Supply chain management (SCM) is a vast field through which the organizations pay significant attention to the implementation of the integrated impacts in the sales of goods. Walmart China is among the big retail stores, and with the help of the supply chain management; the organization can meet its demand forecast.
Demand Forecast
The supply chain of the Wall-Mart China goes hand in hand with its demand forecast which the entails the approach employed by the organization to meet the customer’s needs and countermeasures against the limitations affecting storage and transportation. Notably, the entity strives to keep high inventories that are relevant to the consumers. Having adequate stocks in the holding area enables the organization to benefit from the customer’s traffic flow, who in turn attains their tastes and preferences. According to Baker, Croucher & Rushton (2017), the benefits of having adequate inventories at the store are to offer a bumper between the demand which the customers have towards a specific product and also the supply of the product by the organization to the customers. Demand is key to the survival of the company; the decision-makers must pay significant attention to various supply chain techniques such as ship-direct-to store or distribution facilitates. With the available distribution facilities, the vendors are in a position to distribute goods from the warehouse to the leading shops in consideration of the economic order quantity.
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Recently, Walmart incorporation in China faced several challenges regarding the supply chain for goods resulting from a low volume of products. Eventually, the organization’s market share dropped significantly within the economy of China since its reduced level of inventory could not meet the required order quantities. The parent company suffered a substantial blow from this decline, whereby some drastic measures were undertaken. Such actions included investing in the distribution facilities and minimizing the direct channel of distribution from the manufacturing company to Walmart Incorporation. These solutions meant that the organization has to make orders directly to the distributions facilities, thus reducing the ordering cost and improving the quantity, and resultantly enjoying leverage from the vendors. Today, one of the organization’s distributions centers is in a position to distribute at least one hundred and fifty cases of food daily at the cost of $3,675,000 (Johnson, 2015). Also, the demand is estimably ninety thousand cases – an unmistakable surplus – which the management offset by supplying commodities enough to establish equilibrium.
Despite the tremendous efforts by the organization in ensuring that their vendors are up to their level bests, several limitations arise within the supply chain management, some of which are arguably inevitable. The restrictions range from the specific demands for the goods distributed to the shipping process and destinations which are significantly too far from the desired locations. Notably, the organization employs the shop-direct-to-store approach, which is expensive and whose returns are proving significantly low. Another hindrance is perishability; the organization transports at least one hundred and fifty thousand cases of food daily (Johnson, 2015). The distribution center can only transport perishable goods that are within the needed temperature regulated environments. The transportation can only be viable to three locations since the matter of product storage is an issue and may interfere with the demand forecast (Johnson, 2015). Also, since the organization has daughter branches within China, the competition is high, and this is also a constraint to the company.
Sourcing
Johnson (2015) finds that Walmart organization in china is operating on a network which is moderate uneven with addition twenty-nine autonomous purchasing offices across China. Also, the organization has at least twenty thousand vendors, and a significant number distribute goods to the organization on a day to day basis. From the year 2012 to 2015, the company faced a significant problem of quality control but was in a position to mitigate the challenge to make sure that their repetition in the country was maintained. The mitigation process revolved the development of supply chain management which in return enhanced the quality of goods which the customers received and as a result, created a better business model ( Xie & Cooke, 2018).
Moreover, the organization faced quality control issues with the suppliers and had to make significant changes in the transport modes and also improve timely delivery to maintain the shape, size, and nature of the products. However, the Chinese economy has seen a revamp in the recent past, making it among the most developed economies globally; these conditions are favorable to the entity. Nonetheless, the organization must be prepared to face the issue of quality control in the future.
Recommendations
From the above analysis, it is recommendable that the Walmart Incorporation in China should expand its personnel to ensure quality and timely delivered of commodities. Implementing such a step means that the issue of quality control will be resolved. The importance of this step is to sustain the existing clients and also attract potential customers who are among the most critical stakeholders. Moreover, increasing the number of management personnel will help in running operations efficiently. It is worth noting that some instances during high demand periods, the organization’s performance were at least seventy percent. However, the organization’s costly shop-direct-to-store model would not sustain such performance. It follows, therefore, that the organization should create room for distribution facilities to ensure such demand forecasts are not overwhelming.
Furthermore, it is vital to seek more suppliers to curb the potential low order quantity cases. Essentially, more suppliers imply benefits relating to orders leverage. Thus, having an efficient and effective supply chain management within the organization will assist in meeting the client’s demand and ensuring quality control is optimal.
Conclusion
Walmart’s supply chain management (SCM) enables the management to ensure quality control of its products and timely attainment of the demand forecast. The organization has faced several challenges related to its supply chain, whose solution is having more suppliers that will deliver more goods at considerably lower prices as well as hiring more personnel to help in ascertaining that the products delivered meet the quality standards. As a result, the organization will sustain the existing consumers and attract more potential customers by offering commodities that fit their desired tastes and preferences.
References
Johnson, F. P. (2015). Walmart China - Supply Chain Transformation. Ivey Publishing.
Baker, P., Croucher, P., & Rushton, A. (2017). The Handbook of Logistics and Distribution Management: Understanding the Supply Chain . Kogan Page Publishers.
Xie, Y., & Cooke, F. L. (2018). Quality and cost? The evolution of Walmart's business strategy and human resource policies and practices in China and their impact (1996–2017). Human Resource Management .
