Supply Chain Management 1

Running Head: SUPPLY CHAIN MANAGEMENT PAPER

Supply Chain Management

Jarrod E. Brown

ISCOM/370 - University Of Phoenix

Instructor Asher
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Supply Chain Management

Organizational functions like supply chain management are critical to a company’s

success. Unfortunately, supply chain management is not defined as simply as one would think

since supply chain management is adaptable to organizational needs. Wisner, Leong, and

Tan (2005) gave four definitions of supply chain management:

1. “The Institute for Supply Management describes supply chain management as

“[t]he design and management of seamless, value-added processes across

organizational boundaries to meet the real needs of the end customer. The

development and integration of people and technological resources are critical to

successful supply chain integration.”

2. “The Supply Chain Council’s definition of supply chain management is

“[m]anaging supply and demand, sourcing raw materials and parts, manufacturing

and assembly, warehousing and inventory tracking, order entry and order

management, distribution across all channels, and delivery to the customer.”

3. “The Council of Logistics Management defines supply chain management as “. . .

the systemic, strategic coordination of the traditional business functions and the

tactics across these business functions within a particular company and across

businesses within the supply chain for the purposes of improving the long-term

performance of the individual companies and the supply chain as a whole.”

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4. “Finally, in a research paper authored by a notable expert in supply chain

management, Dr. Hau Lee and his coauthor Corey Billington define supply chain

management as “the integration activities taking place among a network of

facilities that procure raw materials, transform them into intermediate goods and

then final products, and deliver products to customers through a distribution

system.”

From the four definitions provided by Wisner, Leong, and Tan the main concept of

supply chain management is organizing or assimilating all the necessary functions to create a

product while constantly evaluating the processes to meet customer demands, and improve

organizational competence. Supply chain management is a continual improvement process and

requires constant communication between all supply chain participants.

Wal-Mart’s Supply Chain Evolution

According to Wal-Mart Stores, Inc. (n.d.),"Wal-Mart… serves customers and members

more than 200 million times per week at more than 8,400 retail units under 55 different banners

in 15 countries. With fiscal year 2010 sales of $405 billion, Wal-Mart employs more than two

million associates worldwide.” Some success factors for Wal-Mart are community building, one-

to-one marketing and a sense of community. Wal-Mart information management systems have

obtained knowledge of consumer purchasing habits, which was used to develop their supply

chain management. In 1983 Wal-Mart invested in a satellite system that was designed to connect

all stores, this matured into an intricate communication network that eventually included all

stores, headquarters, distribution centers, and suppliers.

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The expanded communication system enabled a modified just-in-time process of Wal-

Mart’s inventory control. As each Wal-Mart store sells a product, their system communicates

automatically to the supplier of that item, who then knows to include a replacement in the next

shipment to the nearest distribution hub. This integrated communication allows for a higher

degree of response to inventory needs, and reduces the amount of inventory required to keep in

the store taking up valuable space.

Another upgrade Wal-Mart invested in was their distribution technology which

established a network of innovative distribution hubs. They implemented cross-docking to

minimize the inventory held in the distribution centers and promote the need-based inventory

delivery system which runs over Wal-Mart’s communication systems. This supply chain model

allowed for shipments that arrive at a warehouse to be moved immediately to the trucks taking

outbound shipments to store fronts. These same trucks are also taking merchandise from stores,

reducing the total cost of delivery.

Conclusion

As it goes to show, supply chain management is vital to an organization and how it is

managed and implemented needs to be continually evaluated. Wal-Mart used technology and

new methodologies to fix their supply chain issues and it helped the company keep prices low for

consumers. As new technology arrives, companies can continue to improve its supply chain

management processes to provide better services to clients and supply chain participants. Wal-

Mart is just one of many examples of how important it is to re-evaluate how to conduct business

and refine supply chain management ideologies. Without proper supply chain management a

company can lose a lot of money or even worse go out of business.

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Reference

Wal-Mart Stores, Inc.. (n.d.). Investors. Retrieved from

http://investors.walmartstores.com/phoenix.zhtml?c=112761&p=irol-irhome

Wisner, J. D., Leong, G. K., & Tan, K. (2005). Principles of Supply Chain Management: A

Balanced Approach. Mason, OH: South-Western.