Supply chain assignment help: Stocks of Wal-Mart 

1. Role of Stock in Wal-Mart

Wal-Mart has been able to maintain its competitive advantage through efficient supply-chain management and that is why this US-based company got topmost rank in the global  list created by Fortune  for the year 2001-2 by earning revenues of $219.81 billion( see table 1 appendix). Thus Wal-Mart has become the largest retailing business concern in the world, far ahead than its competitors like K-Mart, Nordstrom, and JC Penny etc. The company’s idea was formulated by Sam Walton , its founder who always focus on  constant cost reduction, enhancing sales,  following effective measures for  distribution and logistics management system through the implementation of innovative information technology (IT) tools.

The efficient supply chain management of Wal-Mart makes it the leader in the retail industry. This retail chain provides unparalleled consumer value through EDLP strategy. The everyday-low-price (EDLP) strategy followed by Wal-Mart makes it achieve an excellence in supply chain through constant and regular wringing efficiency at greater level from its supply chain, application n of cutting-edge technology, along with that implementation of innovative inventory and distribution policy (Li 2007).

Wal-Mart mainly represents an interface between the manufacturer and the consumer. The responsive supply chain network of Wal-Mart has become a real-time benchmark which is capable enough to find out the changes in demands of customer in very rapid manner and then communicates these changes to the supplier. This level of responsiveness helps in accelerating the inventory turnover of Wal-Mart as shown in figure below:

CPFR& VMI                                                                                                                                                                                          CPFR&VMI                                                                  EDLP

Figure 1: Supply Chain for Wal-Mart

In order to fulfil the respective requirements of its stores Wal-Mart developed an inventory management plan through heavy investment in IT and communication systems. This helped in effectual tracking of merchandise and sales inventory in all the stores across the country (Jamilya 2011).

 Wal-Mart reduced the unproductive inventory as it allowed stores to manage the stocks on their own, reduction of size of packages in various product categories and on-time price markdowns. Instead of cutting the inventory it made full capacity utilisation of IT and made more inventories available of the items which the customers demanded more and on the other hand there was a reduction brought to the total levels of inventory. Wal-Mart implemented through networking of its suppliers through installation of computers. Like it entered in collaboration with P&G for the maintenance of inventory in the stores. It also built an automated re-ordering system which created a link through computers between its stores and P&G and other distribution centres too.

 This kind of collaboration resulted in win-win situation for both the companies that are P&G and Wal-Mart, as now it became easier for Wal-Mart to monitor their level of stock in constant manner in the stores countrywide and identify the items which had   tendency to move fast (Chandran 2003). On the other hand P&G can also reduce its cost and pass on some portion of savings to Wal-Mart. Wal-Mart also utilised radio frequency technology and bar coding for its inventory management the largest and most sophisticated computer system, Massively Parallel Processor installed at Wal-Mart helped it in tracking the movement of goods and stock levels.

 Thus the major benefits which it reaped through efficient supply chain management were: lead time being reduced, accurate forecasting of inventory levels, reduced safety stock, faster and quicker inventory turnover, increased space for warehousing and efficient working capital utilisation.

2. Two business trends which have significant impact on how stocks are managed

There are many global business trends which have significant impact on stock management in the organizations but the two main trends which we are going to analyse are Power Retailers Trend and Advanced Computer Technology.

Power Retailers Trend

 In the marketplaces of the first world economies its ahs been found that with the help of increased market concentration which is also known as “power retailer” they have started ruling them. For example in United States the discount retailers like K-Mart, Wal-Mart etc have turned into dominant marketing chains in general merchandising (Annual Reports of Wal-Mart, n.d.).Thus the one profit maximising strategy which the “power retailers are using is to refuse to keep large inventories (Hewitt 2001). The power retailers like Wal-Mart have learnt their lessons of Just-in-time inventory management very well. The desirable aim of big retailers like Wal-Mart is to maintain zero inventories. They wanted precisely defined and confirmed lots to be delivered for the goods needed and that to the retail locations which were highly dispersed and that too at the exact timing when they are needed on the shelves of their stores. The inventory management technologies have been strategically applied by Wal-Mart like point-of-scale scanning and electronic automated reordering system which helps in making split-second logistics performance possible within the organization. It has been noticed that for some categories of fast-moving products like toiletries and cosmetics, the power retailers are able to achieve thirty five or more inventory turns every year (Sharman 1991). Thus it allows the retailer to sell their goods before they even pay their suppliers for that good. This is a real-time proof of maintaining zero-inventory retailing (Wood, Murphy and Wardlow 2002).

Advanced Computer Technology

The advanced computer technologies like the automated identification systems have boosted the efficiency of the logistics to a dramatic position (Mulani and Lee 2002). These automatic Identification Systems like bar coding, Radio frequency technology along with communications technology and supply chain software the flow of goods can be easily synchronised and the information as per the customer demand can be collected. Many companies which are supplying to Wal-Mart use Radio frequency identification RFID tags while shipping goods to any Wal-Mart store. RFID tags are electronically activated chips which are being attached to pallet of goods which helps in tracking of goods from the time of packaging at the manufacturing plant to the time they are purchased by the final consumer. The biggest benefit of using RFID tags is increased revenue for Wal-Mart because through this kind of tracking the shelves in the stores are full all the time and the inventory management cost is also reduced to great extent. The reason being the time spent in counting the items on the shelves and overstocking of the goods is minimised to a great extent (Lamb, Hair and l McDaniel 2010). Using the fixed optical readers and bar codes in Wal-Mart helped in directing the goods to the right dick and from there they can be loaded into the trucks for shipment (Kinsey 2000). The bar coding technology helped in enabling effectual picking, reception, and right kind of control management of the inventory related to the particular and specific in Wal-Mart. This resulted in counting the goods easily in physical manner and order packing of the inventories.

 Thus both these business trends strategically helped Wal-Mart in performance enhancement in operations management along with providing better customer service too (Chandran 2003).

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