Walmart Supply Chain

As far back as I can remember I have seen Wal-Mart stores in every town that I have traveled through. Wal-Mart was founded by Sam Walton and was first established in Bentonville, Arkansas in 1962 (Wal-Mart, 2012). Now Wal-Mart has over 10,000 stores worldwide (Wal-Mart, 2012) and is ostensibly the biggest retail company globally with a whopping $444 billion annual Revenue (Bloomberg Business Week, 2013). This giant retailer presents a wide range of products such as apparel, electronics, accessories, health items, jewelry, automotive, goods, appliances and various services including mobile and financial (Walmart, 2012). In 2011 Wal-Mart achieved the recognition of "The Most Admired Multinational Company in Central America" for the third consecutive year by Estrategia & Negocios Magazine (Walmart, 2012). Wal-Mart was also recognized for its leadership in the retail industry in Central America and the creation of value chains with suppliers, assuring the lowest price for customers, while driving development and benefits for the communities where it operates (Walmart, 2012). Wal-Mart has been able to achieve respectable leadership in the retail industry because of their efficient supply chain management practices (Chandran, Wal-Mart's Supply Chain Management Practices, 2003).

Supply Chain Management

Supply chain management is the process that an organization uses to "improve the way the company finds the raw components it needs to make a product or service and deliver it to customers" (Hugos, 2011). There are five basics components of a supply chain management system production, inventory, location, transportation, and information. Production is the strategy for managing all the resources that go toward meeting customer demand for the product or service (Hugos, 2011). Inventory relates to, which items should be stock, how much should be held as raw materials, semi-finished, or finished goods (Hugos, 2011). The purpose of inventory is to act as a buffer against any uncertainties in the supply chain (Hugos, 2011). Location refers to where the facilities for production and the inventory storage should be located (Hugos, 2011). Transportation refers to, how the inventory should be moved from one supply chain location to another (Hugos, 2011). The last component is information, how much data should be collected and how much information should be shared (Hugos, 2011).

Wal-Mart Supply Chain Management Practices - Vendor Partnership

Wal-Mart's supply chain strategy has four key component: vendor partnerships, cross docking and distribution management, technology, and integration (Chandran, Wal-Mart's Supply Chain Management Practices, 2003). Wal-Mart's supply chain begins with strategic sourcing to find products at the best price form suppliers that are in a position to meet their demands (Chandran, Wal-Mart's Supply Chain Management Practices, 2003). Wal-Mart strategically partners with these vendors by offering long-term and high volume purchases in an exchange for the vendors lowest possible price (Chandran, Wal-Mart's Supply Chain Management Practices, 2003). Wal-Marts goal has always been to provide customers with the goods they want when and where they want them at the lowest possible price (Wal-Mart, 2012). Wal-Mart insures that all vendors adhere to three basic principles (United States Department of Labor, 2013). The first principle is "providing value and service to our customers by offering quality merchandise at low prices every day". The second principle "corporate dedication to a partnership between the Conpany's associates (employees), owenership and management". Finally the third principle "a commitment by Wal-Mart to the United States and the communities in which stores and distribution centers are located" (United States Department of Labor, 2013). Wal-Mart believes that the conduct of their vendor's is a reflection of them and it can affect their reputation, Wal-Mart requires that their vendor's conform to standards of business practices which are consistent with these three principles (United States Department of Labor, 2013). They take these principles very seriously and reserve the right to to make unannounced inspections of their vendor's facilities (United States Department of Labor, 2013).

Wal-Mart Supply Chain Management Practices - Cross Docking

To insure that Wal-Mart's distribution processes are efficient Wal-Mart relies on logistic technique known as cross docking. (Chandran, Wal-Mart's Supply Chain Management Practices, 2003). Cross docking is a system where the finished goods are directly picked up from the manufacturing plant of the supplier, sorted out and then directly supplied to the manufacturing customers (Kulwiec, 2004). Cross docking provides significant inventory savings, because there are no storage areas, no subsequent retrievals from storage racks, and no rerouting back to the dock areas (Kulwiec, 2004). With crossdocking a company eliminates the costs of holding the inventory and the costs of handling or they are drastically reduced, and it provides improved customer service because the deliveries to the customers are expedited (Kulwiec, 2004).

Wal-Mart is known as the master of crossdocking in discount retailing business (Kulwiec, 2004). Reportedly they deliver around