Monday, September 9, 2013
Wal-Mart, a Sophisticated Supply Chain?
According to the article, “Ten Ways to Improve Inventory Management,” Bain consultants report that reducing the amount of inventory will lower overall costs incurred by the company and in the future produce savings. Keeping just the right amount of inventory and meeting demand is not just a matter of forecasting tools used by the sourcing team, but also using departments across the company. In class, we have been discussing Wal-Mart, one of the biggest retailers and biggest . I wondered if there were any weaknesses to Wal-Mart's supply chain?
The people required to maintain an efficient supply chain are not just located at the company headquarters, it is also the people on the ground within the business. For example, Wal-Mart. According to Time Magazine,  Wal-Mart has the “most sophisticated supply chain management system in the industry.” However, in order to cut down on labor costs, Wal-Mart has cut back on the amount of people working within the store. This has caused products to not be on the shelves even though they are clearly in stock in the backroom. Since there is no one to continuously fill the shelves that are becoming empty, Wal-Mart customers are leaving the store without the item that they came to buy. This is frustrating because there aren’t associated a customer can ask to see if the item is in stock in the back. Then if a customer finds an associate, the associate is usually busy assisting other customers, I know this from personal experience. I went in looking for a bike lock that I had seen in stock online at my local Wal-Mart. However, when I went in to look for the bike lock I could not find it! I tried looking for a sales associate for 15 minutes and I could not find one. I finally found an associate, but they were helping another customer find something in the paint section. I left the store frustrated and went to specialty bike store to get my bike lock.
Wal-Mart is not the only retailer that has had frustrated customers encountering Out-of-Stock situations. An Out-of-Stock situation is almost the same as a customer not being able to find a product on the shelf. It means the product is not on a shelf and not even in the store back room! In the case study “Proctor and Gamble: Building a Smarter Supply Chain,” P&G has been unable to keep stores selling their products stocked. According to this case study, Out-of-Stocks cost you one sale in nine! That means, “Retailers lose 11% of sales due to out-of-stocks.” Retailers should consider how much inventory they are ordering and keeping in stock.
Overall, improving a supply chain requires overall company involvement. It requires the executives analyzing past sales and entrusting the sourcing team to make adequate forecasting decisions, using the IT team to use the appropriate technology to meet the needs of the company, and the employees at the end of the supply chain who are actually stocking the products being sold. Do you think that Wal-Mart could use more employees on the floor? How can Wal-Mart leave its customers more satisfied and less frustrated when they go in to a store and cannot find an item?