What made Wal-Mart successful

Massive buying power

There are many reasons why Wal-Mart is successful . The first one is Wal-Mart has massive buying power. Wal-Mart is providing its customers with everyday low prices hence giving them value for their money. Wal-Mart is able to provide low prices as it has massive buying power. Furthermore, there are tough negotiations with buyers helping it drive down costs, but Wal-Mart can. Wal-Mart has more power to negotiate because they buy from the producers from the factory wholesale prices. The huge amount of variety products makes the vendors  into squeezing their costs and keeping their profit margins low.

Excellent Operation

The second reasons that make Wal-Mart successful is operational excellence.  The operational excellence is high expectations. The high expectations lead to high productivity that means lower costs. The focus on low cost also had the effect of forcing Wal-Mart to look inward and find innovative ways to take costs out of the supply chain These lower costs mean more profits and savings which enable it to open more stores making it more financially stable and enabling it to achieve economies of scale. Greater scale in turn means lower prices which are then passed on to the consumers.

Strong logistics and distribution network

Besides the low prices, the products are made available to consumers with minimal inconvenience. Wal-Mart has developed a strong logistics and distribution network and following the hurricane Katrina it was able to supply its stores with products quickly when other stores were out of stock for many items. It uses an inventory management technique called cross-docking of products in its distribution centers which helps in reducing the inventory costs as the time inventory is piled up in warehouses is reduced. Wal-Mart has its own tractors and trailers which enables it to keep its shelves full and drive sales. Out of stock can mean havoc for Wal-Mart.

 

Cutting costs and saving expenses

Another reason why Wal-Mart is successful is they tries to cut costs out of their operations such as distribution centers, home office, fleet .When the sales are not high, expenses are also controlled and managers are not hesitant to even cut their own hours. The culture is driven from the top and the top management sets example for others to follow. The philosophy of saving expenses is very much embedded in employees and they realize that a dollar foolishly spent drives the money out of the customer’s pocket. Operations are handled in a way to save every possible penny which leads to saving dollars and ultimately results in providing items at low cost to consumers. 

 

Excellent customer service

It has developed a culture where employees are expected to think out of the box and provide customers with excellent service. Therefore it is just not following operational excellence but building relations with customers which today is the key to any organization’s success.

 

Walmart’s Method of Managing the Supply Chain

Walmart has been able to assume market leadership position primarily due to its efficient integration of suppliers, manufacturing, warehousing, and distribution to stores. Its supply chain strategy has four key components: vendor partnerships, cross docking and distribution management, technology, and integration.
Walmart’s supply chain begins with strategic sourcing to find products at the best price from suppliers who are in a position to ensure they can meet demand. Walmart 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.
Suppliers then ship product to Walmart’s distribution centers where the product is cross docked and then delivered to Walmart stores. Cross docking, distribution management, and transportation management keep inventory and transportation costs down, reducing transportation time and eliminating inefficiencies.
Technology plays a key role in Walmart’s supply chain, serving as the foundation of their supply chain. Walmart has the largest information technology infrastructure of any private company in the world. Its state-of-the-art 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.

 

Benefits of Efficient Supply Chain Management

Wal-Mart’s supply chain management strategy has provided the company with several sustainable competitive advantages, including lower product costs, reduced inventory carrying costs, improved in-store variety and selection, and highly competitive pricing for the consumer. This strategy has helped Walmart become a dominant force in a competitive global market. As technology evolves, Walmart continues to focus on innovative processes and systems to improve its supply chain and achieve greater efficiency.