SOM 306 Case Study: Improving Supply Chain Management at Walmart

This case study delves into the supply chain management of Walmart, a global retail giant, highlighting the challenges it faces in inventory management, lean systems, and overall operational efficiency. The study identifies issues such as out-of-stock situations, unproductive inventory, and the impact of these challenges on the company's profitability and customer satisfaction. It explores potential solutions, including effective supply chain management strategies, vendor-managed inventory (VMI), and technology implementation such as Universal Product Codes and Radio Frequency Identification (RFID). The analysis emphasizes the importance of integrating digital services with physical stores and improving the quality of goods and services through Total Quality Management (TQM) to enhance customer satisfaction and maintain a competitive edge in the market. The study concludes that effective supply chain management is crucial for Walmart's growth and ability to meet its long-term goals.

Running head: Supply chain management
Supply chain management

Supply chain management
Executive summary
The paper talks about the supply chain management of Walmart Company. The company
was founded in 1962 in the United States. The firm provides enormous retail products and
services to the customers. It is one of the biggest brands in the retail industry. The paper explains
that how the company is facing various challenges and issues related to the supply chain
management, inventory management and lean system. In today’s modern world, Wal-Mart is
unable to fulfill the needs and requirements of the customers due to lack of inventory. As a
result, it affects the long term mission and vision of the firm as it also influences the purchasing
power of the customers. The company cannot grow its business in the market without
maintaining effective supply chain and inventory management. Lack of inventory is one of the
biggest issues for the company which affects the financial position of the firm. Furthermore, the
paper explains that how the firm overcomes on these issues and challenges.
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Supply chain management
Table of Contents
Executive summary.....................................................................................................................................2
Introduction.................................................................................................................................................4
Issues in Walmart........................................................................................................................................4
Ways to improve inventory issues in Walmart............................................................................................5
Conclusion...................................................................................................................................................9
References.................................................................................................................................................10
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Supply chain management
Introduction
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.
Issues in Walmart
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
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Supply chain management
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.
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.
Ways to improve inventory issues in Walmart
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
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Supply chain management
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).
Supply chain management
Material
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Information technology
Suppliers Manufacturers Distributors Retailer Customers
Information

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.
Walmart supply model
Inventory and quality management
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
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Supply chain management
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.
Technology
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
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Supply chain management
(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.
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References
Ahson, Syed A., and Mohammad Ilyas. RFID handbook: applications, technology, security, and
privacy. CRC press, 2017.
Ayers, James B., and Mary Ann Odegaard. Retail supply chain management. CRC Press, 2017.
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.
Monczka, Robert M., et al. Purchasing and supply chain management. Cengage Learning, 2015.
Ross, David F. Competing through supply chain management: creating market-winning
strategies through supply chain partnerships. Springer Science & Business Media, 2013.
Ross, Joel E. Total quality management: Text, cases, and readings. Routledge, 2017.
Rushton, Alan, Phil Croucher, and Peter Baker. The handbook of logistics and distribution
management: Understanding the supply chain. Kogan Page Publishers, 2014.
Walmart. “Our story” 2018. Web. 14th April 2018, <https://corporate.walmart.com/our-story>
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.
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