To analyze components of supply chain, Wal-Mart is taken that is global leader in retail industry and also the largest corporation in the world (Walmart 2011). Wal-Mart is continuously developing its business by developing its services and product portfolio. The supply chain of Wal-Mart is also effective to enhance its effectiveness within the industry (Hoppenstedt & Rathkolb 2005). This paper will discuss about supply chain components and problems and approaches to solve the problem.
Components of Supply chain Management
Supply chain is a network that is used in business concern to sustain the exact flow of information in the organization (Jespersen & Larsen 2011). Following are the six key components of the Wal-Mart’s supply chain:
Production is an important element of the supply chain of Wal-Mart. Strategic decisions of Wal-Mart regarding production focuses on customer needs, demand from market, capacity, quality and volume of goods (Wal-Mart 2011). There are some problems that may occur in the production of Wal-Mart such as changes in tastes & preferences of customers, new technology, and low quality of raw material. To approach this problem for supply chain component, Wal-Mart should conduct surveys and get continuous feedback from customers in timely intervals as it would be effective to continue with the production as per their changing needs and requirements (Jespersen & Larsen 2011).
Supply is an outsourcing process as through this an organization obtains required material and inputs for production of its products & services. It is one of the major components of the supply chain of Wal-Mart (Wisner, Tan & Leong 2008). Wal-Mart focuses on the quality of product, flexibility in prices, developing velocity to determine supply of inputs that helps to maintain its low cost strategy continue (Wal-Mart 2011). The price consideration in selecting the supplier for raw material may create problem for Wal-Mart as it would affect its supply chain management. To reduce this problem, management of Wal-Mart should consider developing velocity, flexibility and quality in selecting suppliers as it would be effective to reduce cost and to maintain lower cost level (Hoppenstedt & Rathkolb 2005).
Inventory is also an important element of supply chain management as it is essential for management to determine appropriate level of inventory within the business to increase competitiveness. For effective management of inventory, Wal-Mart focuses on day to day stock bases through Radio Frequency Identification (RFID) technology. It is a technology that is basically used to track remaining goods within organization (Wal-Mart 2011). By this technology company can identify product availability through bar codes that are printed on them. The more traffic in network may create problem in effective utilization of this technique and may interpret wrong information that may affect the organizational effectiveness (Hugos 2006). Increase in server database, continuous improvement in technology will be effective to minimize impact of this technique over supply chain management.
Location is also an important part of business as it determines success of the business (Lambert 2008). Wal-Mart emphasizes on customer demands and determination of customer’s satisfaction in determining places for its stores. Identification of customer demand helps to determine the locations for store and production facilities close to the consumers (Wal-Mart 2011). The selection of inappropriate locations in other region without considering income level and living standard of the customers may create problem for Wal-Mart in location selection. The analysis of macro and micro environment before selecting location would be effective to increase the supply chain management of the organization (Lambert 2008).
Transportation is intimately related to inventory decisions and also with the customer requirements (Bolstorff & Rosenbaum 2007). Wal-Mart uses stores to offer its products to the customers and by its own trucks for delivery (Wal-Mart 2011). The use of store and its own truck for transportation may create problem as strike by the employees may affect the delivery of its goods to the customers that would affect its market share and customer base. To eliminate this problem, management of Wal-Mart could make arrangement with external transportation companies that will be used in the situation of strike (Bolstorff & Rosenbaum 2007).
Information is an important component of the supply chain of an organization as it includes collection of information from end-users and to link them with resources (Li 2007). Wal-Mart is using linked computers through the internet to execute information globally. All the stores globally are connected with each other that help to get customer feedback and information and to implement them within the business (Wal-Mart 2011). The information sharing with global stores through the internet may create problem of misuse of data and theft of data. To manage this problem, organization should use proper security and password protection for using information.
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Hugos, M. H. (2006) Essentials of supply chain management. 2nd ed. USA: John Wiley and Sons.
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