Journal of Economics and Management

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Wal Mart s successfully integrated supply chain 103. 1 Introduction, It is widely recognized that instead of focusing only on their operations. supply chain capability has become a critical factor to boost the competitiveness. of companies As Harrison 2003 affirmed companies now consider its supply. chains as a competitive advantage Through the supply chain products or ser. vices are delivered to the final customers quickly with the lowest cost to satisfy. their demands as well as increase cost effectiveness for all internal and external. participating parties Gattorna 2006 However in the competitive global econ. omy firms have to redesign their supply chain to adapt to new environment and. take advantage of the worldwide market Managing the supply chain requires the. consideration of the entire supply chain system of procurement and distribution. logistics and inventory Manuj Mentzer 2008, Wal Mart is currently the world s largest retailer kept holding its top posi. tion in fiscal year 2016 Forbes 2016 With 482 130 million revenues it. ranked the number one in the Global Fortune 500 List in 2016 Global 500. 2017 From 1962 when the first Wal Mart store was opened by Sam Walton in. Rogers Ark to now Wal Mart runs over 10 000 retail outlets in 27 countries. The success of Wal Mart derived from many factors but the key factor leading. to a dominant position of Wal Mart in the retail industry lies in its effective sup. ply chain Traub 2012 More specifically Wal Mart is a successful retailer with. its speed cost effective and high integrated supply chain Furthermore Wal. Mart s retail and supply chain management SCM strategies have also become. competitive advantages to accelerate its growth over competitors Information. technologies initiatives are used and kept innovating to facilitate Wal Mart s. SCM efficiency Although a speed cost effective and integrated supply chain. brings a huge success for Wal Mart until now as Lee 2004 mentioned it is not. enough for this company to maintain a sustainable competitive advantage over. its rivals Thus in the 21st century not only Wal Mart but all companies should. redesign its supply chain that is not just fast and cost effective but needs con. sisting of all three qualities agility adaptability and incentive incentives align. ment Lee 2004, The paper mainly aims to analyze features creating a Wal Mart s successful. integrated supply chain contributing its dominant position in the retailer market. and identify issues existing in Wal Mart s supply chain in the globalization era. today Then some suggestions will be mentioned for Wal Mart s operations aim. ing to establish the new Triple A supply chain towards sustainability with three. capabilities agility adaptability and alignment,104 Thi Thu Ha Nguyen. The present paper is structured as follows Introduction and significance of. the study are given in Section 1 Section 2 and Section 3 represent Literature. review and Research methodology Section 4 shows Wal Mart s supply chain. and key components of successful integrated supply chain formulation while. Section 5 identifies some issues existing in Wal Mart s supply chain and sug. gests the necessity and how to build the ideal Triple A supply chain for Wal. Mart s operations Conclusion is given in the last section. 2 Literature review, Wal Mart s integrated supply chain is the key enabler of its growth from.
a small retailer in rural Arkansas to a global leader Wal Mart has become the. leading retailers because of having a decision making system that relied on data. analysis through a barcode scanning system a point of sale system and real. time data collection Mark 2012 Moreover the leadership position of Wal. Mart in the retail industry has resulted from efficient supply chain practices. provided by automated distribution centers combined with computerized inven. tory systems Chandran 2003 Wal Mart is also well known for operating suc. cessfully its own trucking system and an innovative cross docking logistic tech. nique whereby products can be delivered from inbound to outbound trailers. without intermediate storage Johnson 2008, Besides Freeman et al 2011 indicates that Wal Mart is not only a business. leader but also a technology leader in which its supply chain coordinating tech. nique for collaborative planning forecasting and replenishment CPFR and ven. dor managed inventory CPFR program helps Wal Mart minimize distortion of. demand information and coordinate the business plan with supply chain partners. while as for vendor managed inventory aspect the data is shared between Wal. Mart and its suppliers in order to maintain the lowest cost of its inventory. Emiliani et al 2007 also confirms that Wal Mart successfully captures the. benefits of information technology More specific the RFID program allows. Wal Mart create real time databases as well as the opportunity to integrate more. effective targeting a minimal inventory Minimizing inventory is considered as. a means to enhance a sustained competitive advantage in the arena of cost reduc. tion Furthermore as a result of an effective inventory management Wal Mart. can reduce the costs such as inventory taxes and insurance costs which are the. motivating factors pushing companies looking for efficiency and profitability. However according to Lee 2004 the greatest difficult of Wal Mart in captur. ing the advantage competition is lied in suppliers cooperation. Wal Mart s successfully integrated supply chain 105. 3 Research methodology, This paper is based on literature studies for reviewing Wal Mart s integrat. ed supply chain and designing an ideal Triple A supply chain. Based on the literature of Krajewski Ritzman Malhotra 2013 pp 379 405. regarding an integrated supply chain and according to Grean Shaw 2002. Prater et al 2005 Johnson 2008 and Natto 2014 we confirm that Wal. Mart understands how integrated its supply chain More specifically this com. pany have a supply chain with a high degree of functional and organizational. integration in which new service or product development supplier relationship. order fulfilment customer relationship processes and its internal and external. associations are integrated into the business in order to minimize the disruptions. resulting from unexpected changes in demands or supplies in the supply chain. Besides the collaboration between Wal Mart and its suppliers plays an im. portant role in enhancing the efficiency of Wal Mart s supply chain However it. is difficult for Wal Mart to maintain the profit margin balance between different. parties Chiles Dau 2005 The unbalanced allocation of interests among par. ticipating parties might result in the failure of supply chain practices for exam. ple generating conflicts refusing the cooperation with each other between part. ners in excess of inventory Narayanan Raman 2004, Furthermore Lee 2004 and Shin Tucci 2015 mention that due to the. misalignment of interests between Wal Mart and its suppliers Wal Mart copes. with the inventory problem Also they suggest that in the 21 century s global. competitive environment Wal Mart needs to consider this problem as well as. focused on an alternative supply chain consisting of all three qualities agility. adaptability and alignment which was called The Triple A supply chain. On the other hand Lee 2004 propose the necessity of establishing the new. Triple A supply chain for not only Wal Mart but also all companies in the 21st. century is that a supply chain which concentrated much on speed and cost. effective would lead to a worse performance reduce customer s satisfaction. regarding products availability and the company s competitiveness while a sup. ply chain with all three capabilities including agility adaptability and alignment. could improve the performance and enhance both short run and long run com. petitive advantages Moreover Lee 2004 suggests how to build three capabili. ties that made up a successful supply chain,106 Thi Thu Ha Nguyen. 4 Wal Mart s supply chain,4 1 Wal Mart s competitive strategy.
Wal Mart s competitive strategy is to provide the best quality of products. and services at the lowest affordable price for customers Chandran 2003 In. order to implement this strategy this company applied a new trend of discount. ing merchandise off the suggested retail price in the 1960s and then employed. an Everyday Low Prices EDLP program in the 1970s and 1980s to guarantee. a wide range of quality products and services at a relatively low price than most. of retailers Walmart 2012 By using the EDLP program Wal Mart saved. a large number of advertising expenditure which transferred into its price reduc. tion and then became the best known retailer in the world Johnson 2008. Besides Wal Mart s efforts in retail strategy were made to cut operating. costs Wal Mart s distribution centers were put closer to real time information. on in stock levels of each store which enables this company push the products. to stores automatically The information systems at the store level allowed pro. ducers to be informed whenever a product was sold In forecast of changes in. goods demand associates had the power to manually input requirements or. override impending transportations Indeed to ensure that the staffs were in. formed managers shared in depth information about day week month store sales. with all workers in 10 minute long informal meeting every day Johnson 2008. 4 2 Managing the Wal Mart s supply chain, As Manuj Mentzer 2008 mentioned managing the supply chain means. that the company needs to consider three segments within a supply chain com. prising of procurement and distribution logistics and inventory management. Wal Mart is a successful company which adopted the information technology. for managing its supply chain as well as enhancing its core competencies. 4 2 1 Procurement and distribution, In order to adhere to Everyday Low Costs EDLC policy Wal Mart de. cided to eliminate the intermediaries and go directly to suppliers to procure. needed things In addition before placing orders Wal Mart has always negotiat. ed with manufacturers learned their cost structure and make purchasing estima. tions Chandran 2003, Wal Mart s successfully integrated supply chain 107. Wal Mart was the first retailer that experimented central database store. level point of sale systems and satellite network in the mid 1980s When com. bining with the use of barcodes employees were able to acquire and analyze. real time store level information Moreover the giving information of sales and. external data such as weather forecast helped buyers improve the accuracy of its. purchasing predictions Johnson 2008, In regards of Wal Mart s distribution its distribution centers are located in. different areas and the company divided each distribution centre into different. sections in accordance with the quantity of products The company usually re. quires a frequency of inventory turnover and a high percentage of products in. distribution centers before directly transporting to stores Thus the efficiency in. managing distribution centers is critical factor for Wal Mart to ensure the stable. and consistent flow of goods Chandran 2003, The application of information technologies such as barcodes or currently.
RFID radio frequency identification tags makes this process smooth By using. these information technologies employees can easily acquire the real time in. formation about all merchandise stored in distribution centers Mark 2012. However a RFID technology which can better satisfy the needs and demands of. retailers is more innovative than traditional barcodes technology because of. some reasons Firstly RFID tags are capable of storing more data than barcodes. RFID tags enables employees to access the information of products for instance. the time and location the goods were produced and its expiry date Secondly. RFID technology helps Wal Mart to identify and track inventory from manufac. tures to warehouses to stores Jones et al 2005,4 2 2 Logistics. Wal Mart is successful in operating its private trucking system A powerful. transport system is the highlight of Wal Mart s logistics infrastructure with more. than 3 500 trucks serving for distribution centers These truck fleets enables. logistics division to finish goods shipment from distribution centers to stores for. a short time and to replenish inventory every week Also this organization has. an innovative cross docking logistics technique that can enhance the efficiency. of distribution which is able to classify and convey the merchandise from facto. ries to warehouses of Wal Mart and then fast and directly transfer products from. inbound to outbound trailers without extra storage In other words this cross. docking technique helps Wal Mart reduce the inventory handling costs operat. 108 Thi Thu Ha Nguyen, ing costs as well as saving the space and enhancing the efficiency of distribution. Chandran 2003, Furthermore the combination of these logistics technologies with REMIX. technology and a satellite network that has brought great benefits for Wal Mart. in recent times now have changed the approach to dispense the high velocity. goods for instance bread vegetables etc from lower level of automation to. automation By using these technologies one distribution centre can serve a cluster. of retail outlets as well as add food distribution cent. a means to enhance a sustained competitive advantage in the arena of cost reduc tion Furthermore as a result of an effective inventory management Wal Mart can reduce the costs such as inventory taxes and insurance costs which are the motivating factors pushing companies looking for efficiency and profitability

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