Introduction
Walmart is an American multinational that operates hypermarkets not only within the United States but in other countries. The main success factor that can be associated with Walmart is on its ability to maintain positive control over its business and supply chain strategies. The company has been able to build on its success by seeking to create value for its customers as well as attempting to create an avenue through which to maximize on set out comprehensive standards of performance. Currently, Walmart is considered as one of the largest retail stores in the world under its revenue standings, as it has an annual revenue collection of $514.4 billion. That acts as a clear reflection of the fact that indeed the company must work hard towards creating positive avenues through which to deliver on the best possible outcomes by building on its strategic approaches.
In this report, the main focus will be on trying to examine both the business and supply chain strategies that Walmart has adopted as part of its strategic approaches. The analysis of the strategy will focus more on trying to examine how the company is using both its business and supply chain strategies as a way of building on its success margins. The report will also seek to discuss how the two policies align with the sole intention of having to provide reliable recommendations for improvement to help improve on strategic alignment. The recommendations provided will not only seek to create a standard through which to deliver on the best possible outcomes in terms of company performance but would seek to create an approach through which to define improvements in company performance.
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Walmart’s Business Strategy
The business level strategy that Walmart has adopted is based on the philosophy of having ‘everyday low prices’ for the products it offers to its clients within the different consumer markets. In other words, Walmart has been on the forefront towards adopting cost leadership as part of its business strategy, which allows the company to focus on the economies of scale as part of the determinants for success. Cost leadership is defined as a strategic approach in which a company or firm seeks to price its products or services at a lower cost margin when compared to some of its key competitors (Grant, Trautrims, & Wong, 2017). In the case of Walmart, this can be seen from the fact the company has been on the forefront towards creating practical approaches through which to minimize the cost of its products to the clients.
The basis of Walmart’s business strategy reflects on three key factors, which are constant improvements of assortment, price, and access to its products. The use of the three factors allows for a clear avenue through which to create a balance of scale, which is well positioned towards delivering on the best possible outcomes in terms of enhanced profitability levels. Walmart does not only strive towards ensuring that it provides its clients with the cheapest products but also seeks to provide them with a wide variety of products. That means that clients often find themselves experiencing some sense of satisfaction considering that the company has been able to consider the value placed on price and choice. Customers focus on choosing products that would suit their preferences while creating effective avenues through which to ensure that their cost margins remain low.
The adoption of a business strategy allows for a more fundamental shift towards ensuring that customers can make ultimate decisions concerning the products or services being offered by different firms or companies (Gattorna, 2017). In the case of Walmart, this can be seen from the fact the use of cost leadership as part of its business strategy has created an avenue through which the company can focus on other aspects of business performance including customer service and enhancing flexibility concerning the shopping experience. Walmart has been on the forefront towards ensuring that its customer service standards remain high when compared to some of its key competitors. Having higher customer service standards serves as a clear reflection of the fact that the company is well positioned towards improving the customers' satisfaction levels.
Walmart’s Supply Chain Strategy
Supply chain management is one of the vital strategic expectations for any given firm or company in its bid to managing the logistics associated with the products offered to customers within different locations (Wisner, Tan, & Leong, 2012). The adoption of a supply chain strategy allows for a practical approach through which to determine how customers would be able to access the best quality of products within the shortest time possible. Wisner, Tan, & Leong (2012) point to the fact that the theoretical analysis of supply chain “work as a cohesive, singularly competitive unit, accomplishing what many large, vertically integrated firms have tried and failed to accomplish” (p.8). From this understanding, it is clear that companies ought to build on their supply chain strategies as part of their strategic efforts towards improving on their performance.
Walmart has adopted the use of the continuous-flow supply chain strategy, which seeks to create an avenue through which the company can deliver products to its consumers within the shortest time possible while maintaining a continuous flow. One of the critical factors that drive Walmart towards using this particular supply chain strategy is that it has a customer demand profile that has little variation. In other words, this means that the customer profile for consumers of products from Walmart does not change as a result of external factors. Ultimately, this acts as one of the critical factors that drive the company towards determining the demand, which would be of great value towards defining supply. The use of such aspects allows for a clear avenue through which to maintain a continuous flow of products to different stores to meet customer demands.
The use of the continuous-flow supply chain strategy has played a crucial role in ensuring that Walmart is well advanced in its ability to predict shifts in demand among consumers within different regions or locations. In other words, this means that the use of this strategy has helped towards offering a continuous-replenishment system to its stores while meeting the set-out demands. That serves as one of the critical determinants of its success while considering that the company can meet the demand standards by its clients. Additionally, this also means that Walmart can set out new strategic approaches through which to optimize on cost variations. The optimization of cost variations allows for leveraging of the supply chain models used to ensure that the supply chain costs remain low; thus, having minimal impacts on the customers.
The benefit that the supply chain strategy has had on Walmart’s performance within the consumer market is that it has helped towards creating an order cycle that the company uses within different periods of the year. Wisner, Tan, & Leong (2012) point to inventory management as one of the critical issues affecting supply chain management suggesting that most companies find themselves failing in their bid to managing their inventory leading to an inadequate supply chain outcome. In the case of Walmart, this has not been the case considering that the company has been on the forefront towards creating defining the demands among its consumers within different periods. That allows for a more fundamental shift towards ensuring that it can create a current order cycle that each store manager would be able to follow in his or her role in making relevant orders for specific products.
Alignment of Business Strategy and Supply Chain Strategy
The arrangement of Walmart's business strategy and supply chain strategy, as have been discussed in the previous sections, can be seen within several critical areas of its business performance. Firstly, the two policies align through Walmart's ability to leverage on the cost value of its supply chain model, which helps towards maintaining cost leadership as its essential business strategy. By minimizing the costs associated with the movement of products from the supplies to the stores, Walmart has been able to reduce its operating costs significantly. Ultimately, this means that it is well positioned towards maintaining its cost leadership strategy; thus, building its competitive advantage when compared to some of its key competitors within the different consumer markets.
Alignment of the business and supply chain strategy is considered as being imperative in supporting value creation processes, which would serve as a guarantee that a firm or company would be in a position building on its performance (Tarafdar & Qrunfleh, 2017). For Walmart, the second key area that defines the alignment between the business and supply chain strategies can be seen through its demand-driven planning and business model. Walmart has been on the forefront towards the usage of real-time demand insights, which shape how the company can engage as part of its business operations. The ultimate result that this has had is that it has helped towards creating a strategic approach through which the company can define its performance outcomes. Additionally, this also helps towards leveraging on some of the risks including instances where a supplier would go out of business or natural calamities that would impact on business performance.
Supply chain management can be evaluated from the perspective of the business strategy based on the ability for the firm to have a prescheduled order cycle that is effective towards meeting the timelines set out by the customers and consumers (Jia, Wang, Mustafee, & Hao, 2016). In its bid towards ensuring that it can integrate between the supply chain strategy and the business strategy, Walmart has been able to build an adaptive and agile supply chain model. The model allows for rapid planning and integrated execution within the shortest time possible to avert some of the potential risks that are likely to result from reduced supply chain management. Walmart’s strategic approach has been driven by the fact that the company seeks to shape its supply chain model based on changing market opportunities and events.
Supply chain and business strategies integration reflect on strategic data that seeks to improve on planning with the sole intention being towards creating a strategic approach through which to maximize on business performance (Marshall, McCarthy, McGrath, & Harrigan, 2016). Walmart has been on the forefront towards integrating sales and operations planning with its corporate business planning, which paves the way for a clear avenue through which to determine some of the loopholes that are likely to arise in the supply chain. Additionally, the integration of planning within Walmart has helped towards creating a preschedule order system in which the company can make orders based on the demands within specific regions and for particular products. Walmart finds itself in a strategic approach through which to create its budgeting and forecasting systems, which allow for trade-off decisions when making valid supply chain decisions.
Recommendations to Improve Strategic Alignment
Based on the discussions above, it is clear that although Walmart has been able to integrate its supply chain and business strategies, it may need to consider specific areas of improvement to help build on its success margins. The crucial first recommendation would revolve around the need for having to ensure that Walmart would move towards embedding sustainability into its supply chain operations considering that this would serve as a guarantee for improved performance standards. By integrating sustainability, Walmart would find itself at a position where it is guaranteed positive outcomes in terms of business functionality. Additionally, this would also mean that the company would be in a strategic position through which to handle some of the risks that are likely to arise as part of its supply chain operations moving into the future.
The second recommendation would involve having to ensure that Walmart adopts a supply chain model that it not only reliable but predictable at all times considering the existing volatilities in the market environment today. Walmart operates in a market that is likely to be grossly affected by a wide array of external factors, which would have severe implications on the company's ability to maintain positive performance outcomes. From that view, what is evident is that the current supply chain strategy that the company has adopted is likely to fail, which would have negative implications on the business strategy. By adopting a reliable and predictable supply chain model, Walmart would be in a commanding position of having to make sound decisions regarding its orders. The model would also help towards minimizing the volatility of the business strategy adopted by the company towards positioning itself within the consumer market regardless of the existing risks.
Conclusion
Walmart is an American multinational that operates hypermarkets not only within the United States but in other countries. The business level strategy that Walmart has adopted is based on the philosophy of having ‘everyday low prices’ for the products it offers to its clients within the different consumer markets. The basis of Walmart’s business strategy reflects on three key factors, which are constant improvements of assortment, price, and access to its products. Walmart has adopted the use of the continuous-flow supply chain strategy, which seeks to create an avenue through which the company can deliver products to its consumers within the shortest time possible while maintaining a continuous flow. For Walmart, the critical area that defines the alignment between the business and supply chain strategies can be seen through its demand-driven planning and business model.
References
Gattorna, J. (2017). Strategic supply chain management Creating shareholder value by aligning supply chain strategy with business strategy. In Strategic Supply Chain Alignment (pp. 32-52). Routledge.
Grant, D. B., Trautrims, A., & Wong, C. Y. (2017). Sustainable logistics and supply chain management: principles and practices for sustainable operations and management . Kogan Page Publishers.
Jia, F., Wang, X., Mustafee, N., & Hao, L. (2016). Investigating the feasibility of supply chain-centric business models in 3D chocolate printing: A simulation study. Technological Forecasting and Social Change , 102 , 202-213.
Marshall, D., McCarthy, L., McGrath, P., & Harrigan, F. (2016). What's your strategy for supply chain disclosure?. MIT Sloan Management Review , 57 (2), 37-45.
Tarafdar, M., & Qrunfleh, S. (2017). Agile supply chain strategy and supply chain performance: complementary roles of supply chain practices and information systems capability for agility. International Journal of Production Research , 55 (4), 925-938.
Wisner, J. D., Tan, K. C., & Leong, G. K. (2012). Principles of supply chain management: A balanced approach , 3 rd Edition. Cengage Learning.
