wal-mart

1 Running Head: Supply Chain Evaluation

Supply and demand form the most important aspects of economics in any business,

and in order for a company to operate effectively, these aspects must be mastered. Demand is

usually portrayed from the perspective of the consumer, while supply is portrayed from the

perspective of the producer. Product flow entails the movement of goods from a supplier to an

external or internal consumer and dealing with customer service needs like consumables and

input materials. In Walmart company's operations, there are consumers, retailers, wholesalers,

distributors, and suppliers. In a supply chain, products and services often flow forward from the

source of origin to the consumer, although there is a backward flow of materials which is mainly

linked with product returns.

Demand Forecasting

A. Evaluation

Walmart's suppliers are using various approaches to ensure they meet the demands of

customers during peak and steady-state operations. The strategies that they are using are

organizing strategically, minimizing pipeline time, leverage multi-channel fulfillment,

prioritizing allocation, holding back and optimizing positioning, multi-strand manufacturing,

and predicting launch and early-stage demand. The business approximates its base load supply

! 2 Supply Chain Evaluation

by evaluating the previous and follow-up production amounts that are required by customers.

After estimating the base load supply, they place a matching order for the components with

upstream suppliers in the world. The company predicts launch and early-stage demand by using

data analytics in the sales performance of same goods in past years. This information helps them

to decide the degree of follow-up orders and production. Walmart leverages multi-channel

fulfillment by viewing downstream on the supply side and uses its selected Omni channel

structure to reach customers easily when sales surpass anticipations. They emphasize ecommerce

channels to reduce pipeline time and taking orders online. They also get support from retailers

and wholesalers through drop shipments that are meant to be offered to their customers, splitting

the physical and commercial fulfillment.

Inventory reorder points in the company show the lowest unit quantity that a certain

product reaches to initiate inventory renewal. These reorder points give the business time to

replenish a product before the good is out of stock and when they are not able to fulfill orders

(Nobil, Sedigh, & Cardenas-Barron, 2020). The general formula of the reorder point computes

the total lead time demand and safety stock in days when a product requires to be reordered.

Walmart offers lower prices since they improve their inventory through simulation to decrease

their costs. Simulation is used to identify when and how numerous units the company should

order from their suppliers, being aware that if they have an inventory that is not sold within a

certain time, they will have to pay penalties for interest and space that causes holding or carrying

costs. Inventory reorder points present various benefits to Walmart, such as better forecasting,

minimize stock-outs, and minimize costs.

! 3 Supply Chain Evaluation

The economic order quantity of the company consists of the ideal order quantity that

Walmart must purchase to minimize inventory costs like order costs, shortage costs, and holding

costs. Walmart is well known for its efficiency in the inventory management department because

they run an economic quantity order in which their demand rates are known, frequent and

continuous. Walmart runs a flawless economic order quantity system that is an important tool in

measuring demand, holding costs, and ordering costs. This system usually works well for

Walmart because the ordering costs are low, making it easy to let suppliers hold on to the rest of

the inventory. There are several demand forecasting constraints that exist in the supply chain,

such as lack of a unified SCMS solution, lack of stakeholder buy-in, incomplete data, legacy

systems, and there is no forecasting system to speak of.

Sourcing

A. Evaluation

The current network sourcing strategies that are used by Walmart include technology,

cross-docking and strategic vendor partnerships. The sourcing strategy of Walmart is based on

an important inventory technique known as cross-docking. This strategy transfers goods directly

from arriving trucks to outbound trucks which help to save the costs of storage. Suppliers

distribute goods to distribution centers of Walmart, where they are cross-docked and then

transferred to the Walmart stores. This strategy of cross-docking reduces inventory transportation

costs and eradicates ineffectiveness (Benrqya, 2019). This leads to savings for the business,

which are later passed on to the consumers in the form of inexpensive prices. Walmart used the

strategy of selecting suppliers who could meet the demand and offer them with the best price for

! 4 Supply Chain Evaluation

the goods. They later developed strategic relations with these vendors through the provision of

long-term and high volume consumptions in exchange for the lowest probable prices. The

company also created communication and relationship networks with their suppliers to advance

the material flow. The technology was also embraced in the company to track its inventory and

restock its stores. Technology plays a key role in Walmart's supply chain and aids them to

estimate demand accurately, control customer relations and service response logistics and track

inventory. Walmart was the first company to implement bar codes in which store-level

information was gathered and analyzed quickly.

B. Recommendations

A strategy that I recommend to optimize the sourcing network that considers the current

operations is using a robust procurement function. A strong procurement process will underpin

and complement the sourcing network for optimal business outcomes and financial results (Bag,

et al., 2020). This strategy will allow the source network to stretch for greater achievement and

success. A robust procurement function must be based on particular factors, including a rigorous

discipline around lifecycle vendor management, strong alignment between procurement and the

business stakeholders, and a high percentage of spend under management.

! 5 Supply Chain Evaluation

Reference

Bag, S., Wood, L. C., Mangla, S. K., & Luthra, S. (2020). Procurement 4.0 and its implications

on business process performance in a circular economy. Resources, Conservation and

Recycling, 152, 104502.

Benrqya, Y. (2019). Costs and benefits of using cross-docking in the retail supply chain.

International Journal of Retail & Distribution Management.

Nobil, A. H., Sedigh, A. H. A., & Cárdenas-Barrón, L. E. (2020). Reorder point for the EOQ

inventory model with imperfect quality items. Ain Shams Engineering Journal, 11(4),

1339-1343.