Wal-Mart Case Analysis
Abstract
Wal-Mart was founded in 1962 by Sam Walton in Rodgers Arkansas. Over the years, the chain stores have not only grown to be the leading retail shops in the U.S. but the world at large. According to Porter’s Cost Leadership Strategy approach, the only way a company will be successful using this strategy is if it is able to operate at a lower cost than its competitors. Wal-Mart has proven this theory because it has been successful by lowering its operating costs at all the chain levels and by having a bargaining power with suppliers to obtain low prices. This paper asserts various aspects of Wal-Mart including its management, success, failures and gives recommendations for improvement.
What impresses you about this company? Other than the obvious lower cost products offered to the consumer, what impresses me about Wal-Mart is that Wal-Mart is always leading edge on supply chain systems and technologies. Because of their size and sheer volume, they are able to "force" their suppliers to conform to their practices. Implementing change to the supply chain is the most difficult thing to do, but they have the leverage to do it.
Things like electronic inventories, RFID, "live" electronic links to suppliers’ inventories, etc., all create efficiencies and help to keep costs down. For example, when you buy a box of corn flakes at Wal-Mart, as soon as it is scanned as a sale, it automatically communicates this to the supplier of corn flakes. This triggers an auto reorder and a replacement shipment is sent to Wal-Mart. With RFID technology, a whole pallet of cornflakes can show up and be scanned, then received into their stock without even unwrapping the pallet. Costs are lower, less handling, quicker response to sales, minimizes stock outs, etc. (Peter .P. & Donnelly, J. 2013). In addition, Wal-Mart’s Retail Link system allows thousands of their suppliers to track their merchandise through Wal-Mart’s value chain, get hourly sales figures for each item
Wal-Mart was founded in 1962 by Sam Walton in Rodgers Arkansas. Over the years, the chain stores have not only grown to be the leading retail shops in the U.S. but the world at large. According to Porter’s Cost Leadership Strategy approach, the only way a company will be successful using this strategy is if it is able to operate at a lower cost than its competitors. Wal-Mart has proven this theory because it has been successful by lowering its operating costs at all the chain levels and by having a bargaining power with suppliers to obtain low prices. This paper asserts various aspects of Wal-Mart including its management, success, failures and gives recommendations for improvement.
What impresses you about this company? Other than the obvious lower cost products offered to the consumer, what impresses me about Wal-Mart is that Wal-Mart is always leading edge on supply chain systems and technologies. Because of their size and sheer volume, they are able to "force" their suppliers to conform to their practices. Implementing change to the supply chain is the most difficult thing to do, but they have the leverage to do it.
Things like electronic inventories, RFID, "live" electronic links to suppliers’ inventories, etc., all create efficiencies and help to keep costs down. For example, when you buy a box of corn flakes at Wal-Mart, as soon as it is scanned as a sale, it automatically communicates this to the supplier of corn flakes. This triggers an auto reorder and a replacement shipment is sent to Wal-Mart. With RFID technology, a whole pallet of cornflakes can show up and be scanned, then received into their stock without even unwrapping the pallet. Costs are lower, less handling, quicker response to sales, minimizes stock outs, etc. (Peter .P. & Donnelly, J. 2013). In addition, Wal-Mart’s Retail Link system allows thousands of their suppliers to track their merchandise through Wal-Mart’s value chain, get hourly sales figures for each item
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