The supply chain is often one of the greatest sources of cost for companies and

Question

The supply chain is often one of the greatest sources of cost for companies and consequently it often becomes a major target of cost reduction. This is true for both product and service industries. For example, in manufacturing, managers seeking to reduce supply costs have a number of options including re-designing products so that they can be built with less costly parts (sometimes referred to as "value engineering" (Meeker & McWilliams, n.d.), automation, transitioning sources of supply from high-cost domestic suppliers to suppliers in low cost regions of the world, among other options. In the service industry input services must be combined in some fashion to provide the output service a customer wants to buy. Therefore, managers seeking to reduce supply chain costs can automate input services or outsource them from high-cost employees to low-cost service-providers, among other options. In this light, address one of the following: (a) Select an organization. Discuss in detail some methods it has used to reduce supply chain costs and what results were achieved; ( b) Select a cost reduction approach or method (like the concept of "value engineering" (Meeker & McWilliams, n.d.) I mentioned above, or outsourcing of employee labor, as examples), provide a real-world illustration of it, and discuss the advantages and disadvantages it holds for organizations that use it; (c) Select a company. How would you determine how much of the total cost of that company is associated with the supply chain? Provide detailed steps that you would take to perform this analysis and arrive at a conclusion. Given that the supply chain is one source of cost, what are the other sources of cost for the company?

Explanation / Answer

a) Walmart manages an average of dollar 32 million in an inventory. Walmart has the most efficient supply chain management system which has contributed to its success. Walmart initiated vendor managed inventory where manufacturers are responsible for managing walmart warehouses. This resulted in hundred percent order fulfillment on merchandise. Company entered into strategic partnership with most of its vendor and quoted lowest prices for high volume purchases. Walmart uses cross Docking as a Logistic practice to replenish inventory efficiently. It reduces transportation time, transportation cost and eliminate inefficiencies, walmart uses Technology to forecast demand track and predict inventory levels, create highly efficient transportation routes and manage customer relationship. walmart also implemented universal product code barcode to track the product. walmart also devised retail link which is the datebase that forecast supplier demands to supplier network which displays real time sales data to walmart distribution centres. Recently Walmart also started using radio frequency identification tag which are the numerical code that can be scanned from a distance to track pallet of merchandise moving along the supply chain.

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