II. Demand forecasting
1. Wal-Mart is witnessing one of greatest in terms of logistic and operations. Notably, Wal-Mart has stocks of products from across seventy countries and operates in more than 11000 stores. These stores are spread in more than twenty seven countries. Looking at all the stocks, it is clear that Wal-Mart is running over $ 32 billion in inventory as per the current stocks. With the types of figures evident in Wal-Mart, it is clear that this has been achieved due to a viable supply chain management. Wal-Mart is committed towards ensuring that the supply chain is less costly but effective thereby helping consumers to purchase items at the store at cheaper prices. Since its inception, Wal-Mart has continued to remove a number of its supply chain links in a bid to cut the costs associated with supplying the products supplied in various market segments. In its innovative platform labeled vendor managed inventory Wal-Mart has liaised with the manufacturers such that the manufacturers have to manage their products in warehouses built by Wal-Mart. Due to the current collaborations between Wal-Mart and its suppliers, it is evident that the store is able to maintain long term relationships with the suppliers while the suppliers would offer their products at the lowest possible prices.
2. Due the fact that the store has over the years built a strong customer loyalty and trust, the demand for the products is usually high since the company is able to offer high quality products at lower price compared to its competitors. To replenish the inventory in an effective way, Wal-Mart has established a supply chain management whereby the products can effectively reach the intended store without incurring any costs of storage in warehouses. This is usually applicable when the manufacturer is not so far from the store where the products are to be delivered. For instance, when a manufacturer has to supply two hundred tones of products using a truck, the company would organize other semi trucks that would later on transport the products in varying amounts. This would cut costs and even the time used to transport the products as a bulk of two hundred tones. Therefore, before making orders to the manufacturers the store has to first identify the customer needs and calculate the costs that will be incurred minimizing them so that the customer can acquire them at cheaper prices. Though Wal-Mart has a simple and short supply chain, the long distance between the stores and the manufacturers has been a major constraint. At instances the manufacturers may take longer than anticipated when delivering certain products a factor that compromises the overall customer satisfaction (Payton, 2005).
A. Wal-Mart’s success can be attributed to the ability of the store to enhance collaboration and networking with its suppliers. Apparently, the store is using cross docking as the major network sourcing strategy (Li-xia XU, 2014). This tactic seeks to cut the costs of inventory and in so doing the store manager to acquire suppliers at low prices.
To optimize on its sourcing strategy Wal-Mart should use lifecycle vender management. This strategy encompasses being able to create a long term relationship with the venders which in turn promotes a proactive road map whereby products and supplies can be made in real time (Sethi, 2014). When the vender is assured of a long term engagement he or she will maintain consistency ii terms of quality and may also make other referrals if the vender cannot meet the current customer demand as per the requirements of Wal-Mart.
Li-xia XU, X. L. (2014). Carrefour and Wal-Mart’s Supply Chain Management Strategies. International Journal of Business and Management , 155-162.
Payton, P. (2005). Wal-Mart Experimental Stores: Environments of scale. European Retail Digest, 48; 7-12, 6p.
Sethi, P. (2014). The Wal-Mart Affair. Corporate Governance , 424 – 451