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This essay explores on the interesting supply chain management practices of Wal-Mart, from

the external to the internal, as one of the major reasons forWal-Marts continuing success

globally. The three assessment questions that highlight this essay are the appraisal of the

essential pre-requisites for docking, the evaluation of the use of state-of-the-art technology

systems and the advantages and disadvantages of Wal-Marts in-house transport fleet. Indeed,the attributed success of Wal-Mart lies in the heart of how they do business in their own way.

To begin with, Wal-Mart was named the number one ranked in the prestigious global Fortune

500 for the financial year 2002 with earning revenues amounting to $219.81billion has earned

its reputation as the largest retailing company in the world. The success of course was made

possible behind the dedication of the men and women employees ofWal-Mart having

employed about 1.28 million employees. But the essence behind the success ofWal-Mart is

the man behind who started everything and laid down the basic principles and philosophy to be

emulated by Wal-Mart people is Mr. Mr. Sam focuses on four core principles that engulfs

the overwhelming success of Wal-Mart are the focus on the improvement of sales, constantly

reducing costs such that they will be able to capitalize oncost saving opportunities to be

passed on the customers, the adoption of efficient distribution and logistics management

systems to ensure the constant flow of the goods and the use of highly-advantageous

innovative information technology (IT) tools that makes the operating processes even faster,

efficient and up to date. At the age of 22, Mr. started out the business and from then on,

decades have passed, the success of Wal-Mart is tremendous. Until 1980, Wal-Martcontinued

to grow rapidly that is brought about by the gigantic customer demands by the small towns

where the penetration of its market is prevalent. Mr. s death in 1992 had caused a setbackof Wal-Mart; however, 5 years after, the resiliency ofWal-Mart is mirrored in the emergence

of Wal-Mart as the largest volume discount retailer inCanada and Mexico. Similarly on the

same year, Wal-Mart even expanded in the Europe particularly inGermany. The other

international expansion efforts immediately followed in the successive years.

Analysts perceived the phenomenal growth ofWal-Mart to the emphasis being placed in thecustomer needs and the reduction of cost through efficient supply management practices as

being laid down by Mr. as Wal-Marts core principles in running and competitively staying in

the business.

Main Part

1 Critically appraise the essential pre-requisites for cross-docking and highlight

the key benefits to Wal-Mart.

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Cross-docking refers to the logistics practice in the unloading and loading of materials with

little or no unnecessary storage in between to ensure the that the quality of goods would be

enjoyed by the customers by first hand. To avoid all sorts of potent causes of inefficiencess in

the distribution operations, Wal-Mart features a logistics infrastructure that is guaranteed to be

fast and responsive transportation system wherein thedistribution centers are being serviced.

The essential pre-requisite for cross docking are very basic and monitorable. Basics are strong

building foundations in which it ensures the overall efficiency of the whole process. Wal-

Mart recognizes the need to hire dedicated drivers who can share in their belief of prioritizing

customer service. Upon hiring potential drivers, they filter the drivers capabilities and

measure the responsibleness and reliability in being able to handle the pertinent standards

essentially needed to maximize the worth of the drivers. Far more interesting is that after they

have filtered and honed drivers commitment as being stated in the code of conduct

embodied in the The Private Fleet Driver Handbook which contains the check-list to be

followed at all times in the safe exchanges of goods and the roles they are expected to act on.Further, Wal-Mart after implementation, monitors their drivers progress in which drivers have

to report the hours of service they have done on a daily basis to their respective coordinators.

By these means, Wal-Mart is constantly assured that their drivers are able to do their jobs

accordingly and do not cause unnecessary delays that may hamper the efficiency of the

distribution operations. To be able to make it up on time, the coordinators on the other hand,

gives information to the driver as to what is the expected time of arrival or delivery of the

goods should be made. Part of Wal-Marts expectations to the drivers is that they are to take a

loaded truck trailer from the distribution center to be delivered to the retail store and such time

drivers will be headed back, their trailer would be empty and surely have unloaded everything

to the point of destination where it is supposed to be delivered.

Other than the standards being strictly imposed toWal-Marts drivers, the structure of the

distribution process is truly well-organized that can be attributed to the efficient distribution

practices Wal-Mart has been employing. Like for example, the scheduling of the unloading

time at the dock of a store with two hours interval in between unloading. The precise

unloading time of goods to a dock permits the constant, smooth flow of the distribution

process without the fuzziness of rushing into the completion of the delivery process. Further,

the purpose of the time interval permits the employees to do their job without the pressure and

hassle of doing it impromptu. By the time the 2 hour lapses, Wal-Mart is then assured thateverything has been unloaded and thedistributionis followed accordingly.

Cross-docking is an add-on technique thatWal-Mart employs to further contribute to

the efficient distribution process they already had. In this system, it requires the direct pick-up

from the manufacturing plant or supplier the finished goods, to be sorted out and also directly

supplied to the customers. With the shift of focus to the supply chain to the demand chain, it

takes out the centralization and allows the customers to pull products the moment they are

needed. The benefits of cross-docking technique Wal-Mart has reaped is the reduction in the

handling and storage of finished goods and most importantly the competitive edge of havingan efficient supply chain management system that includes reduction in lead time, speedy

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inventory turnover, accurate forecast of inventory levels, reduction in safety stock, reduction in

the dependency of the distribution center, thereby, further causes reduction in the training costs

and errors. Overall, thecross-docking helped in the minimization of storage, labor and

handling cost.

2 Critically evaluate the use of state- of the- art technology systems to track

and predict levels of inventories in Wal-Mart.

The use of technological infrastructure such as information technology and state-of-the art

communication system is a very powerful tool in any business today that guarantees up-to-date

and hasten process in thelogistics operationswhich leads to being able to cater to the needs

and demands of the customer in the least time possible. Therefore, to hand over excellent

service that is tantamount to customer satisfaction. For example, in many companies the

incorporation of e-business allows companies to keep up with the wants of customers in a fast

changing world of business and it enable companies to reach more customers while at the

same time increasing the number of customer retention. The use of the said state-of the art

technology guarantees Wal-Mart to readily and steadily track down the sales and merchandise

in all of its stores across the United States including the follow-up track down to theglobal

operations. In fact, in 1983, Wal-Mart launches its own satellite communication system asthey see the need to expand not only their operations but also their communication system

such that they can sustain the growing demand of communication essential to keep terms in the

operation of the increasing retail outlets or distribution centers. The benefits of the

communication system, as Mr. explained, I can walk in the satellite room, where our

technicians sit in front of the computer screens talking on telephone to any stores that might be

having a problem with the system, and just looking over their shoulders for a minute or two

will tell me a lot about how a particular day is going. On the screen, I can see the total of the

days bank credit sales adding up as they occur. If we have something really important or

urgent to communicate to the stores and distribution centers, I, or any other Wal-Martexecutive can walk back to our TV studio and get on that satellite transmission and get it right

out there. I can also go every Saturday morning around three, look over these printouts and

know precisely what kind of work we have had. The satellite communication system has

been utilized in Wal-Mart at its maximum level including the employees. Wal-Mart ensures

that potent problems are being settled readily and just like the valuable importance given by

other companies to communication system, Wal-Mart, aside seeing its importance, they regard

the communication system as being pivotal aspect of their entire operations.

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With the use of communication system, Wal-Mart also actuates information technology in the

supply chain management. The manual way of using inventory which is sometimes costly of

the potential human errors has been minimized by Wal-Mart by the full usage of IT to make

inventories instantly available when needed. Similarly, Wal-Mart was able to network its

suppliers through the use of commuters where Wal-Mart in this regard can have a cooperatedcollaboration with its leading big time suppliers like Procter and Gamble. Both the use of IT

on one hand monitors the inventory supply through automatically updating the IT system

which in turn, reciprocates by sending signal directly to the supplier and thecommunication

system, on the other hand, proposes a win-win solution for both the supplier and Wal-Mart due

to the open communication line between them results to better coordination and collaboration

for both parties. Thus, the supplier on one hand would love to do business with Wal-Mart of

the utmost convenience Wal-Mart has been offering to the suppliers.

Wal-Mart was very genius in the optimization use ofinformation technologyand

communication system because they only did not limit its usage to the executives and the

suppliers but they extend the usage and made available for the employees that can also benefit

the use of the said technologies in aiding them to do better of their work with no stress.

Employees of Wal-Mart in every store had what they called the Magic Wand, a hand held

computer which was linked to in-store terminals through a radio frequency network, that gives

assistance to employees of tracking down the inventory, deliveries and back-up merchandise in

stores at the distribution centers. The Point of Sales (POS) System is another application in

the use of IT that is used in the monitoring and tracking down of sales on the store shelves.

These helped employees to keep track of the inventory in stores, deliveries and backupmerchandise in stock at thedistribution centers. The execution of both the order management

and store replenishment of goods was made possible by the use of the said POS system.

Another use of Wal-Marts information technology is the establishment of thecentralized

inventory data system wherein it enables the store personnel to know precisely the status of

inventory levels and the location of every product since the centralized inventory data system

is made to monitor the progress of inventory, whether it has been already been loaded to adistribution center or still in transit. By this means, the store is able to know what to expect

and make sure that every store has adequate supply to cater to the customers.

3 Critically appraise the advantages and disadvantages of Wal-Marts in-house

transport fleet.

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The advantages of Wal-Marts in-house fleet are that they were able to reap the benefits of

low-cost in transportation for the delivering of goods to the different stores and distribution

centers. Given the benefits of having owned a transportation system, Wal-Mart capabilities of

replenishing the shelves, is four times faster than the other competitors. Not only that, it

enables Wal-Mart to save 3% compare with the 5% of the competitors. Moreover, the code ofconduct that is being imposed to the Wal-Marts drivers boosted more confidence for Wal-

Mart that the goods are being delivered exactly on time and right on the money.

A disadvantage of Wal-Marts in-house transport fleet is hard to pinpoint and cannot be

readily noticeable since the reputation of Wal-Mart is impeccable. Perhaps, one disadvantage

of having an owned transport fleet is that the repairs and maintenance may be a bit costly for

Wal-Mart since they have that sole responsibility of taking care of their trucks. Additional

expenditure will be evident and Wal-Mart is expected to sustain and allocate ample amount of

money in the operations of in-house transport fleet. Amidst of the disadvantage of

theadditional cost, the easiness and effectiveness of the use of in-house fleet transportation

system wins over the slight disadvantage it brings.

Conclusion

The success of Wal-Mart is proved to be in the reliability and efficiency in the supply chain

management system. Having gone through the essence of the underlying operations of Wal-

Mart, they always seek to improve and explore over the possible ways to give customers

superb quality service without an additional expense. From the purchasing to transporting and

then finally to selling, at Wal-Mart they were able to have a well-coordinated and systematized

system that ensures the success of the whole supply chain management which in turn would

benefit and satisfy Wal-Marts customers.

From the external environment dealings, Wal-Mart started first by bargaining prices with the

suppliers and manufacturers until Wal-Mart gets the bottom or the drop-down price and then

develops a more than a business relationship with the suppliers such that they give suppliers

full business loyalty and expresses how much Wal-Mart look forward of having years of

business with them. Then in the transportation, the monitoring and tracking down of the goods

allows Wal-Mart to constantly replenish the shelves giving its customers the taste of the

freshness of goods. Aided by the use of satellite communication system and the information

technology system, undoubtedly added to the effectiveness and efficiency of the whole supply

chain management and thus, certified the provision of uninterrupted service to its customers,suppliers,stockholders and trading partners that leads to the integration and coherence of what

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has been established.

True to the basicprinciple of business, the minimization of cost, high production leads to themaximization of profit. The practice of Mr. s core principles on constantly improving sales is

brought about by the service they have been offering at no extra cost. At Wal-Mart, they have

been very successful in finding means in which to capitalize on every cost saving opportunities

and the adoption of efficient logistics system enable Wal-Mart to earn unrivaled intangible

competitive advantage and edge to the rest of the business world which is made possible also

in the use innovative technology.

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