Wal-Mart's Supply Chain

1986 Words8 Pages
Introduction
Supply chain management is the process that an organization uses to "improve the way the company finds the raw components it needs to make a product or service and deliver it to customers (www.supply-chain.org 2006)." There are five basics components of a supply chain management system-plan, source, make, deliver, and return. Planning is the "strategy for managing all the resources that go toward meeting customer demand for the product or service (www.supply-chain.org 2006)." The source components are "the suppliers that will deliver the goods and services the organization needs to create the product or service (www.supply-chain.org 2006)." Make applies to manufacturing the product or the activities necessary to provide the
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This system shifted from the retailer ‘pushing ' products to the customers ‘pulling ' products through the system. In January 2005, Wal-Mart directed its top 100 suppliers to use RFID tags with embedded electronic product codes (EPC) for tracking and identifying. "RFID uses low-powered radio transmitters to read data stored in tags that are embedded with tiny chips and antennas. Proponents of the technology say such "smart" tags can store more detailed information than conventional bar codes, enabling retailers and manufacturers to track items at the unit level (Brewin 2003)."
The researchers at the University of Arkansas noted a 16% reduction in out-of-stocks since Wal-Mart adopted the RFID system into its supply chain (Healthcare Purchasing News 2005). The study also revealed that EPC items were replenished three times faster than comparable items using standard bar coding system. Wal-Mart has been able to use the new system to reduce excess inventory with more effectiveness than the control stores (Healthcare Purchasing News 2005). To this day, using its detailed supply chain management system Wal-Mart has been able to achieve respectable leadership in the retail industry.
Organization Function
Wal-Mart is a huge and very powerful company and therefore uses its competitive edge as a core competency. Walton, the founder and entrepreneur behind Wal-Mart, opened a retail store with the goal of "offering significant discounts on

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