For this milestone, you will submit an assessment of the supply and demand

Running head: Walmart China: Supply Chain Transportation 7

Milestone 1: supply Chain Management

Walmart China: Supply Chain Transportation

Name;

Institution:

9th September, 2016

Walmart China: Supply Chain Transportation

Introduction

Walmart stores Inc. is based in Bentonville, Arkansas. Walmart is a global company with 11,000 stores, under 72 banners, in 27 countries. Each week the company serves more than 260M customers worldwide. Walmart china is one of the stores opened in 1996. Walmart china is currently serving 416 retail stores in China. Walmart’s supply chain distribution and transportation has been successful throughout the years. This is because of management support through capital investment and also its competitive advantage in the market. Walmart China is one of the company’s clients that it supply chain has not accomplished much for the last three years. The article will be focusing on demand foresting of Walmart China customers and suppliers and evaluation to determine areas in this client supply chain that will require improvement to enhance efficiency. Supply chain element of sourcing will also be discussed in detail and evaluations will be done to improve it.

Demand forecasting

Supply and demand side Walmart China product flow

The company’s supply chain has undergone several transformations from high-volume distribution mechanism to a customer-facing operation. Large quantity units of between 15,000 stock units to 20,000 stock units were being transported from the stores to customer location. The suppliers of Walmart China also shipped products directly to stores. This ship-direct to store model was impractical and inefficient to Walmart China. With this shipment model, suppliers of Walmart China could use full truckloads, container loads and economic order quantities to supply their products. This mode was unfavorable to perishable goods of the store. With this distribution system, Walmart China introduced two modes of transport in 2015. They include perishable distribution system and dry distribution system. This called for different distribution centers that have currently evolved to eleven perishable DCs and nine dry DCs. The respective products kept and distributed in the two centers of Walmart China include dry grocery products, consumables, and general merchandise products and cross dock.

Constraints; Customer needs

The customers require convenient locations, cheap products and quality products & services from the suppliers of Walmart China. To accomplish this, the stores increased in number to serve all cities in China and all places of the country. The services offered should also be improved and the prices of products should be affordable.

Other customer expectations include; operating cycle of seven days a week on two shifts, capacity of 150,000 products per day, average value of $24.5 per case, peak demand of approximately 90,000 per day, the product mix is expected to be 3,500 SKUs comprising of broad range of products ranging from durable to perishable products. The Distribution Center is expected to be of seventy percent of peak demand.

Supplier capabilities

Walmart China operates through its physical locations and its created website. These operations are currently carried out in 166 cities with 416 stores around the country of China. Majority of these stores use the same standard procedure in terms of inventory management, customer relations, information technology, material handling, staffing, merchandise display, product design and stock/product control. This supply chain processes is facilitated by corporate management team in various stores of the company.

Evaluation: suppliers

Currently, Walmart China has employed a strategy that will help in reducing the cost of transportation. This implemented strategy will help in forecasting the company store sales effectively. It will also help in transporting the products using fuller trucks and using railways as the most cost-effective means of transportation in the company. There are also mechanisms established for the stores to supply each other with stock in cases of stock outs. Walmart China is highly dependent on information system to operate it business in the stores. Websites created has helped in conducting ecommerce platform for online marketing and selling the products of the company. This IT system has also help the company in conducting an efficient supply chain management.

Evaluation; constraints

Walmart China currently ships their products directly to its consumers in over 1, 900 retail stores. The days on inventory turnover is trending up as per the recent evaluation while the inventory turnover of the company is reducing drastically. The company is focusing on improving inventory turnover to accommodate the trending rapid changes in the technological industry and more specifically on electronic market. The company also uses online distribution facilitated by several store websites created.

Evaluation of Walmart China Network Sourcing Strategy

The network is quite fragmented with 29 autonomous buying offices across the Republic of China. There are only five dry serviceable distribution centers servicing the all stores. The logistics team charged some fee to suppliers of the company for using their networks. This made distribution costly and horrible services were provided. Due to this high cost from the logistics team, Walmart preferred using large trucks to supply the products to the stores. This was still costly to the company.

In 2015, there were transformations that lead to the current network sourcing system. The system has 20 distribution centers located in different cities. These DCs are divided into eleven perishable centers and nine dry centers. The company is currently in moderate situation with supplier fill rates rising up and the stock performance also rising. This gives a fairly comfortable distribution network system. The system runs an ambient DC model similar to that of Walmart in U.S to better give a cross dock and enhance efficiency.

Walmart China suppliers products are directly distributed from the manufacturers to the stores. Sometimes these products are picked from distribution centers and the company warehouses to the stores. Currently the store company operates twenty distribution centers located in several parts of the country of China. These centers help in transporting the company products efficiently and effectively from the manufacturers to the stores.

Recommendations

Walmart China order system should be updated to increase the number of orders received to increase the company performance in stock delivery. The logistics system used to supply the Walmart China Products should be totally eliminated to enhance efficiency. The company credit risk level should be low. There should be high inventory supervision to avoid loss and mismanagement of stock. The company network system should produce large output of products to meet the customer demand forecasted. Efficiency should be enhanced through minimal transportation costs incurred.

Appendix

Recommendation

References

Y. Narahari and S. Biswas. Supply Chain Management: Models and Decision Making

Ram Ganeshan and Terry P. Harrison. An Introduction to Supply Chain Management

D. Connors, D. An, S. Buckley, G. Feigin, R. Jayaraman, A. Levas, N. Nayak, R. Petrakian, R. Srinivasan (1995) Dynamic modelling for business process reengineering . IBM Research Report 19944,

Jeremy F. Shapiro. Modeling the Supply Chain. Duxbury Thomson Learning, 2001

David Simchi Levi, Philip kaminsky, and Edith Simchi Levi. Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies. Irwin McGrawHill, 2000.

1. Order receipt – increased

2. Credit check - minimal

3. Inventory check – high

4. Production-more than - 1.5 m

6. Billing- more accounts receivables

5. Shipment – low costs