Supply Chain And Inventory Management Issues At Walmart: Analysis And Solutions

Issues Faced by Walmart in Inventory and Supply Chain Management

The main aim of this task is to evaluate and identify the issues related to operation and supply chain management. Walmart cooperation has been taken in the task which is largest retail company in the United States. The firm has approx 11718 stores in the world and clubs in 28 countries. Effective leadership strategies are used by the organization to destroy the competitors in the market. Furthermore, here is the discussion about the supply chain management issues which may affect the inventory and sale of the firm. Supply chain management, Lean system and total quality management play an empirical role in retail industry to maximize the profitability and satisfy the needs and requirements of the customers. The paper explains that how the organization overcomes on supply chain and operation management issues. More detail of the task has been discussed below.

Walmart is an American multinational retail company that operates a chain of hypermarkets, grocery stores and discount department stores across the world. The company was incorporated in 1962 by Sam Walton with its headquarter is located in Bentonville, Arkansas United states. It is the biggest corporation in the world measured by revenue. Moral and personal integrity is one of the basic fundamentals of Walmart which could help to attain long term profitability and revenue in the marketplace (Walmart, 2018). The main mission of the organization is to improve and enhance the quality of life for people across the world. It will help to overcome the rivalries in the global marketAdditionally, the organization focuses on product quality, low prices and growth opportunities.

There are various issues faced by Walmart while conducting business activities and operations in international market. Some of the issues are related to the inventory management, lean systems and quality management which may influence the profitability of the firm adversely (Wisner 135). Due to lack of tidiness and cleanliness, the company is unable to expand and flourish its business globally as it is one of the biggest issues in the organization. In addition, underperforming and out of stock is one of the significant issues that is being dealt by Walmart. Due to lack of inventory, the firm is unable to provide regular retail products and services to the customers. Also, it influences the sales and goodwill of the organization (Monczka et al 619). In today’s competitive world, the company is suffering from the dual problem such as unproductive inventory and out of stock issues. Due to out of stocks, the sales and revenue of the firm has decreased as it also influences the long term mission and vision.

Solutions to Overcome Inventory and Supply Chain Management Issues

Furthermore, employees are not enough in the store to keep the record of inventory and products. Due to poor labor force, the products are not being brought out into the selling floor. Some of the products are ordered at store level while some products are ordered by the workers at the home office. Generally, instructions are not sent to the store about new inventory and items. In addition, the company is not integrated the digital services with physical stores which could affect the inventory system of the firm. Due to lack of inventory, Walmart is unable to fulfill the demands of the customers on the regular basis. It also increases the cost of retail products in the competitive market. Due to lack of inventory, various issues and challenges were faced by the company in 2017. The company was busy in December month because many items were being demanded from the customers in the market. Therefore, they firm failed to keep these items in the stock during the peak period. As a result, the firm was stocking more products and items in its warehouse (John and Sparks 6). The items that were already in the store were affected by the new items and there were less room to keep the new stock in the warehouse. Due to lack of employees, the firm is unable to use new and innovative technology within the organization. As a result, Walmart may fail to attract and retain more consumers in the marketplace. They are not producing new products with innovative features and quality. As a result, consumers prefer to purchase the retail products from other companies. Tesco, Family dollar and Dollar tree are main competitors of the firm. Walmart needs to take care about these challenges to make a good image in the competitive market.

Effective supply chain management: The supply chain management is an effective tool to reduce the issues of inventory. Effective supply chain management shall be adopted by the company to lower the cost and build effective relationship with the customers in the best possible ways (Rushton et al 28).  Supply chain management consists several factors such as purchasing, operations, distribution and integration. A supply chain starts with the purchasing managers who determine the products and items need to be sold. The operations portion of the supply chain monitors on the demand planning, inventory management and forecasting. Demand planning is done to create accurate forecasts for the products in the market. Supply chain management is an effective tool that contributes in company’s success and growth (David 194). The company needs to initiate the vendor managed inventory (VMI) within the organization for managing the product in the warehouses. In this way, the firm can fulfill the 100% order of customers in the market. By using unique and effective supply chain, Wal-Mart is able to avert various issues related to inventory and supply of the products (Michael H 1).

Effective Supply Chain Management

 

In today’s era, Walmart generates forecasting model to dill up empty shelves in order to maintain their customers in the global market. The Wal-Mart supply model has been draw below.

 

Effective inventory management is done by the company to maintain sufficient level of inventory within the organization. Along with this, the firm should use effective vendor managed inventory model to eliminate the risks and challenges related to inventory (James B and Mary Ann Odegaard  464). This model helps to minimize delays in the movement of stock across the supply chain. Under this model, the buyer provides certain and necessary information to the suppliers related to the products and the suppliers take full responsibility for maintaining an agreed stock of the material in the organization. By using this model, the company does not need to spend extra workforce to handle each supplier’s goods and products. The company should use four types of inventory during manufacturing and introducing the products such as finished goods inventory, anticipation inventory, transit inventory and buffer inventory. The finished goods inventory support to Wal-Mart operations and activities where the finished products are sold from the inventory to the consumers.  In addition, transit good refers to the goods which are held in the warehouse while in transit. This type of inventory provides support in replenishment of the finished goods inventory in the company’s stores. Furthermore, buffer inventory ensure the capacity and ability of Walmart to satisfy the demand of the customers which is increased suddenly. Along with this, the company uses anticipation inventory to maintain extra stock of goods in the warehouses. It helps to maintain ample inventory level in the stores (White et al 136).

In addition, the organization can use just-in-time cross docking inventory management to handle its stock in the warehouse. This method includes minimum storage in the stores. In this method, goods are directly transferred from the supplier’s trucks to the company’s trucks, which help to deliver the products to the stores. Along with this, the company needs to improve in the quality of goods and services. Quality is an essential aspect for the customers whenever they want to pay for a product and service. The firm can use total quality management system to improve and enhance the quality of items within the organization. TQM is reduced costs by focusing on the various areas such as rework, field service, scrap and warranty cost reduction (David and Davis 7). The main objective of TQM is to achieve higher customer’s satisfaction in the global market. Quality management is an important tool to imports around 60 percent of its vegetable and fruits as well as 80 percent of its seafood. To maintain good quality of products, Walmart should comply with global food safety initiative procedures (Joel 2). Under this procedure, the company can check and analyze the quality of food products.  In addition, effective communication programs shall be designed to increase and enhance the safety of products.

Effective Inventory Management

Technology plays a vital role in Wal-Mart supply chain.  In today’s era, the firm uses innovative technologies to reduce the inventory issues within the organization. The firm has implemented Universal Product Code and bar codes to collect the enormous information related to products. Through a universal satellite system, the retail company is able to connect with analysts who can predict the supplier’s demand. In addition, the organization can also use radio frequency identification tags (RFID) to attain the competitive advantages in the global market (Nemai Chandra 141). In addition, the firm can use unique and effective operation strategies to control on the inventory.

Conclusion

On the above mentioned study, it can be concluded that Wal-mart is the biggest retailer who is operating its business activities and operations in more than 15 countries. Supply chain management can be a main source through which the company can grow its business and achieve objectives. No company can survive and develop its business without effective supply chain management. In today’s modern world, the firm faces various challenges and issues related to inventory and supply chain management. All these issues could influence the long term goals and objectives of the firm. It shall be noted that Walmart should use effective strategies to reduce the stock issues within the organization. Dynamic supply and logistics management must be initiated by the organization to handle inventory issues. On the other hand, the company also faces various issues related to employees such as absenteeism and strike. It is observed that the company must use sustainable human resource management to reduce the issues related to the workers.

References

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Fernie, John, and Leigh Sparks. Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers, 2014.

Goetsch, David L., and Stanley B. Davis. Quality management for organizational excellence. Upper Saddle River, NJ: pearson, 2014.

Hugos, Michael H. Essentials of supply chain management. John Wiley & Sons, 2018.

Karmakar, Nemai Chandra, ed. Handbook of smart antennas for RFID systems. John Wiley & Sons, 2011.

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Ross, David F. Competing through supply chain management: creating market-winning strategies through supply chain partnerships. Springer Science & Business Media, 2013.

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White, Peter, M. Dranke, and Peter Hindle. Integrated solid waste management: a lifecycle inventory. Springer Science & Business Media, 2012.

Wisner, Joel D., Keah-Choon Tan, and G. Keong Leong. Principles of supply chain management: A balanced approach. Cengage Learning, 2014.