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Hien Le 
Strategic Management – Individual Assignment 
Why is Walmart so successful? 
(Hint: It’s their state‐of‐the‐art s...
Hien Le 
Strategic Management – Individual Assignment 
Walmart also establishes strategic partnerships with most of their ...
Hien Le 
Strategic Management – Individual Assignment 
free of charge for orders larger than $50. Walmart has never been s...
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Why walmart is so successful

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A little individual assignment for Strategic Management class. A brief analysis on Walmart's state-of-the-art supply chain management.

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Why walmart is so successful

  1. 1. Hien Le Strategic Management – Individual Assignment Why is Walmart so successful? (Hint: It’s their state‐of‐the‐art supply chain management) Walmart, the biggest private employer in the world with over two million employees, has been criticized by many groups and individuals, including labor unions, for their workforce policies, treatment of product suppliers, environmental practices and many other issues. However, according to the Fortune Global 5001, Walmart is still the world’s largest company by revenue with $476 billion in 2014 and the largest retailer in the world with over 11,000 stores. This essay will address the main reason that lead to Walmart’s success (and somewhat their controversy): their extraordinary methods of supply chain managements that eventually help them become the market leadership in retail industry worldwide with massive buying power and excellent operation. Walmart’s supply chain strategy has four key components: vendor partnerships, cross docking and distribution management, technology, and integration. Their supply chain innovation began in the 1980s when they worked directly with manufacturers to cut costs. For vendors, they applied a business model called VMI – vendor managed inventory ‐ where buyer of a product provides certain information to a vendor supplier of that product and the supplier takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer's consumption location. Both vendors and retailers will share risks and benefits under this system and Walmart could expect near 100% order fulfillment on merchandise as a result. 1 Fortune. (2014). Fortune Global 500 2014. Retrieved from Fortune: http://fortune.com/global500/
  2. 2. Hien Le Strategic Management – Individual Assignment Walmart also establishes strategic partnerships with most of their vendors, offering them the potential for long‐term and high volume purchases in exchange for the lowest possible prices. Cross docking is a logistics technique that play a vital role in Walmart’s supply chain strategy. Products are routed from suppliers to Walmart’s warehouses, then they will be unloaded from an incoming semi‐trailer truck or railroad car and then be loaded directly into outbound trucks, trailers, or rail cars, without sitting for long periods of time. By this technique, Walmart reduces their costs and improve their inventory turnover significantly to accomplish a very competitive pricing policy. Walmart is also known as the technology leader in the retail industry. They were the one who pushed the adoption of universal bar code, and were also the first major retailers to demand the use of radio frequency identification technology (RFID) recently. The bar and the RFID tags allowed retailers to generate all kinds of information ‐ creating a subtle shift of power from manufacturers to retailers. Wal‐Mart became especially good at exploiting the information behind these technologies. They have the largest information technology infrastructure of any private company in the world. Their technology and network design allow Walmart to accurately forecast demand, track and predict inventory levels, create highly efficient transportation routes, and manage customer relationships and service response logistics. Walmart’s integration strategy is also interesting. Like many large retail and grocery chains, they also provide private label products as the low‐priced alternatives to name brand products. Walmart also recently opened their online store at www.walmart.com and have it delivered
  3. 3. Hien Le Strategic Management – Individual Assignment free of charge for orders larger than $50. Walmart has never been successful in large cities, so they see this new forward integration as a beneficial way to penetrate those markets. Walmart’s operational excellence in supply chain management enables them to provide low prices as it has massive buying power. It has driven smaller retailers out of business; forced manufacturers to be more efficient, often leading these suppliers to move manufacturing jobs overseas; actively kept labor cost down; which are some of the main reasons that leads to their negative publicity.

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