprises on the supply chain and customer needs. Changes in supply chain
environment and building a happy market becomes the development trend of modern enterprises in
supply chain. The case study as the following shows, a successful supply chain management strategy
may result in lower cost of product, improve competitive prices and provide low price for
consumers.
In the past decade, WAL-MART has grown into the worlds largest retails, WAL-MART
transformation from a regional retailer to global power is the effective management of change of its
supply chain.
WAL-MART will focus on the development of cost structure, so it can offer low prices of daily. The
main factor to achieve is to enable the company to add stocks and inventory strategy, which relies on
known as the core way cross docking logistics technology. The use of cross docking, the product is
routed from the supplier to WAL-MART's warehouse, that transported to the store does not take a
long time inventory. This method reduces the WAL-MART cost significantly. WAL-MART passes
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these savings on offer very competitive prices to their customers. WAL-MART has concentrate on
the development of a comprehensive structured and advanced supply chain management strategy, in
order to develop and strengthen the competitive advantage.






























EXECUTIVE SUMMARY2
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TABLE OF CONTENTS..3

1.0 INTRODUCTION.4

2.0 WHY SUPPLY CHIAN MANAGEMENT IS IMPORTANT4

3.0 APPLICATION.5

3.1 BENEFITS OF EFFICIENT SUPPLY CHAIN MANAGEMENT...5

3.2 EMPHASIZES THE CORE COMPETITIVENESS OF ENTERPRISES..6

3.3 METHODS AND TECHNOLOGICAL ...7

4.0 CONCLUSION...8

REFERENCES.....9

















1.0 INTRODUCTION

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In the development of technology and the world economy, transnational management is becoming
more and more common. In manufacturing, product design may be in Japan and procurement of raw
materials in the China or Brazil, parts and components production can be done at the same time, In
Taiwan or Indonesia, and then in the China assembly, finally sold all over the world. Before the
products enter the market, company manufacturing quite a number of related products, because of
the different position, the production level and management ability, so as to form a complex network
of supply chain production.
WAL-MART is the worlds largest retailer, more than 4000 stores, 6000 stores in American and
international. Key to the success of retailers is its "everyday low price" or "daily specials" strategy, in
which we provide products at the lowest prices on the market. Even so, the company has maintained
its gross margin at around 27% as an efficient supply chain and strong bargaining power by.
WAL-MART is the modern supply chain management has a strong focus on supplier partnerships,
pioneer distribution and inventory management. Retailers use a variety of strategies, such as cross
docking, vendor managed inventory and the RFID (radio frequency identification), in order to
maintain control over the company's purchase, transport and storage of goods. This allows it to buy
goods at low prices, reduce intermediate storage and inventory holding cost.










2.0 WHY SUPPLY CHAIN MANAGEMEN IS IMPORTANT

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Supply chain management is an important factor in operational efficiency. Supply chain management
can be applied to the customer's satisfaction and success of the company, in social situations,
including medical, disaster relief, all kinds of emergencies; evolution of culture, it can help people
improve their quality of life. As the supply chain management organization skills and knowledge to
take a key role in action, the employer and the employee of supply chain management. Supply chain
management is the core of company management and successful for the following reasons: Supply
chain management is essential in the range of global.
Basically, the world is a big supply chain. The main issues involved in supply chain management,
including the rapid development and strategic partnerships multinational, global expansion and
procurement; oil prices and environmental concerns wave, these problems greatly affect the business
strategy and the bottom line. As these trends come out, supply chain management becomes the
world's most important business principles.


3.0 HOW TO IMPROVE SUPPLY CHAIN MANAGEMENT

Wal-Mart has been become the market leader, because its efficient of suppliers, manufacturing,
warehousing, distribution to stores. The four main components of its supply chain strategy are
vendor partnerships, cross-docking and distribution management, technology, and integration.
Wal-Mart's supply chain strategic is looking for products from the vendor who is in a most favorable
price position; ensure that they are able to meet the demand. Wal-Mart to establish a partnership with
most of the manufacturers, giving them in exchange for the lowest possible price and a lot of buying
long-term potential .
Then suppliers of the product shipped to cross-docking, and then transported to the Wal-Mart stores.
Cross- docking, distribution and transportation management to maintain inventory well and reduce
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transportation costs, transit time and eliminate inefficiencies.
Technology makes the Wal-Mart's supply chain successful, is the foundation of its supply chain.
Wal-Mart has a private company that is the world's largest information technology infrastructure
service for management department. The most advanced of its technology and network information
to allow Wal-Mart to analysis the country's needs and forecasting stocks and inventory levels, then
establishment of efficient transport routes. Wal-Mart also has managed customer relationships and
service response logistics system.





3.1 SUCCESSFUL SUPPLY CHAIN MANAGEMENT BRING BENEFITS

Wal-Marts supply chain management strategy operate mature with the market and other department
has provided number of long-term competitive advantages for company, including makes product
costs and inventory holding costs, makes more choice and products for customer, and highly
competitive pricing for the consumer, makes customer use less money to buy more goods. This
strategy has helped Wal-Mart become leader strength in a competitive market of global. As
technology developing, Wal-Mart keeps going to concentrate on innovative processes and systems,
in order to improve its supply chain and makes greater efficiency.





3.2 EMPHASIZES THE CORE COMPETITIVENESS OF ENTERPRISES

In supply chain management, an important concept is that enterprise and core business
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competitiveness, and its position in the supply chain, the non-core business outsourcing. Because of
the limited resources, enterprises must in every kind of industries and fields to gain a competitive
advantage is very difficult, so it must focus resources on one of your area of expertise, namely the
core business. In this supply chain positioning, become an irreplaceable role in supply chain.
WAL-MART as a chain of retail enterprises, high level of service and based on customer network is
its core competitiveness. WAL-MART beyond its own "commercial retail enterprise identity set up
efficient supply chain. First of all, WAL-MART is not only a home waiting for the upstream
manufacturers supply, tissue distribution of purely commercial enterprises, but also directly involved
in the upstream manufacturers production plan, and the upstream manufacturers to discuss and
develop product plan, delivery cycle, and even help the upstream manufacturers in new product
development and quality control work. This means that WAL-MART can always the earliest and
most want to see the goods on the market, while other retailers are waiting for the supplier's product
catalo or negotiate the contract, WAL-MART has started selling this product on the shelf. Secondly,
WAL-MART customer service can timely customer feedback to the manufacturer, and help
companies improve the quality of products. In the past, commercial retail enterprises just as a
middleman, delivering the products from manufacturers to consumers, which in turn will consumer
advice by telephone or written feedback to suppliers. It seems that WAL-MART did not one's own
knack in, but the results are very different. The reason is that, WAL-MART will be able to participate
in the production planning and control of the upstream manufacturers to, thus the opinions of
consumers quickly reflected in the production, rather than simply as a setter or microphone.
The WAL-MART way is not complex, but most commercial enterprises is more of a "bridge" of
consumers and manufacturers, lack the ability to participate in and control of production. That is to
say, WAL-MART model has crossed the enterprise internal management and external
"communication" category, but formed with itself as the main chain, link manufacturers and
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customers of the global supply chain. A supply chain is guaranteed through advanced information
technology, which is a set of advanced supply chain management system. Leave the unified,
centralized, real-time dug in supply chain management system ", direct control of production" of
WAL-MART and a high standard of "customer service" will be impossible.

3.3 METHODS AND TECHNOLOGICAL

The overall goal of SCM is to optimize supply chains in an attempt to provide more accurate and
time sensitive information that can be used to improve process times and cut costs. Supply chains
have been around for decades and a constantly being improved. The newest opportunity for
improvement is the introduction of radio frequency identification (RFID) tags. RFID technology
will provide real-time information that will allow manufacturers to get better readings of customers
and markets thus further improving supply chains. RFID will help retailers provide the right
products at the right places at the right times. Ultimately, maximizing sales and profits

Wal-Mart has been leading the charge with RFID technology. Having the largest retailer adopt and
begin to use RFID technology has given strong backing to the technology and will only further and
quicken the expansion of RFID. They have begun requiring all their major suppliers to implement
RFID technology on all products supplied to Wal-Mart.

One example of what Wal-Mart has done with SCM and its suppliers is that of its relationship with
Proctor & Gamble. These two built a software system that hooked Proctor & Gamble up to
Wal-Marts distribution centers. This system would then monitor supply levels and when products
run low, automatic alerts are sent out to require the shipment of more products to that distribution
center. Wal-Mart has taken this as far as going to the individual store locations. The shelves are
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monitored in real time via satellite links that send inventory messages whenever Proctor & Gamble
products are scanned at a register. This allows Proctor & Gamble to be fully aware of up to the
minute product inventories at the actual store locations and ship additional products as necessary.
This concept is a huge step in making SCM as efficient as it can be.




4.0 CONCLUSION

In conclusion, today's market is a buyer's market; today's market competition is also increasingly
fierce global market. Enterprises want to survive in the market, in addition to efforts to improve the
quality of the products, but also for its activities in the market to take a more advanced, more
efficient management mode of operation. Supply chain management is to appear in this reality, many
scholars on the supply chain management gives the definition, but more in many definitions of
comprehensive should be this: supply chain management is to market and customer demand as the
guidance, the core enterprise under the coordination, and win-win principle, to improve
competitiveness, market share, customer satisfaction, profit maximization as the goal, to
collaborative commerce, collaborative competition for commercial operation mode, through the use
of modern enterprise management technology, information technology and integration technology, to
achieve the effective planning and control of the whole supply chain information flow, logistics,
capital flow, business flow and value flow, thus the customer, suppliers, manufacturers, vendors,
service providers and other partners to form a complete network structure, strategic alliance to form a
very competitive. Say simply, supply chain management is to optimize and improve the supply chain
activities, its object is between supply chain organizations and their "flow", the application of the
method is integrated and collaborative; goal is to meet customer needs, and ultimately improve the
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overall competitiveness of the supply chain. The essence of supply chain management is the
value-added supply chain deeply, the correct product customer required (Right Product) can be at the
right time (Right time), in the right quantities (Right Quantity), the right quality (Right Quality) and
the correct state (Right Status) to the right place (Right Place) - "6R", and the minimum total cost.
We also hope every company should do the supply chain management by sustainability ways.





























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