Transportation and Warehousing Networks

Michelangelo Orsini

June 17 2018

To begin with, undertaking a comprehensive evaluation or assessment of the transportation and warehousing networks for any business setting is very crucial. This is mainly because the evaluation helps in determining the strengths and weaknesses of the networks thus making it easier to come up with strategies of dealing with any challenges and eventually this leads to improved productivity and efficiency within the systems. The supply chain network is very important since it determines the level of customer satisfaction and the ability of an organization to meet its short and long-term objectives (Poirier, 2003). 

Transportation

Evaluation

Transportation networks are affected by various constraints in different ways. Walmart is one of the world’s largest multinational retail organizations (Rugman, 2005). The corporation’s transportation network system is crucial especially because it operates a chain of hypermarkets and stores in different places. There are various constraints with the transportation network that may affect the overall supply chain operation. The first constraint is the physical constraints. The physical constraints mainly comprise of factors such as climate and topography. There are some geographical features that affect the type of transportation channel that would be the most effective in transportation of products. For instance, Walmart operates a chain of hypermarkets and stores and all these facilities are located in different areas with different features. This implies that it may be difficult to transport products on time through use of roads. For example, the corporation deals with grocery products which are perishable and therefore, they should get to the stores on time. Accessibility to some locations is difficult due to geographical factors. The climate may also easily affect such products especially when special equipments are not used. Time is also another constraint. Of this case, time basically refers to the duration taken to reach the products to customers at a minimized cost.

Another constraint is the legal aspect which entails the regulations for commercial motor vehicles. Regulations may make it difficult for the organization to fully implement its strategies. For example, the length requirements for trucks may make it difficult for the organization to transport products that may require a bigger space and length or hazardous products. Another example is the 70 hours 8-day rule for the drivers. Therefore, some of these regulations may hinder the organization from being flexible in its activities. Generally, all these constraints may have impact impacts on the customer satisfaction, delivery performance, flexibility, transportation costs, and the supply chain response time (Chandra, & Grabis, 2007). 

Different modes of transportation are used based on reliability, costs, applicability among other factors. In order to ensure that the transportation network is performing as expected, the organization has been able to put in place the correct mode of transport. The corporation has a fleet of large trucks used for distribution and this is the main mode of transport. These trucks have the ability to carry heavy and large products. Improved packaging and loading makes it easier to maximize the quantity of products carried by each truck. In order to minimize the costs, the corporation uses various strategies such as use of large trailer sizes. The stops per trip are also minimized to minimize time wastage. The use of technology has enabled the corporation to design networks that cost effect.

Recommendation

In order to deal with these constraints, then the first strategy is by outsourcing. This may include outsourcing transportation and also working closely with manufacturers. The corporation may determine how its stores are located and the products and services providers that are nearby. This may help in identifying the appropriate services that should be outsourced. Overall, outsourcing is an effective way of dealing with physical constraints and various government regulations. For instance, this may make it easy to deal with perishable products because it may become easier to get products from the producers to the consumers within a short period. The corporation should also improve end-to-end visibility so as have real-time awareness of the shipments movements. The corporation should also consider the use of other transportation automobiles such as vans so as to improve efficiency within the supply chain.

Warehousing

Evaluation

Analysis of current warehousing infrastructure

Currently, Walmart’s warehousing infrastructure is characterized by a lot of application of technology. The corporation uses specialized equipment in handling and lifts and this enhances the multi-store delivery ability and maximizes overall warehouse services. Proper data storage and scheduling software also make it run the warehouse operations easily because inventory can be easily tracked. Generally, automating the warehouses has improved efficiency for the corporation. The corporation has also installed proper storage devices to maintain the quality of products. This implies that the current warehousing infrastructure meets the corporation's storage needs.

Walmart’s customers are increasing from time to time and therefore, there is a need for the corporation to expand its operations so as to ensure the customers are satisfied. This includes expansion both in the local and global markets. The corporation should also expand in other industries such as the textile industry among others. One of the constraints that may affect the corporations during its expansion is government and state regulations on operations of facilities. Possible locations such as Canada and the U.K have different regulations. The second constraint is competition. There are many organizations that are involved in business activities that are similar to Walmart and this is a major constraint during expansion.

Considerations for special handling of hazardous materials

The corporation deals with a variety of products and this comprise of hazardous products which should be handled in the required manner. The considerations for special handling of hazardous materials include installation of special equipment for handling the materials, proper employee training, proper labeling of containers and stores, emergency producers, and equipment, and proper storage. These considerations may slowdown warehousing operations may slow down so as to have the specialized systems installed and to also undertake a special employee training. The hazardous materials require more time and caution when handling and this slows down the routine activities. The corporation may also be required to make some rescheduling on the warehousing activities. For example, currently, the corporation deals with non-hazardous materials which mean that a new schedule should be put to ensure that the loading is done at different times to minimize risks.

References

Chandra, C. & Grabis, J. (2007). Supply chain configuration : concepts, solutions and applications. New York: Springer.

Poirier, C. (2003). The supply chain manager's problem-solver : maximizing the value of collaboration and technology. Boca Raton, Fla: St. Lucie Press.

Rugman, A. M. (2005). The regional multinationals: MNEs and'global'strategic management. Cambridge University Press.

Walmart Website. Retreived from: https://corporate.walmart.com/our-story/our-business

Walmart-China Case Study

Michelangelo Orsini

QSO 330

Case Summary

Walmart is an American retail enterprise operating a chain of discount shops and grocery stores (Johnson, 2015). In 2015, the business made sales of over $482 billion positioning it as the largest retailer business in the world (Johnson, 2015). The Company’s success has partly been attributed to its online strategies, where it is also anticipated that it will be able to generate an investment of approximately $1 billion in the ensuing fiscal year. During the same period, the management also declared the Company’s interest to grow their presence within the offline platform and the integration of both online and offline strategies in China (Johnson, 2015). The Walmart Company was first introduced in China in 1996 in Shenzhen region, following the establishment of the business supercenter and a Sam’s Club (Johnson, 2015). By 2015, the business had established about 416 of its stores across China. Currently, the enterprise perceives its efficient supply chain as its most important strategic asset for competing in the retail sector, along with its centralized strategy for stores and logistics controls (Johnson, 2015). Walmart also has two distribution centers in China namely, the perishable distribution center and the dry distribution center.

Nevertheless, some of the supply chain management issues Walmart has had to deal with in the past include establishing appropriate infrastructures for its perishable portfolios and having over two-hundred stores before the fall of 2025 (Johnson, 2015). Also, Walmart has continued to experience challenges on what flow model (flexible, cost-efficient, and promising in terms of business growth) is ideal for its DCs (Johnson, 2015).

II. Demand Forecasting

A. Evaluation

i. Suppliers

Walmart China supply chain has evolved over time from ship-direct-to-store to other more centralized models of supply chain management. Nonetheless, the supply models faced several criticisms ranging from being costly and exposing suppliers to a poor quality of services while using the DCs (Johnson, 2015). Whereas Walmart DC strategy was perceived as value adding to the supply chain, the suppliers also complained of high fees for using Walmart network rendering it suppliers insensitive. Essentially, the DCs were aimed at reducing logistic cost, optimizing inventory levels, and enhancing the quality of services by allowing suppliers to ship directly to Walmart stores (Johnson, 2015). However, the DC strategy was later deemed as unfavorable to perishable commodities transported to the warehouses. Therefore, in 2015 the DCs were divided into two categories to cater for perishable and dry merchandises, where an aggregate of 15,000 to about 20,000 SKU were created within its stores. Using the new DC strategy supplies were shipped based on individual store needs to overcome the complexities of achieving order fill-rates, logistic costs, and achieve minimum order quantities needed to overcome stock run out (Johnson, 2015).

ii. Demand Constraints

The demand forecasting constraint for Walmart may partially be impacted by the third-party handling of its eleven DCs. Nevertheless, the Senior VP of Walmart-China Mr. Lesley Smith proposed the need to establish an in-house managed distribution center, which will substitute the existing ones and effectively respond to future demand and supply for the firm (Johnson, 2015). The proposed DC will cater for the current 128 stores and proposed 200 stores capacities by end of 2025. Therefore, the management had the challenge of implementing the best flow model to achieve the optimum inventory capacity projected for their new DCs (Johnson, 2015).

Also, another demand forecasting constraint for Walmart is pegged on consumer needs. Walmart was faced with the problem of setting up a convenient store location, along with introducing an inexpensive alternative, and quality goods and services to its Chinese markets. Therefore, the management responded by growing the number of its retail outlets in several locations in Chinese provinces along with implementing affordable pricing (Johnson, 2015). Other expectation among customers included growing the Company SKUs to about 3,500 to sustain their inflated daily demand of approximately 90,000. Also, the enterprise was expected to have an efficient operating cycle throughout the week to achieve the demand capacity of approximately 150,000 daily (Johnson, 2015). Furthermore, Walmart China is focusing on growing consumer operations where it has continuously strived to remit goods nearer to the consumers where it has increased it supplies to over 1,900 retail outlets in different regions. Furthermore, the ongoing e-commerce transformation has seen the inventories held by the business reduce over time (Johnson, 2015).

III. Sourcing

A. Evaluation

Walmart-China currently deploys the cross-dock sourcing strategy where its network has been disjointed into 20 distribution centers, i.e., 11 DC for perishable merchandise and 9DC for dry merchandise (Johnson, 2015). Using the strategy shipments as received are sorted and laden into trucks, which are then dispatched to the store. Such a strategy is deemed efficient in lowering the firm inventory and inventory turnover cost (Johnson, 2015). Furthermore, Walmart has received significant flexibility in increasing its SKUs within its supply chain system. Hence, the business is able to benefit from bulk shipping that is done on a timely basis (24 hours) and closer to its stores, along with saving on storage-related costs (Johnson, 2015).

B. Recommendations

Therefore, it is recommendable that the management at Walmart resort to using staple stock flow for its sourcing and revitalize its stock delivery plan (Cooper & Ellram, 2014). Implementing such a model is significant for the Company to overcome its supplier complexities and for stock scheduling purposes to ensure timely delivery and quality of the supplies (Richards, 2017). Besides, the cross-docking technique has its downsides and may not be ideal for every situation of a sustainable supply chain, e.g., where delivery is not prompt/ ready. Hence, an appropriate strategy will overcome the problem of stock mismanagement, along with lowering the inventory and logistic overheads (Cooper & Ellram, 2014). Also, a resilient and consistent network should be adopted to correspond and satisfy market demand (Richards, 2017).

References

Cooper, M. C., & Ellram, L. M. (2014). Characteristics of supply chain management and the implications for purchasing and logistics strategy. The international journal of logistics management, 4(2), 13-24.

Johnson, F. (2015, November 26). Walmart China - Supply Chain Transformation. Retrieved May 28, 2018, from https://hbr.org/product/walmart-china-supply-chain-transformation/W15534-PDF-ENG

Richards, G. (2017). Warehouse management: a complete guide to improving efficiency and minimizing costs in the modern warehouse. Kogan Page Publishers.