Supply Chain Walmart Term Paper

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Supply Chain Management

Wal-Mart is a retailer with a focus on being a low cost competitor. Supply chain management is a critical component of this, and has long been the primary focus on Wal-Mart's competitive advantage. In response to a website mocking Wal-Mart customers, one executive famously noted that Wal-Mart sells to everybody, and there are 476 billion reasons to believe that Wal-Mart's target market really is everybody (MSN Moneycentral, 2014). The company knows that it if perceived to have the lowest prices on a wide range of everyday goods, it will win a considerable amount of business. But delivering the lowest prices consistently is not easy, and this is where the supply chain comes into it.

An above-the-line initiative is basically mass media, while below the line consists of other promotional methods (Manral, 2011). In either case, Wal-Mart has a consistent message about low prices, and the supply chain system serves to back up the low price mantra. First, there is Wal-Mart's famous bargaining power. With its large sales volumes, Wal-Mart is a price-setter, and it likes to set prices just above the profit point for its suppliers, just enough to keep them around but otherwise low enough that Wal-Mart can undercut its competitors on prices.
The company also seeks to lower costs throughout its supply chain, and has become an innovation leader in logistics in order to do this. The company has a highly-efficient supply chain that is linked in real time to stores for ordering, that minimizes waiting times at warehouses and working with its suppliers to do the same (Traub, 2012). As a result of these initiatives, Wal-Mart's distribution costs are 1.7% of cost of sales, compared with 3.5% for K-Mart (Ibid). The company's high sales volumes facilitate a massive fleet of trucks, warehouses closely spaced together, and the utilization of something very close to a just-in-time system throughout its entire supply chain.

It is kind of funny to think about offering tips to Wal-Mart as to how to improve its bargaining power. PhD's study these guys. To reduce buyer power, Wal-Mart crafts a brand image of being the lowest cost. This is a marketing mantra and is backed up….....

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