Managing Supply Chain

Supply Chain Managing

Walmart is considered as a firm with one of the most effective and more so, efficient supply chains in the world. Its traditional supply chain has over the decades been pivotal towards enabling the firm to comprehensively utilize it behemoth purchasing power, thus, influencing supplier behaviors towards meeting its individual cost-cutting objectives (Ahire, Malhotra & Jensen, 2015). As such, the company has been able to adhere to its mission statement by critically managing three core elements of its supply chain. These include the corporation’s distribution practices, running its very own logistics fleet, and proactively employing new technologies into its supply chain management system.

Given that the Wal-Mart Corporation is a technologically adept organization, it launched the Walmart.com network aimed at enabling consumers to make purchases online, and then have the chosen product shipped directly to their residences. Similarly, the product could be shipped to specific stores/outlets, also known as Distribution Centers, for the customers to collect. (Ahire, Malhotra & Jensen, 2015). The company’s largest center, the Carrollton Distribution Center (CDC), looked to developing an automated as well as manual carton mixing process aimed at cost-cutting measures improvement. This paper seeks to present an outline of Walmart.com’s supply chain structure, its carton mix challenge, and the solutions identified to overcome the challenge. This paper will also address the results and benefits associated with the adopted planning approach.

In 2006, this multinational mammoth of an organization opted to upgrade its internet-based business model first established in 2000 (Ahire, Malhotra & Jensen, 2015). The upgrade involved integrating a new site-to-store subdivision within its online shopping website, Walmart.com. In an effort to ensure that the business model continued to operate profitably, the company sought the services of consultants to offer solutions towards comprehensively managing operating costs (Ahire, Malhotra & Jensen, 2015). The main challenge towards this end was the fact that the program in place was essentially developed by a previous team which presented challenges to the new team hired to incorporate new solutions.

The graph below shows a projection of savings on carton materials after study recommendations were implemented. (Ahire, Malhotra & Jensen, 2015)

(Source: Ahire, Malhotra & Jensen, 2015)

A specific problem with the Distribution Centers concerned the carton mixes. Consultants decided on employing a heuristic approach to calculating and subsequently developing an optimal carton-mix heuristic (Ahire, Malhotra & Jensen, 2015). As such, the older heuristic was developed using the Microsoft excel package towards optimizing carton dimensions for the manual as well as automated packaging system. To further appraise the heuristic approach adopted, it was perceived that the DSS software which is more user-friendly was best suited for this particular project (Ahire, Malhotra & Jensen, 2015). This was another challenge eliminated through this project as it would enhance the carton-mix allocation processes indefinitely. In an effort to improve efficiencies, and realize savings on this particular element of the corporation’s supply chain, a strategy was proposed (Ahire, Malhotra & Jensen, 2015). Given that, the Distribution Centers sought to have a carton mix that could select particular product sizes and carton sizes. On the same note, there were carton mixes that could have had products packaged by an automated system. On the other hand, other product sizes significantly required manual labor packaging.

The team did not encounter significant challenges during the data collection phase. The results of the study conducted to circumvent the challenge served to eliminate the CDC’s by incorporating a heuristic viewpoint aimed at optimizing on carton mix resulting in significant savings on cost (Freidberg, 2013). Other accruing benefits were not only substantial but also strategic as they enabled for the determination of the appropriate carton mix which was more effective in comparison to previous approaches (Ahire, Malhotra & Jensen, 2015); (Mulcahy & Sydow, 2008). As a result, shipping costs decreased, the company created a smaller carbon footprint, and the efficient use of carton boxes was realized. As such, the outcome of the study resulted in a more effective lean management approach to a relatively new supply chain system.

References

Ahire, S. L., Malhotra, M. K., & Jensen, J. B. (2015). Carton-Mix Optimization for Walmart. com Distribution Centers. Interfaces, 45(4), 341-357.

Freidberg, S. (2013). Calculating sustainability in supply chain capitalism. Economy and Society, 42(4), 571-596.

Mulcahy, D. E., & Sydow, J. (2008). A supply chain logistics program for warehouse management. CRC Press.

References

Ahire, S. L., Malhotra, M. K., & Jensen, J. B. (2015). Carton-Mix Optimization for Walmart. com Distribution Centers. Interfaces, 45(4), 341-357.

Freidberg, S. (2013). Calculating sustainability in supply chain capitalism. Economy and Society, 42(4), 571-596.

Mulcahy, D. E., & Sydow, J. (2008). A supply chain logistics program for warehouse management. CRC Press.

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