品 上海究通大学 SHANGHAI JIAO TONG UNIVERSITY Supply Chain Management 2013 Supply Chain Management 罗岩-1120329046-B1203292 What we can learn from Wal-Mart's Success? Introduction Wal-Mart is an American multinational retail corporation that runs chains of large discount department stores and warehouse stores.The company is the world's third largest public corporation,according to the Fortune Global 500 list in 2012,the biggest private employer in the world with over two million employees,and is the largest retailer in the world. There are many reasons lead to its success,but the most important one is crossing-docking.Cross-docking is a practice in logistics of unloading materials from an incoming semi-trailer truck or railroad car and loading these materials directly into outbound trucks,trailers,or rail cars,with little or no storage in between.This may be done to change type of conveyance,to sort material intended for different destinations,or to combine material from different origins into transport vehicles (or containers)with the same,or similar destination. Background Cross-docking,obviously,obviates part of inventory which was before regarded necessary;thus cross-docking is to some degree an application of JIT (Just in Time) which pursues zero inventory. In the meantime,cross-docking also takes advantage of pull supply chain to improve its flexibility;thus it's also a practice of postponement strategy. Advantages of retail cross-docking: Streamlines the supply chain from point of origin to point of sale; ● Reduces handling costs,operating costs,and the storage of inventory; Products get to the distributor and consequently to the customer faster; ● Reduces,or eliminates warehousing costs; Page 1 Total 4
Supply Chain Management 2013 Page 1 Total 4 Supply Chain Management 罗岩 – 1120329046 - B1203292 What we can learn from Wal-Mart’s Success? Introduction Wal-Mart is an American multinational retail corporation that runs chains of large discount department stores and warehouse stores. The company is the world's third largest public corporation, according to the Fortune Global 500 list in 2012, the biggest private employer in the world with over two million employees, and is the largest retailer in the world. There are many reasons lead to its success, but the most important one is crossing-docking. Cross-docking is a practice in logistics of unloading materials from an incoming semi-trailer truck or railroad car and loading these materials directly into outbound trucks, trailers, or rail cars, with little or no storage in between. This may be done to change type of conveyance, to sort material intended for different destinations, or to combine material from different origins into transport vehicles (or containers) with the same, or similar destination. Background Cross-docking, obviously, obviates part of inventory which was before regarded necessary; thus cross-docking is to some degree an application of JIT (Just in Time) which pursues zero inventory. In the meantime, cross-docking also takes advantage of pull supply chain to improve its flexibility; thus it’s also a practice of postponement strategy. Advantages of retail cross-docking: Streamlines the supply chain from point of origin to point of sale; Reduces handling costs, operating costs, and the storage of inventory; Products get to the distributor and consequently to the customer faster; Reduces, or eliminates warehousing costs;
上海文通大¥ SHANGHAI JIAO TONG UNIVERSITY Supply Chain Management 2013 ● May increase available retail sales space. Difficulties faced Though cross-docking might reduce handling costs,operating costs,and the storage of inventory(Reduces,or eliminates warehousing costs)and improve supply chain efficiency and may even increase available retail sales space;this practice could hardly be widely spread Mainly because it's difficult to effectively and efficiently manage and coordinate the supply circle in warehouse or synchronize the logistics operation,i.e.cross-docking requires advanced IT and SCM. ● Moreover,systems of procurement,transport and distribution cannot be easily totally integrated into the supply chain channel. ● And the supply chain has to risk supply shortage because companies have long been used to rely on inventory rather than minimal or zero inventory concept. Many small and medium sized enterprises would reckon cross-docking is available for large corporate like Wal-Mart etc.However,cross-docking in effect would bring about many benefits for those small businesses as well. ● Unfortunately,for enterprises in different fields,there has been procrustean tendency of the business process design,the effects of implementation of cross-docking is by no means satisfactory.For those seasoned managers and front-line staff,they should actively inspect the pertinent adjustment or modifications of cross-docking Disadvantages of cross-docking: Potential partners don't have necessary storage capacities; Need for an adequate transport fleet to operate; Need for a computerized logistics system; Additional freight handling can lead to product damage. Failure in Germany and South Korea Page 2 Total 4
Supply Chain Management 2013 Page 2 Total 4 May increase available retail sales space. Difficulties faced Though cross-docking might reduce handling costs, operating costs, and the storage of inventory (Reduces, or eliminates warehousing costs) and improve supply chain efficiency and may even increase available retail sales space; this practice could hardly be widely spread Mainly because it’s difficult to effectively and efficiently manage and coordinate the supply circle in warehouse or synchronize the logistics operation, i.e. cross-docking requires advanced IT and SCM. Moreover, systems of procurement, transport and distribution cannot be easily totally integrated into the supply chain channel. And the supply chain has to risk supply shortage because companies have long been used to rely on inventory rather than minimal or zero inventory concept. Many small and medium sized enterprises would reckon cross-docking is available for large corporate like Wal-Mart etc. However, cross-docking in effect would bring about many benefits for those small businesses as well. Unfortunately, for enterprises in different fields, there has been procrustean tendency of the business process design, the effects of implementation of cross-docking is by no means satisfactory. For those seasoned managers and front-line staff, they should actively inspect the pertinent adjustment or modifications of cross-docking. Disadvantages of cross-docking: Potential partners don't have necessary storage capacities; Need for an adequate transport fleet to operate; Need for a computerized logistics system; Additional freight handling can lead to product damage. Failure in Germany and South Korea
上海究通大学 SHANGHAI JIAO TONG UNIVERSITY Supply Chain Management 2013 Wal-Mart has 8,500 stores in 15 countries,under 55 different names.Wal-Mart's investments outside North America have had mixed results:its operations in the United Kingdom,South America,and China are highly successful,whereas ventures in Germany and South Korea were unsuccessful. Why did it fail in South Korea?There are reasons below.Wal-Mart has missed a proper timing to enter the Korean market,and was unable to capture logistically efficient locations which can allow building an efficient distribution system with advantage of economies of scale that it enjoyed in the US market.Major Korean retailers had already located their stores in key commercial areas and developed their distribution networks to optimize the merchandising and the retailing operations prior to Wal-Mart's market entry.Also,Korean consumers considered the freshness of food products very seriously and were willing to make frequent trips to supermarkets or corner stores to buy small volumes of fresh products.Korean consumers'shopping behavior and their preference did not match with the Wal-Mart's retail format.Wal-Mart did not make any changes to meet their local taste. So when Wal-Mart are opening stores globally,it is very important to solve the problem that how to meet the local taste and take advantages of its advanced efficient logistics and supply chain management system. What we can learn from Wal-Mart's success The success of WAL-MART is an organic combination of excellent business model and the application of advanced information technology Through the analysis and research above,the most impressive thing that Wal-Mart gives to us is the set of advanced,efficient logistics and supply chain management system,especially using the Cross-Docking.Wal-Mart's worldwide distribution centers,chain stores,warehouses and freight transport vehicles,as well as partners(such as suppliers,etc.)are concentrated,managed and optimized efficiently,which formed of a flexible,efficient production,distribution and sales network.Therefore,Wal-Mart even paid money on the purchase of specialized Page 3 Total 4
Supply Chain Management 2013 Page 3 Total 4 Wal-Mart has 8,500 stores in 15 countries, under 55 different names. Wal-Mart's investments outside North America have had mixed results: its operations in the United Kingdom, South America, and China are highly successful, whereas ventures in Germany and South Korea were unsuccessful. Why did it fail in South Korea? There are reasons below. Wal-Mart has missed a proper timing to enter the Korean market, and was unable to capture logistically efficient locations which can allow building an efficient distribution system with advantage of economies of scale that it enjoyed in the US market. Major Korean retailers had already located their stores in key commercial areas and developed their distribution networks to optimize the merchandising and the retailing operations prior to Wal-Mart’s market entry. Also, Korean consumers considered the freshness of food products very seriously and were willing to make frequent trips to supermarkets or corner stores to buy small volumes of fresh products. Korean consumers’ shopping behavior and their preference did not match with the Wal-Mart’s retail format. Wal-Mart did not make any changes to meet their local taste. So when Wal-Mart are opening stores globally, it is very important to solve the problem that how to meet the local taste and take advantages of its advanced efficient logistics and supply chain management system. What we can learn from Wal-Mart’s success The success of WAL-MART is an organic combination of excellent business model and the application of advanced information technology. Through the analysis and research above, the most impressive thing that Wal-Mart gives to us is the set of advanced, efficient logistics and supply chain management system, especially using the Cross-Docking. Wal-Mart’s worldwide distribution centers, chain stores, warehouses and freight transport vehicles, as well as partners (such as suppliers, etc.) are concentrated, managed and optimized efficiently, which formed of a flexible, efficient production, distribution and sales network. Therefore, Wal-Mart even paid money on the purchase of specialized
上海文通大¥ SHANGHAI JIAO TONG UNIVERSITY Supply Chain Management 2013 logistics satellites to ensure the network information transmission. It is difficult for Chinese companies to do the same as Wal-Mart.Because maintaining this vast network of IT investment and upgrading fees are hard to bear. At present,a lot of companies in China are stepping into the construction of informatization,some companies even are using supply chain management system. But compared with Wal-Mart the result is not so good.The reason is that some of the supply chain management software is more developed by IT technicians and programmers,and the world's advanced level of management thoughts and ideas are difficult to imitate.On the other hand,when building supply chain management system,Chinese companies may face lack of experience,personnel and financial difficulties.In the trend of constructing the global logistics and supply chain management,China has gradually become the world's manufacturing center,and now it is facing a good opportunity for logistics management and supply chain management development. Page 4 Total 4
Supply Chain Management 2013 Page 4 Total 4 logistics satellites to ensure the network information transmission. It is difficult for Chinese companies to do the same as Wal-Mart. Because maintaining this vast network of IT investment and upgrading fees are hard to bear. At present, a lot of companies in China are stepping into the construction of informatization, some companies even are using supply chain management system. But compared with Wal-Mart the result is not so good. The reason is that some of the supply chain management software is more developed by IT technicians and programmers, and the world's advanced level of management thoughts and ideas are difficult to imitate. On the other hand, when building supply chain management system, Chinese companies may face lack of experience, personnel and financial difficulties. In the trend of constructing the global logistics and supply chain management, China has gradually become the world's manufacturing center, and now it is facing a good opportunity for logistics management and supply chain management development