Keys to Successful Supply Chain Management Free Essay Example

The most difficult challenges in supply chain optimization are Estimating or forecasting future demand. The coordinating activities are also important to meet the demand in the organization because forecast demand is not enough. There are three strategic levels of goals and plans which shape the tactical level and the operational level to save money and live better. The strategic goals and plans are established by the vice president and chief operating officer of Walmart who give a commitment to both organizational efficiency and effectiveness.

The search to increase store efficiency by connecting in-store merchandising which guide merchandising assortment decisions. The cut in merchandise allows Walmart will be more selective about which product necessary to carry and more committed to sell in high volume.

The responsibility for tactical goals and plans is taken by the head of major divisions or functional units that mainly pay attention on the major actions. So top management set up a strategic plan and major division must take to fulfill its part.

For example, Walmart want to easier shopping and maximizing demands so it do super promotion aisle to shuffled departments for the customer. The main purpose of operational plans identifies the specific procedures or processes which is necessary for lower levels of the organization or inventory such as individual departments and employees. For instance, the operational plans which develop by front line managers mostly concentrate on specific tasks and processes. It helps meet tactical and strategic goals by focusing on customer satisfaction. The shopping experience of customers is increased to provide access and visibility to departments of the store that previously difficult to shop in Walmart.

Features, information used, factors, model, and monitoring: The main purpose of Walmart is to have items in inventory for a minimal amount of time going from manufacturer to the shelves rapidly. The time horizon of Walmart which focuses of the markets is short term it has actually created an opportunity for longer-term investors. According to the forecasting process, Walmart will be having two features: hierarchy and function-based definition. The vertical or horizontal lines of command pertain by the hierarchy feature and authority throughout the organizational structure, constant mean so it is easy to predict. In contrast, the function-based definition feature of the company’s organizational structure will involve groups of employees to fulfill a certain functions. Walmart follows a hierarchical structure so different information will be used in different departments like senior manager, senior business analytics.

The department of the information system will very structure and formal that track the time spent on projects down to increment of fifteen minutes. The seasonable demand behavior of Walmart which is a regular repeating itself as the seals of Walmart increases on the weekend because people have enough time at the weekend. Walmart do not follow linear trend because the data or sales of Walmart often increase or decrease. For example, the estimated inventory investment and cost analyses derived return on investment for the shelf space, and illuminated category trends. The cycle of Walmart is difficult to predict because it is created by economic fluctuation and the main reason for that can be inflation or the product’s life cycle.

Model

There are two types of forecasting models: Qualitative and Quantitative. But according to our perspective Walmart follows quantitative model forecasting which refers to formal statistical methods employing time series, cross-sectional or longitudinal data, or alternatively to less formal judgemental methods. A common data model or trend for all data of interest regardless of the data’s source provide by a data warehouse in Walmart. It predicts that the three layers which are main data warehouse functions are staging, integration, and access. First is used to store raw data for use by developers or second layer is used to integrate data and have a level of abstraction from users. The getting data out for users in third layer. It makes easier to report and analyze information than it would be if multiple data models were used to retrieve information like as sales invoices, order receipts, general ledger charges, and many more. So this is the easiest way Walmart use to forecast the inventory demand. For instance, Walmart use the operating income data from previous two years, then divided by two, so that is also the way for another three and five-moving average, use three or five previous data Walmart do this for two year moving average.

Walmart’s forecasting of operating income is continuously increasing time by time this only show by the calculation of these years .The demand for forecast for inventory based on the moving average data. Therefore, it predicts that the percentage of Wal Mart’s forecasting demand is positively related to the increasing of moving average forecast. This model must test and monitor this to see whether it has accuracy or not. In his way, effective monitoring and control are achieved by Walmart’s hierarchical functional organizational structure. But the disadvantage of this organizational structure is that it has minimal support for organizational flexibility. For example, it is argued by Supplier X that Walmart should dedicate more shelf space to its products because of its high sales volume and high-profit margin. But on the other side it is argued by Supplier Y should reduce the shelf space of its brand might not seem so negative on its face. But that shopper of its product also often buys additional products that carry high margins for Walmart. Supplier X and Supplier Y providing greater insight with each analysis owing to this Walmart gained a wealth of understanding about what was going on time in the business.

Walmart Inventory system

Being one of the big names in the business, Walmart uses different types of inventory based on their requirements. Let’s discuss few of them which Walmart uses most often.

Finished Goods Inventory (FG)

As Walmart retail stores are known for having as many items available under one roof, finished goods inventory play very important role into Walmart’s successful operation. At each Walmart store finished goods are delivered regularly from distribution centers. These delivered goods are stocked into Walmart’s shelf on regular basis. Hence, customers buy these goods and Walmart operation keeps going on smoothly.

Transit Inventory (TR)

Across the globe there are 11695 Walmart stores. To keep every store up to date with enough stock, Walmart has got massive distribution network where some goods are in transit for days or months. Hence, it’s necessary to consider goods which are in transit when it comes to inventory. Transit inventory plays vital role into the replenishment of stock into Walmart stores.

Safety Stock (SS)

Walmart also uses buffer inventory to meet the uncertainty of market when it comes to matching of demand and supply. Walmart stores always carry extra stock of certain types of goods which can be used to fulfill increased demands. Hence, customers hardly find anything which has run out of stock in Walmart store thanks to safety stock inventory.

Anticipation Inventory (AI)

In order to meet increased demand due to seasons such as long Christmas holidays and Black Friday sales, anticipation inventory comes into the picture. Walmart uses this inventory method just to anticipate high seasonal demands.

Walmart also uses vendor managed inventory model. By using modern IT and communication technology, Walmart stays in contact with vendors by sharing real time information and data regarding stock with vendors. Thus, by having those real time data of Walmart’s stock they can figure out whether Walmart should be sent new stock if it’s below than certain level. This method requires expensive investment for advance and reliable IT communication system, RFID and bar code scanning. However, benefits such as decrement of delay and overall low cost of inventory outweigh its drawbacks. For example, with RFID technology vendors can track and count goods of Walmart without any manual counting. This has proved very time saving and cost effective inventory management practice for both Walmart and vendors. Hence, I would agree with their current vendor managed inventory model and would also use it.

Supply Chain Relationships Walmart

Let’s discuss each categorical relationship which Walmart has with its suppliers.

Non-Strategic Transactions

As this kind of supply chain relationship includes standardised products suppliers, Walmart has got long range of products of this category into their shelves. These products can be leading brands soft drinks, eggs, milk, chocolates, raw ingredients of cooking such as spices etc. Hence, Relationship of these products suppliers and Walmart has both scope and criticality low. For example, relationship between Walmart and Coca-Cola can be considered as non-strategic transactional relationship.

Contractual Relationship

This kind of relationship has high scope and low critically as in this kind of relationship dependency on suppliers would be high but impact of sourced items or service would not affect an organisation’s core activities. This relationship into Walmart’s context would be relationship between maintenance products suppliers and Walmart. List of these products can include repair and maintenance items such as electrical, tools, hardware, plumbing and first aid items. Thus, relationship between these products suppliers and Walmart would be contractual relationship.

Partnerships

Being world’s largest retailer chain Walmart has many service based partners. Each partner has got its own part of contribution to Walmart’s overall profits and providing effective service. For instance, Bringg is Walmart’s partner for grocery delivery. This kind of partnership has low scope but due to playing very important part into Walmart’s key functions it has high criticality. Some other partners of Walmart are Broadstreet Financial Services Corporation, Modcloth, Art.com, Jet.com, OneSource nutrition centers and many more.

Alliances

In recent years Walmart has forged its Alliances with famous tech companies such as Goggle, Microsoft, and JD.com etc. These alliances of Walmart are to make its position more strong into the e-commerce market which can give tough competition to Amazon.com. It has high scope and high criticality, because for example services of these alliance tech companies would be customizable as per Walmart’s requirements to achieve its sales into the online market.

Conflict

Conflict Situation

Bringg is Walmart’s grocery delivery partner as mentioned above into the partnerships. For fulfilling new clients’ requirements, Bringg has cut its number of employees serving for Walmart without informing Walmart authority. This includes decrement in numbers of delivery staff and service monitoring staff appointed for Walmart by Bringg. As a result of this, Walmart started getting complains from their customers that goods are being delivered late. Moreover, sometimes due to rush in numbers of orders to be delivered and lack of delivery staff, one delivery person is taking more orders out for delivery at same time. This is resulting into orders being delivered wrongly. Having same kind of complains over the past two weeks, Walmart authority inquires delivery staff and some employees of Bringg so they find out the reason of this poor delivery performance. Walmart tries to send report of delivery performance of Bringg to upper level management so they can come up with solution. However, according to Bringg’s argument against this situation is that while signing partnership deal+- they did not have any terms regarding the required number of employees to be appointed for the Walmart. This situation has resulted into conflict between these two brands. As Walmart is known for its finest services in the eyes of the customers, this problem is quite unacceptable for them.

Analysis

Step of developing a trust-based relationship that was not proper: As per our opinion, out of all four key steps, lack of creating effective contracting is to be blamed more for this conflict. This step is one which has some written terms and guidelines for both parties’ mutual benefits. Proper execution of this step can guide both organizations when any unpleasant situation arises. By looking at Bringg’s argument against Walmart’s report it is clear that both parties failed to create effective contracting. If they would have decided terms regarding minimum number of required employees, Bringg would definitely come to some other solution than reducing number of employees which are already supposed to work for Walmart. Along with it, Walmart should also have provided forecasted data to Bringg so that Bringg can prepare effectively.

Source of Conflict

We think out of all five types of conflict sources, data and structural conflicts were the responsible one. The primary reason is that Walmart did not share data and information regarding the requirement of the least number of workers for deliveries on each day. Same kind of thing can be applied at Bringg’s side too. There was no written contract as well. Thus, lack of interaction regarding data of orders and number of employees to be allocated became a source of conflict. Along with it, Bringg’s uneven management of delivery boys was also somewhat responsible as in order to serve other clients, they just unevenly distributed human resources which were not structured at all. Any conflict due to the uneven distribution of resources belongs to structural conflict. Hence, lack of data sharing and uneven structural management became main sources of conflicts.

Way of Solving this conflict

With a view to Walmart’s perspective, we believe that this conflict should be solved via Negotiation. The reason for choosing this less formal method can be justified around the degree of seriousness of the conflict. Walmart’s primary functional goal revolves around its retail stores where customers can have a smooth and affordable shopping experience. Home delivery of goods to customers can be considered as their additional or secondary service which is done by its delivery partner Bringg. The only problem for Walmart is that they cannot provide a positive shopping experience to customers due to delay or wrong delivery. Hence, we can see that