Walmart has efficient supply chain management systems which improve its ability to track its commodities from the manufacturer to the point of sale. The company has remained a dominant retail store over the years by continuously improving its supply chain processes. Efficient supply chain management systems enable a company to reduce the prices of commodities while ensuring they provide high-quality goods (Chapman, 2019). The company relies on just-in-time strategies that track production and sale of goods in actual time processes, reducing the logistics associated with tracking commodities manually. Walmart has a lot of power in its supply chain management and negotiation capability since it has continuously improved its services to offer its customers quality goods at lower pricing. The company is dedicated to continuously improving its supply chain management processes to ensure that it can retain low market prices while operating at maximum capacity. Walmart is a big retailer with numerous stores across numerous towns. As a result, it has established global connections with suppliers; hence it can obtain high-quality products from international suppliers at great prices.
Walmart and Procter & Gamble (P&G) have had a successful strategic partnership as they collaborated on an enhanced Collaborative, Planning, Forecasting, and Replenishment (CPRF) software which improves the companies supply chain processes (Salvi, 2020). The CPRF software-enabled P&G to link its products to Walmart’s distribution points through an integrated telecommunication infrastructure. The software enabled P&G to know, plan and control its inventory by identifying which products have been sold at Walmart and automatically creating alerts for P &G to ship more products. The software enabled both companies to streamline their production services and plan better. Both companies could track their shipment orders planning warehouse storage and distribution hence effectively handling product distribution. These efficient systems enabled both companies to save on logistics due to enhanced inventory management; hence the cost savings were transferred to lower commodities pricing.
Using an electronic data interchange (EDI) system enabled both Walmart and P&G to continuously have information on their operations in real-time (Gharaei, 2021). When Walmart sells an item, P&G can track the logistics and transfer the information to its production facilities, improving the planning processes at both manufacturing and distribution stages. This ensures that customers can get deliveries on time and at lower pricing, thus increasing their satisfaction and retention. The system offers real-time data, which eliminates errors as the processes are more electronically managed. Companies can conduct logistics processes faster and accurately through fast data exchange processes, which is more cost-effective in the long run. The EDI also ensures that companies practice innovative stock management practices; since excess inventory in warehouses increases costs, they can get information on how much stock is needed to meet customer demand. Overall, they can lower their storage costs and save revenue, reflecting on their less-priced commodities.
For the EDI system to operate effectively, companies have to be interdependent. Both Walmart and P&G have an interdependent strategic relationship as they maximize their supply chain processes to increase savings for their consumers. Walmart’s suggestion on implementing a vendor-managed inventory (VMI) will enable the vendors to plan on the quantity and duration of stocking their shelves up to a standard using information from the retailer. While the VMI process will ensure that the store never runs out of stock, it will necessitate creating an enhanced system that enables Walmart to communicate with vendors and replenish commodities as they run out. The benefits associated with the system include reduced paperwork, improved data exchange, and reduced costs through an improved planning system (Parsa, 2018). However, the main challenge of setting up the system is the high cost of setting it up since it is costly. Conclusively, the system will serve the company better and bring better yields through customer satisfaction and retention.
References
Chapman, R. J. (2019). Exploring the value of risk management for projects. Improving the deployment of a maturity model. IEEE Engineering Management Review, 47(1), 126-143.
Gharaei, A. a. (2021). Facilitating Information Flow of Vendor Managed Inventory Via The Integration of Electronic Data Interchange and Advanced Shipping. Journal of Applied Intelligent Systems & Information Sciences, 69-78.
Parsa, M. M.-E. (2018). New Models For A Single Manufacturer Multi-Retailer Supply Chain Under Vendor Managed Inventory Program. International Journal of Industrial Engineering: Theory, Applications, and Practice, 25(6).
Salvi, V. Z. (2020). Supermarket Global Supply Chain. Archives of Business Research (ABR), 8(1).
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