Application of best practice principles in the supply chain helps in fostering collaboration and information sharing among stakeholders, which contributes to supply chain efficiency. Wal-Mart achieved supply chain efficiency through the major process of business namely purchasing, distribution, retail strategy and use of information systems. Overall implementation of supply chain in the stores in line with the principles of organizational and people processes, effective customer relationships, maintaining shared vision, technology application, and collaboration and maintaining a long-term focus. From the analysis of the literature, it is apparent there is a gap in knowledge development and exchange in the supply chain, which is a vital aspect in enhancing efficiency. This has particular implications on suppliers who may be affected negatively because pursuing efficiency.
Supply chain efficiency is a major factor in the retail industry that determines the effectiveness of processes in the entire value chain from suppliers to manufacturers to retailers and consumers. Focusing on the consumer and common objectives for partners helps in promoting efficiency. Wal-Mart and Woolworths are multinational retail stores implicating supply chain principles with the goal of promoting efficiency. Application of supply chain efficiency principles in areas of purchasing, distribution, retail strategy and information systems among the companies contributed to high levels of efficiency. The report focuses on supply chain efficiency principles and their application in Wal-Mart and Woolworths to achieve common goals among stakeholders, maintain competitive advantages, embrace technology in operations, and respond to evolving market demands.
Wal-Mart and Woolworths supply chain models
In the purchasing function, private labels are critical to business sustainability as it makes a significant contribution to company profits. The company opened various purchase locations in different localities as a way of making the supply chain stronger. This resulted in significant sophistication of purchasing through use of technology to achieve a leaner supply chain and support tracking of inventory. Distribution is a major determinant of Wal-Mart store locations across the globe. Using the company’s own trucking system, Wal-Mart achieves efficiency by maximizing the use of trucks to deliver unprocessed products from suppliers and processed products to markets. There is close cooperation with suppliers in the process of labeling and case sizes as a way of enhancing efficiency in the movement of stocks (Arli, Dylke, Burgess, Campus & Soldo 2013).
The company involves suppliers and consumers in developing a retail strategy to ensure easy buy-in and grow sales, especially through roll-back campaigns for product pricing. Giving customers significant discounts on products meant increased loyalty, which contributes to more profitability than other retailers. The retail strategy also includes product ‘category captains,’ which determined shelf space allocation in Wal-Mart Stores for suppliers to maximize revenue. Wal-Mart integrated information systems in all processes of the supply chain as a way of improving efficiency and effective as well as cost reduction. The company has a large database on sales and the supply chain that helps in process improvement (Arli et al. 2013).
Just like the case of Wal-Mart, Woolworths implemented major strategies in the supply chain to enhance process efficiency, effective and cut costs as a way of improving revenue and profitability (Arli et al. 2013). Cooperation between suppliers and the retail store helped in solving issues such as stock outs because of the suppliers and retailers operating in different interfaces. Cooperation contributed to cost reduction, improved efficiency and maintaining the prices of food products low in stores. Centralization of the distribution system contributed to the standardization of supply chain processes, making quicker decisions, achieving economies of scale and avoiding role duplication (Arli et al. 2013). Through an effective distribution strategy, the retail store capitalized on core competencies of stakeholders and outsourced areas of non-core competencies such as transportation and distribution centres (Richey, Skinner & Autry 2007). Information systems are at the centre of the company’s cost-saving strategy by improving the supply chain. Through information systems, the company sealed loose ends in the supplying, processing and transportation functions. Through electronic data interchange, the company improved connectivity of all supply chain processes. Information systems and databases enhanced information sharing and cooperation among stakeholders (Richey et al 2007). The retail strategy involved efficiency in all retail outlets including online portals that created a centralized place for stakeholders in the supply chain to interact. Furthermore, the strategy features offering discounts for various products to enhance customer loyalty and drive more sales. Overall, Woolworths achieved efficiency in the supply chain through cooperation with stakeholders, information sharing, harnessing innovation and encouraging feedback to achieve common goals (PR 2014).
Supply chain efficiency principles
To achieve success in the supply chain collaboration among stakeholders at all levels helps in achieving and individual goals through processes efficiency (Richey et al. 2007). Cooperation among stakeholders is mainly through information exchange, synchronized supply, vendor managed replenishment, and the traditional supply chain (Richey et al 2007). Through information exchange, suppliers and retailers operate independently in ordering but share action strategies and market demand to help in long-term planning and aligning sales projections. Collaboration promotes the synchronization of the supply chain by maintaining a centralized decision-making approach that relies on the demand side of the business to develop strategies for future operations (Lichocik & Sadowski 2013). Through vendor managed replenishment suppliers take part in retail store inventory management by assessing vital customer information necessary for supplier processes. The collaboration contributed to improving the traditional supply chain processes, which contributes to high efficiency and effectiveness (Horvath 2001).
The principles of supply chain efficiency apply areas of people processes and organizational structure, effective customer relation management, maintaining a common vision among stakeholders, application of technological advancement, continuous increment of expectations, long-term and sustainable considerations, as well as maintenance of trust. Because of normal competition in business, trust among stakeholders is vital in achieving efficiency in the supply chain. Through trust, the businesses enhance flexibility effectiveness, agility and innovation in addition to achieving high levels of cooperation for the common goals (Richey et al 2007). Supply chain efficiency requires consideration of customers as strategic partners, which requires suppliers and retail stores to develop effective customer relationship mechanisms (Horvath 2001; Lichocik & Sadowski 2013). Maintaining customer and demand oriented focus in the supply chain helps in reaping the greatest benefit for both suppliers and retailers. Through effective supply chain processes, the retail stores bring together stakeholders to elaborate on common objectives for everyone as a way of ensuring full focus on value delivery (Richey et al. 2007). In the age of major technological advancements, incorporating technology in all supply chain processes helps in ensuring cost reduction and improving efficiency. With a long-term and sustainable approach to the supply chain, the companies implement measures aimed at ensuring growth in expectation levels and achievement of common goals.
Supply chain efficiency is a major aspect of business growth, profitability and sustainability in the environment of intense competition, which helps in streamlining the delivery of products and services from suppliers to end users. The report focused on the cases of Wal-Mart and Woolworths retail stores and implementation of supply chain efficiency principles. As identified in the cases, the retail stores maintained supply chain efficiency in areas of purchasing, distribution, and retail strategy and information systems.
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Horvath, L, 2001, ‘Collaboration: the key to value creation in supply chain management’, Supply Chain Management: An International Journal, vol. 6, no. 5, pp. 205-207.
Lichocik, G, & Sadowski, A, 2013, ‘Efficiency of Supply Chain Management. Strategic and Operational Approach’, Logforum, vol. 9, no. 2, pp. 119-125.
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Richey, J, Skinner, L, & Autry, C, 2007, ‘A Multilevel Approach to Retail Management
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