Introduction
Supply chain is a critical function of every organization doing international business. Such a process ensures that the required raw materials are acquired in a timely manner while all final products are delivered to the targeted customers. In the recent past, the problems of climate change and global warming have encouraged firms to embrace the concept of sustainability in their logistical operations. Using the case of Walmart Incorporation, this paper seeks to analyze the effectiveness of a sustainable supply chain and how it can support the performance of different companies.
Walmart: Analysis
Walmart Inc. is a leading retail organization that has its headquarters in Bentonville, Arkansas. Sam Walton founded this giant corporation in the year 1962 (Bhandari, 2017). In terms of size, it operates in 27 countries and has around 11,348 clubs and stores. Across the globe, Walmart operates under various names, such as Asda in Britain, Walmart de México y Centroamérica in Central America, and Seiyu Group in Japan (Nguyen, 2017). From a financial perspective, this organization remains one of the most profitable in the world. For example, its total revenue for 2017-2018 amounted to over 500 billion US dollars (Saeed & Kersten, 2019). Its assets are valued at 219 billion US dollars while its equity stands at 72.5 billion US dollars (Bhandari, 2017). Its expansion across the world means that it will remain profitable in the future.
The company has adopted and implemented a simple strategy that overcomes the challenge of competition. This approach revolves around the constant reduction of prices. This model encourages more customers to purchase their favorite goods from Walmart, thereby making it a leader in the global retail industry. Its unique brands are available in several countries. Some of the leading products include groceries, supermarkets, convenience shops, supercenters, and hypermarkets (Bhandari, 2017). It also utilizes its Sam’s Club to market hardware equipment in different regions.
Supply Chain
Since the 1980s, Walmart has been pursuing a superior supply chain that entails direct collaboration with manufacturers in an attempt to minimize costs and improve efficiently. Using its famous Vendor Managed Inventory (VMI), this organization encouraged all producing companies to manage their respective goods in its warehouses. Such a procedure ensured that all customers received their products in a timely manner (Nguyen, 2017). Walmart identifies suppliers and manufacturers who can deliver large volumes in exchange for reduced prices. It has gone further to streamline supply chain management by improving communication, introducing superior technologies, and reducing inventories (Tseng, Lim, & Wong, 2015). All global warehouses, suppliers, and retail shops are interconnected, thereby being able to work synergistically.
Walmart’s cross-docking model has improved the efficiency and sustainability of the supply chain. Using this strategy, products are transferred to outbound or inbound tracks to minimize the need for warehousing. This initiative ensures that no storage space is wasted. The model has continued to reduce costs, minimize time, and eliminate wastes (Kherbach & Mocan, 2016). The company saves fuel, thereby decreasing its impact on the natural environment. Walmart has gone further to introduce modern innovations to forecast demand and inventory levels (Nguyen, 2017). It also uses new technologies to manage consumer relationships and respond to emerging logistical challenges. Radio frequency identification tags (RFIDs) have become common to minimize replication and monitor inventory.
With effective collaboration between suppliers and manufacturers, Walmart finds it easier to pursue its logistical operations efficiently and distribute the intended materials to the relevant outlets. The introduction of innovative systems minimizes wastes, maximizes efficiency, and overcomes the problems of pollution (Nguyen, 2017). Consequently, the customers at the end of the supply chain acquire their favorite products at affordable prices.
Innovation
The case of Walmart can become a powerful framework for guiding companies to embrace the concept of innovation and make their supply chain processes more sustainable. There are specific strategies that can deliver such benefits within a short period. Firstly, companies need to introduce the concepts of Lean and Six-Sigma in their logistical operations to reduce wastes. Secondly, firms can consider the information and feedback customers present and formulate evidence-based strategies for delivering finished products and supporting sustainability (Saeed & Kersten, 2019). Thirdly, companies can partner with producers, suppliers, and manufacturers who take this issue into consideration.
Fourthly, introducing green technology is a powerful approach for reducing the negative impacts of every supply chain. For example, a company that uses modern trucks that do not emit large quantities of pollutants or greenhouse gases will deliver the intended sustainability goal. Modern technological systems also minimize paperwork and protect the integrity of the natural environment (Kherbach & Mocan, 2016). Finally, organizations can collaborate with the right stakeholders that have similar goals. With these aspects in place, companies will achieve their logistical aims, conserve the environment, and meet the needs of every customer.
Measuring Success
The application of the above innovative strategies can transform the supply chain of any given organization. However, a powerful framework is necessary to measure the success of such initiatives. The recommended one is that of key performance indicators (KPIs). These are objective and practical attributes for measuring success or progress towards a defined aim (Karl, Micheluzzi, Leite, & Pereira, 2018). The reasons outlined below explain why it is necessary to use KPIs.
Firstly, they are essential since they ensure that the identified objectives are matched with the outlined benchmark (Sanders, 2017). Secondly, actions will be undertaken when supervisors realize that there is something wrong with the implemented strategy. The intended goal is to ensure that the existing supply chain remains sustainable. Finally, those involved will use such KPIs to monitor cross-functional activity and apply appropriate changes in every aspect of the supply chain.
Conclusion
The above discussion has identified Walmart as a leading retailer whose success is attributable to its supply chain. With appropriate innovation and introduction of superior technologies, global businesses can streamline their logistical operations and eventually meet the diverse expectations of all customers. The use of KPIs is an evidence-based practice that can ensure that all implemented initiatives deliver a sustainable supply chain.
References
Bhandari, N. C. (2017). Walmart-Bharti joint venture: Formation, breakup, & strategies. Academy of Strategic Management Journal, 16(1), 209-224.
Karl, A. A., Micheluzzi, J., Leite, L. R., & Pereira, C. R. (2018). Supply chain resilience and key performance indicators: A systematic literature review. Production, 28(1), e20180020. Web.
Kherbach, O., & Mocan, M. L. (2016). The importance of logistics and supply chain management in the enhancement of Romanian SMEs. Procedia – Social and Behavioral Sciences, 221, 405-413. Web.
Nguyen, T. T. (2017). Wal-Mart’s successfully integrated supply chain and the necessity of establishing the triple-a supply chain in the 21st century. Journal of Economics and Management, 29(3), 102-117. Web.
Saeed, M. A., & Kersten, W. (2019). Drivers of sustainable supply chain management: Identification and classification. Sustainability, 11(4), 1137-1159. Web.
Sanders, N. R. (2017). Supply chain management: A global perspective. New York, NY: Wiley.
Tseng, M., Lim, M., & Wong, W. P. (2015). Sustainable supply chain management: A closed-loop network hierarchical approach. Industrial Management & Data Systems, 115(3), 436-461. Web.