Free Essays

Distribution Decision PA/ Wal-Mart

Wal-Mart is a major actor in the retail industry with operations that span across the globe. In order for Wal-Mart to compete effectively in the retail industry, it has implemented effective and efficient supply chain practices that ensure 63% of its stocks are sold before Wal-Mart pays its suppliers. These practices ensure increase in sales, improved customer service as well as substantial reduction in the overhead costs (Beierlein & Miller, 2000, p. 2). Wal-Mart Channel Design Wal-Mart has exploited the changes in market trends to its advantage.

With the rising demand for food items, Wal-Mart needed to ensure that the deregulated transport industry and advancement of Information Technology worked to its advantage in ensuring that delivery of its inventories meets the rising demand for food using modern cost effective supply chain management practices. The primary objective of supply chain management is to substitute inventory with information. The use of supply chain best practices, integrated logistics systems, has led to Wal-Mart’s growth into the biggest food retailer in the U.

S. In order to compete effectively in the retail industry, Wal-Mart ensures that it buys the goods on demand at the appropriate costs and also delivers the goods to the suitable location at the appropriate time and at the right operational overheads. Wal-Mart achieves this by integrating the functions of the supply chain with logistics and merchandising. To achieve this Wal-Mart merges the information that establishes buyers’ decisions with the merchandise flows that distribute goods to the consumers most cost effectively.

Wal-Mart has a high degree of responsiveness to its customers, thus it is able to implement the integrated logistics systems (Pagarkar et al. , 2005, p. 3). The massive quantities of goods that are in constant movement in the Wal-Mart supply chain, makes it necessary to employ modern integrated logistics systems. Wal-Mart needs to keep track of goods in motion as well as goods in its store shelves as warehouses. This necessitates the use of integrated tracking and inventory control systems (Arc Aspicio, 2008, p. 2).

Wal-Mart employs the Radio Frequency Identification/Electronic Product Code RFID/ePC in its order management system. This technology enables an item to be tagged rapidly and accurately with little human involvement. This technology integrates the vendor managed inventory (VMI) and the collaborative planning, forecasting and replenishment (CPFR) technologies (Pagarkar et al. , 2005, p. 14). Wal-Mart employs such integrated logistics systems as the RFID, since these systems are cost effective and highly accurate. The RFID facilitates visibility of goods in real-time.

This enables Wal-Mart identify its bottlenecks as well as those areas that may render its supply chain ineffective. Conclusion In the extremely dynamic retail industry, Wal-Mart continues to be the leading retailer due to its continuous employment of evolving technologies. This is demonstrated by the use of the most modern integrated logistics systems in supply chain management. According to Robinson (2000) firms that utilize the supply chain best practices, such as Wal-Mart, obtained greater economic value added than those firms that did not.

This implementation of supply chain best practices has changed the competition between companies into a competition between supply chains. Wal-Mart is a leader in this channel.


Arc Aspicio. (2008). Discount Shopping and Disaster Response? Retrieved April 3, 2009 from http://www. arcaspicio. com/pdf/insight_topic2. pdf Beierlein, J. G. , & Miller, C. A. (2000). Performance Measures and Measurement in Supply Chains in the Food System. Retrieved April 3, 2009 from http://www. ifama. org/tamu/iama/conferences/2000congress/Forum%20-%20Final%20PAPERS/Area%20III/Beierlein_James. PDF