Wal-Mart\'s Innovative Supply Chain Management

Operations Management

WalMart Supply Chain Innovation

WalMart is the world's largest retailer and know as a leader in supply chain management. The way in which WalMart has innovated in terms of the way that the supply chain is management which has included looking at the structure and processes used in the supply chain as well as embracing and leveraging technology. The results have been a reduction in costs and improvement in overall efficiency.

The innovations at WalMart are not all recent; with WalMart constantly adapting and changing. One of the first major innovations, and one which is still in use today started during the 1980s, was the removal of links in the supply chain. A strategy adopted by the company with the aim of creating create efficiency and cutting costs was the development of direct relationships with suppliers, working directly with the manufacturers are supplied many goods, cutting out the middle person (Taub, 2012). Fewer links in the supply chain has the potential to reduce costs and increase the speed at which the transactions across the supply chain take place (Christopher, 2011). It maybe argued is that innovation has guided some subsequent strategies that have been adopted, in terms of collaboration, which has been facilitated through the IT inventory management strategies that have been utilized.

WalMart were the first major retail chain to implement an IT based inventory system with Retail Linka a system developed in-house by WalMart in the 1990's. This also saw the first implementation of company wide universal product bar codes, needed for the company wide system. Today the system has evolved not only in size, but also functionality. The system is based on an Oracle Warehouse database which provides the basic elements of inventory management, including tracking with the use of RFID chips to increase the efficiency of the inventory in and out processes. A significant innovation in the context of inventory management with the supply chain has been the empowerment for the suppliers or vendors and the use of vendor managed inventory and serial planning, facilitated with the sharing of the WalMart data with the vendors.

The firm will share relevant data with vendors regarding the sale of their products and the levels of invitatory already held as well as forecasts-based ion the current patterns of sales (Taub, 2012). This information is then used by the vendors to plan their own production, creating a scenario where there is almost always the immediate ability for vendors to supply WalMart's inventory needs (Taub, 2012).