A Leader in Supply Chain Management

Wal-Mart, a leader in Supply Chain Management

Jonathan Miller

Supply Chain Management is a required part of every business. It deals with not only how a business supplies its customers, but how they use those inputs to create their own products. The overall concept has morphed with the success of large retailers, because of the power they command within the marketplace. With relation to this new customer, suppliers vary their approach, from order taking to order commands, partnerships, or flexible suppliers to name a few. The current manner in which retailers choose their supplier is modernized to find the strength of a supplier and derive value from those strengths. The overall goal is to reduce their carrying costs, while having a reliable supply chain through some type of efficiency. This differentiation of efficiency is a large part of why suppliers choose a main supplier in smaller companies. In the case of Wal-Mart, they choose thousands of suppliers, much like other large retailers, to both diversify risk and product offerings.

One of the current improvements in Wal-Mart's supply chain in recent years came from a partnership they sought out in ORTEC was to maximize their potential savings in relation to their internal shipping services. They have been working in unison to attempt to improve scheduling in relation to truck routing, and also a streamlining of the loading of their trucks to improve efficiency. The concept of reducing one of their largest costs in relation to shipping was part of a larger overall initiative that hopes to streamline and improve the whole supply chain. Loading more efficiently reduces the amount of time taken to load and unload, while also decreasing the number of shipments needed by a particular store. "Previously it took eight man teams 8 hours to unload and ship merchandise to the floors, since we at that time had not palletization." Jonathan Miller. This was one of the cutting edge initiatives in which Wal-Mart is trying to gain overall efficiency within the supply chain. This is an especially critical area considering the overall fleet travel distance exceeds "700 million miles annually." ORTEC-Walmart-Webinar

Another key improvement to the supply chain originated from tragedy that tarnished the company's reputation throughout the world. This situation came from a fire that killed over a hundred workers in Bangladesh. The information that garnered the most publicity from this incident was that this had been a supplier of clothing for Wal-Mart. Because of this negative publicity, Wal-Mart has driven to remove this potential negative publicity from their supply chain forever. Although, the removal of trouble contractors from the supply chain may not necessarily reduce costs for the company, it does remove a potential future problem with the public. The new policy in place states that every supplier must get approval for their suppliers from Wal-Mart's corporate structure, along with some mandated supervision of those contractors. This means that every supplier is accountable for where their products are produced, and the punishment is strenuous for those who violate it. The consequence is that they will no longer be a supplier of Wal-Mart after a violation. For most companies, this would bankrupt them considering the size and scope of Wal-Mart, losing them as a customer would nullify their sales based on economies of scale.

In the current environment, Wal-Mart has been attempting to meet their goals established in 2005, relating to "zero waste, supplying energy from 100 percent renewable energy, and sustaining both people and the environment." Denend, 2011. A large segment of this goal deals with their overall supply chain and how they supply and produce their products. Wal-Mart is garnering help to reach their goals on reductions of pollution through various channels. This effort has many factors, from partnerships with local groups. One such group is the Environmental Defense Fund, which assists in the shaping of corporate policy through attainable goals for the near future. They have also extended partnerships with suppliers on practices that are not only more efficient and environmentally acceptable, but also cut costs and potentially add revenue. This new practice is innovative in the manner in which it holds its suppliers to higher standards, and helps them attain corporate goals through guidance both on the ground and financially.

Wal-Mart has taken great strides over the past decade in increasing their overall efficiency of the supply chain. Although not all practices were proactive and in good faith, they are leading the industry in most of their supply chain practices. Some of this innovation is purposefully lagging based on their established best in the market practices which moved away from the best in the world practices. But overall there have been significant improvements on all levels of the supply chain. This is evident from the amount of planning and initiative that has been undertaken to both improve their corporate image and overall efficiency. This has been evident through improved tracking, movement of goods, warehouse management, and environmental impact reduction of this past decade with more stringent goals on the horizon. From the outlook of the greatest