Supply chain management refers to the process of flow of goods and services in the market which also involves the flow of raw material, finished goods and work in progress from the point of initiation to the point of ingestion. Basically, an efficient and effective supply chain of an organization is an interconnected or interlinked chain which connects all the networks and channels of business makes the product approachable to all the customers present in the target market. Further, the report provides a brief overview of the Wal-Mart Company and its key flow in supply chain management and the development and making process as well. Lastly, the report also provides details about the supply chain forecasting of Wal-Mart Company. More details about the task are discussed below (Shafiq, et. al., 2016).
Wal-Mart is a multinational retail chain store which was inaugurated in the year 1962 by Sam Walton in the United States. The company operates its retail chain store in total 50 states and earned revenue of approx. $480 billion in the previous year (according to fortune global 500). The fact was considered that the company earning the largest revenue among all other companies present in the list. Further Wal-Mart has huge family of employees working with them around 2.3 million people in number. The company is aiming to expand their business in many other countries like Brazil, Chile, and Canada etc. Wal-Mart is identified as the leader in the retail sector of the United States industry and worldwide. Wal-Mart has total 11,695 stores and clubs in 28 countries, under 63 banners and also the Sam's Club retail warehouses are also owned and controlled by the team of Wal-Mart only. The company came on New York Stock Exchange in the year 1972 and by 1988 Wal-Mart also became the most profitable retailer in the US as well. Further by 1989 the company also became the largest company in terms of revenue as well. Furthermore, details about the supply chain management of the company are discussed below (Lombardo, 2017).
Key Flow in Supply Chain
Generally, the supply chain management can be explained as an organized form of different activities in the organization such as information, raw material, finished goods etc. For the purpose of initiation of effective supply chain management, it is important for the management to initiate the adequate flow of work. The supply chain will help the organization to analyze the ineffectiveness present in the organization and implement adequate procedures to enhance the growth of Wal-Mart. Further, the supply chain process which the organization Wal-Mart uses is discussed below (Chase, 2017):
This type of flow includes information flow or flow of data including the purchase order, quotation request, change request, feedback on the performance of suppliers on behalf of customers and product specification etc. this is remarked as one of the most important aspects of the supply chain management of Wal-Mart. as noticed that the company is providing its products on heavy discount due to which the quotation of Wal-Mart is very effective, the customers can also quote their values on the website of the company. They also receive the products and pay the amount through money transfer to account of stores after which the company assigns the suppliers and distributors regarding the sale transaction. But since the organization is giant in its operations due to which the company many times faces the issue of insufficient stock. Considering which Wal-Mart focused on lowering the prices of their product so as to attract the customers and fix the problem (Edelson, 2017).
The company also maintains adequate cash flow in the organization by managing the receipts payable and receivable wisely. The management of the organization is efficient in collecting the cash from the customers and paying back to them. Generally, amount of product purchased from Wal-Mart is paid at the store itself but if the distribution gains the information regarding the replenishment of supply then issues are created in the supply process. As the product is received by the distributor to the store and then funds are moved. Further on the basis of invoice raised the customers to check for the quality of the product and prices of the supplier. The company has also extended the payment cycle from 90 to 120 days (Hill, & Fredendail, 2016).
This flow includes the flow of goods from the manufacturer to the customers. this process includes the intervention of various suppliers, distributors, dealers etc. the company focuses on the supply strategy of product which reduces its cost and offers the best price to the customers of their product. The company aims to eliminate the intermediaries by acquiring the products directly from the manufacturer only. For the flow of product, the company acquires the cross-docking technique which directly picks the finished goods from the manufactures of suppliers and then supplies them directly to the customers (Roberts, & Berg, 2012).
Reverse or return flow is not an addition to the value of product or profits of the company. The company Wal-Mart utilizes the reverse logistic technology for dealing with the return flow of products. When the products do not match the standards of the expectations of the customers then they are returned by them to the store. Further, the Global Responsibility Report, 2015 explains the product use of such products by recycling, repairing and reusing them other better purposes (Swink, et. al., 2014).
It is recommended to the management of Wal-Mart that the organization shall lay more focus on the information flow activities as more the information will flow and more the people of the organization will get initiated to work. Also, flow of adequate information develops efficiency in work as the employees will have full detailed information about the task and its implications (Swink, et. al., 2014).
The Make Process
Production planning refers to the process of identifying the need and creating new product according to the requirement present in the market. The main motive behind the production plan is to develop a product in a way that it achieves the expectation of the customer present in the market and maintain its cost-effectiveness as well. Cost-effectiveness and efficiency are the two main focus of the production plan of the organization. Further Wal-Mart uses the mixed production strategy by aligning both the chase and level market. With the aid of technique, the company becomes able to produce the goods as per the demand present in the market. Wal-Mart should also use the effective production and capacity planning strategies so as to enhance the flow of production. The Wal-Mart production plan includes three categories that are short-term, medium-term and long-term. In the initial category, the production manager guides all the task responsibilities of workforce in their operations. Medium-term includes the process of schedule under which the main focus is to minimize the prices of the products produced and the long term includes capacity planning (Brandenburg, et. al., 2014).
The production process of the company lays stress on fulfilling the needs and requirements of the customers and supply products according to the demand present in the market. They also aim to improve the abilities of production team and the quality of the products served. With the influence of rapidly changing market conditions, the company also needs to implement processes which show effectiveness in its workings. in the global market, the performance of Wal-Mart is compared with K-Mart and Target Corporation, both of these companies have the optimum production capacity to satisfy the demand, considering to which the management shall also implement actions which help the company in its growth process (Swink, et. al., 2014).
Master Production Scheduling (MPS)
Master production Scheduling is a plan, which is designed and developed by the company for the purpose of staffing, production, inventory etc. Wal-Mart is currently using a system technique which is known as perpetual inventory. The company uses the digital technology to book the inventory present with the manufacturing unit within a specified period of time. Further, this process is called continuous inventory (Lu, & Swaminathan, 2015).
Bill of Materials
Bill of material is the list which includes different quantities of elements, materials, and constituents which are required to develop the particular goods at the unit. At Wal-Mart, such bills include are the material information or the data related to the suppliers and raw material which are used in the creation of the product. It includes list of material quantities required for the product (Christopher, 2016).
As the company, Wal-Mart is using the effective production planning process and schedule but still, there is some scope for improvement in the company. The company should initiate to build a better coordinated relationship with their partners so as to aim for future expansion. Also, there should be improvements in the production process as well. The activities shall be allocated to the team members through the head. Proper research shall be conducted according to the conditions of the company and the activities shall be initiated which can improve the satisfaction level of the customers present in the market (Stadtler, 2015).
The Supply Chain Forecasting
Demand planning and demand forecasting
Supply chain management practices at Wal-Mart mainly focus on the demand planning and forecasting. Technological innovation plays an important role in developing the supply chain at Wal-Mart. the company uses the universal product bar codes with the help of which all information about the stores can be collected immediately at the head branch. This type of techniques assists the managers in determining the rate at which the stores are selling goods and services and in what qualifies as well. They focus on forecasting the sales and calculating the past data and advanced trend upcoming in the industry (Gilling, & Ulmer, 2016).
After which they forecast the estimated figures to ensure that the distributors of the organization gain the right quantity of product at the right cost as well. this type of demand forecasting eliminates the issues regarding the unexpected market conditions, uncertainty of system, social conditions which can help the company to increase the demand (Mangan, & Lalwani, 2016).
Typical demand pattern
The pattern below mentioned discusses the demand and supply of inventory at Wal-Mart.
Qualitative and quantitative Forecasting
Wal-Mart has implemented an application for the forecasting of demand which analyses the need of each and every product procured with the company. The qualitative approach is used by the company forecast the demand. Data warehousing business model is initiated by the organization to forecast the demand behavior, reason of behavior and time frame (Natto, 2014).
Forecasting evaluation and accuracy
Wal-Mart is currently using techniques of different mathematical tools for the purpose of evaluation of forecasting and analyzing accuracy in records maintained. Accurate inventory count is required by the MRP to run properly. Also, the company uses various techniques such as Mean Deviation, absolute Mean Deviation, Mean squared error etc. which helps the company in evaluating the difference between actual and calculated demand of products of the company (Chu, 2014).
Thus, it is recommended to the management of Wal-Mart that they should use new and hi-tech techniques to optimize the demand and supply of the company in the competitive environment. Wal-Mart should use the CPFR (Collaborative Planning, Forecasting, and Replenishment) techniques so as to forecast the demand and supply of their inventory in the market. This scheme implements in such a way that suppliers and producers can match the estimated production forecasted by the management. Also with the use of EDI (Electronic Data Exchange) the organization shall enhance their relationship with the vendors, manufacturers and suppliers (Gilling, & Ulmer, 2016).
Thus in the limelight of above-mentioned events, the fact that shall be noted is that for the company Wal-Mart supply chain plays an effective role in determining the growth and supply the products according to the demand. The organization uses qualified supply chain management process so as to innovate their product which can fulfill the expectation of the customer and is cost-effective as well. The above-mentioned report also determines the demand forecasting of the inventory of the company which assists them in manufacturing the products for better. The significant supply chain management is visible for the success of Wal-Mart. the organization uses effective techniques and strategies to successfully create a chain which can supply information along with the supply of material. Wal-Mart also uses innovative technology to improve the supply, production and manufacturing process of the organization. Further few recommendations are given to the company which can help them to initiate effectiveness in the global market.
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