EnterpriseResource Planning and Supply Chain Management
Thesupply chain management is an important success factor in theoperations of Wal-Mart. The giant retailer depends on the supplychain management strategies to provide the most competitive prices toits customers. Wal-Mart management spends time negotiating withsuppliers and vendors during the purchasing process to ensure thatthey provide the lowest possible prices. The information systems inWal-Mart stores are linked to the suppliers to ensure that thesuppliers are able to process purchases based on the sale information(Roberts & Berg, 2012). The distribution systems are supportedby a well-developed and coordinated logistic infrastructure. To easethe distribution process, Wal-Mart use the ‘cross docking’ systemwhere good are picked from the manufacturers’ premises, sorted andtransported directly to where they are required. The purchasing anddistribution systems are critical in supporting the Wal-Mart retailstrategy. This retail strategy aims at improving the lives of itscustomers by offering competitive prices and quality customerservices (Roberts & Berg, 2012).
Inventorymanagement at Wal-Mart is supported by a well-developed informationand communication system. The company has invested in a state of theart information system that links different stores and facilitatesthe tracking of merchandise and sales inventories. Replenishment ofgoods and order management in the stores is based on a point of saleinformation systems which increases effectiveness and efficiency intracking stock levels. The information system is manned by awell-trained and motivated workforce. The operational success of thecompany is influenced by the human resources practices that are aimedat reducing cost and increasing efficiency (Roberts & Berg,2012).
Toimprove its supply chain, Wal-Mart has had several improvementinitiatives. For example, the company invested billions of dollars todevelop a retail link system to connect the stores with thesuppliers. It also developed “Massively Parallel Processor”(MPP), “Collaborative planning and Forecasting and Replenishment“(CPFR) to increase efficiency. In 2003, Wal-Mart adopted the“Radio Frequency Identification” (RFID) technology to reduce costand increase the efficiency of the supply chain. To improve the flowof good from distribution centers to retail stores and eliminateincidences of stock outs, Wal-Mart introduced the Remix program whichsimplified operations at the store level (Roberts & Berg, 2012).
Inventorygrowth rate at Wal-Mart is associated with numerous challenges, themajority of which are beyond the control of the giant retailer. Someof these factors include changes in weather, economic challengesfacing its customers, changes in tax regimes and challengesassociated with e-commerce. Consequently, it has been difficult tokeep the inventory growth rate low relative to the sales growth rate(Roberts & Berg, 2012).
Roberts,B. & Berg, N. (2012). Wal-Mart:key insights and practical lessons from the world`s largest retailer. London Philadelphia, PA: Kogan Page.