International Purchasing and Supply-Chain Management Essay - 1

International Purchasing and Supply-Chain Management - Essay Example The company is acclaimed for maintaining the highest inventory turnover, the highest sales per square foot and the highest operating profit margin in the retail industry since the last ten years. The transition of Wal-Mart from being a local retailer to a global retail giant has been largely driven by the unique and excellent supply chain management of the company. Wal-Mart has implemented a low cost strategy in its business and makes profit through large volume sales. The company is characterized by advanced inventory management systems, aggressive pricing policies, a unique retail and supply chain distribution system and has needed very less promotion and advertising in its journey to become one of the biggest private companies in the world. Wal-Mart is a retailing giant famous for its innovative business practices and is one of the first businesses to implement a centralized distribution system. The company has been renowned for continually integrating the latest technologies into its supply chain processes. Discussion The efficient supply chain management system of Wal-Mart is a major driver for the success of the company as a leading retail giant. The supply chain model of the business is formed by the effective integration of the purchasing, manufacturing, warehousing and distributing processes (Lysons and Farrington 2005, p.90). The supply chain of Wal-Mart implements four main strategies: technology, cross docking, vendor partnerships and distribution management and integration. Wal-Mart operates both retail outlets and distribution centres constitute its supply chain network. The supply chain of Wal-Mart comprises of 95 Distribution facilities and around 1500 stores operating all across the world. The distribution centres hold different types of merchandising goods varying from eatables to clothing and accessories. Procurement and Distribution The supply chain of Wal-Mart starts with the process of strategic sourcing to identify the proper suppliers wh o can provide the products at the best possible prices and can meet the huge demand level of the retail giant. Wal-Mart has entered into strategic collaborations with a major number of suppliers and has guaranteed sourcing products at lowest possible expenses by providing the suppliers with opportunity for high volume sales over a long period of time (Martin, 2006, p.156). The company maintains a strong logistics network comprising of the largest employee base for fleet of private trucks consisting of around 8000 drivers who were involved in the delivery of the goods from the distribution centres to the stores of Wal-Mart. The distribution centres of Wal-Mart comprised of general merchandise, as well as food and clothing distribution centres. The products are picked up from the warehouse of the suppliers by the trucking division of Wal-Mart and then transported to the distribution centres of Wal-Mart. Wal-Mart has formulated standardized labelling and consignment sizes to ensure tha t the shipments were easily transferred across the distribution centres. The consignments are cross docked to the inbound trailers. The supply chain follows a uniform operating and distribution process throughout its supply chain. Each of these distribution centres are designed in a way to provide maximum support to the stores with similar kinds of merchandise being stacked together Hub and Spoke Design The establishment of Wal-Mart’s stores was directly driven by the distribution strategies of the business. The opening of the first distribution centre of the business was a significant investment strategy of the company and was aimed at attaining economies of scale. So the location of the stores was selected such that the distance could be covered within one