Walmart continues to offer very low prices, and this is possible due to 1. Its huge volume of sales that’s possible due to the spread of its operation and its wide customer base 2. A supply chain management system that maximizes efficiencies and reduces outlaysa. Walmart has a most technologically advanced electronic Inventory Management system; the goal of that system is to know exactly What, When and How much is needed. Due to this system they almost never goes out-of-stock.b. Walmart doesn’t manage its inventory; suppliers do that for Walmart.
So, that they can save inventory management costc. The point-of-sales data, real time sales data and warehouse inventory data are all sent and stored in centralized database system. This system makes it easy to provide all information to people involved in supply chain process and allows communication through all units of company in various locationsd. 160 Regional distribution centers are able to carry out cross-docking at their warehouses, a process in which products are taken from a truck upon its arrival and packed in a truck headed to a store without spending time in the warehouse.
3. Minimization of overhead and operational costs4. Leveraging of its bargaining power to force suppliers to lower pricesDell ” From Direct Sales to Channel StrategyDell impressed many in its early years with its distinct model of supply chain management, selling customized computers directly to customers to meet burgeoning PC demand. By using this innovative sales model, Dell became an industry and shareholders’ darling, a high-tech pioneer with seemingly limitless growth. Those days appear to be over: Dell’s profits and shares started to drop considerably from their peaks.Dell was still enjoying the competitive advantage of customizing computers but market for such offerings has shrunk, largely because customer needs and related supply chain costs have shifted in the mature PC business.Direct sales channels like Dell’s, have much lower facility and inventory costs than retailers but higher transportation costs; retailers, in contrast may have instantly available products and offer more comprehensive support, but cannot profitably stock as many different products as direct sellers.Today’s customers are willing to choose from a smaller number of off-the-shelf PCs, and are less concerned with customization. So, Dell decided to go for a hybrid model that will have both direct sales and channel strategy.Dell announced that it would begin offering two PC models through Wal-Mart stores in June. In a subsequent New York Times article, Dell announced that it would sell Inspiron notebook computers through Wal-Mart’s Sam’s Club outlets. And most recently the company announced that its computers would be available in major Chinese cities through fifty Gome Electrical Appliances stores, China’s largest electronics retailer, starting in early October 2007. Dell also plans to extend its international retail strategy by opening its first retail store in Russia.Honda’s Approach to Supplier ManagementHonda of America has developed a network of more than 400 supplier companies throughout North America, including 180 in Ohio alone. True to Honda’s philosophy of “purchase where you produce,” these companies supply more than 80 percent of the parts and materials for the automobiles, motorcycles, engines and components the company manufactures. Honda localizes by understanding and blending into the surrounding environment’s culture, the company’s management policy remains the same regardless of location.Ironically, many of Honda’s supplier development programs and activities, supplier awards programs or supplier incentives, appear very similar to those found at most other automobile manufacturers. But the difference is in how much time, money and effort Honda invests in building and sustaining its supplier relationships. Honda first try to identify a way to make a big impact, like doing a major cleanup, buying lights, putting in special floor mats, whatever it takes to brightening the workplace. The supplier’s associates start to see improvements right away. In almost every case, without prompting, everyone in the factory starts asking, ‘When are you going to start improving my area?’ They call it Honda-land. And everyone’s smiling.The Best Practices program reflects Honda’s methodical, institutionalized approach to continuously improving its suppliers. But the company also demonstrates a willingness to commit significant resources toward ad hoc problem solving when needed. For example, one well-qualified supplier unexpectedly started to have quality and delivery problems. Honda dispatched an inside expert to assess the situation. The problem? To meet Honda’s parts requirement, the supplier had been forced to nearly double its work force in a very short time. Unfortunately, the supplier lacked the management capabilities required for the larger operation. In response, Honda relocated four staff members to live and work with the supplier for 10 months to help the supplier restructure and build the company’s capability to meet Honda’s need. Toyota ” Just in Time MethodologyThe Toyota Production System fulfils customer demand efficiently and promptly by linking all production activity to real marketplace demand. Just-in-time production relies on finely tuned processes in the assembly sequence using only the quantities of items required, only when they are needed. Imagine a process designed to produce six different types of product, where the total weekly demand for the range of products varies up and down by 25%, and the daily mix of product types is continuously changing.A planning challenge, but also a typical scenario in many types of business in which the process (manufacturing or otherwise) has to continuously respond to demand. Toyota Production System has responded to this reality of life by developing an approach that can meet the challenge in an efficient, cost-effective way. Just-in-time offers a smooth, continuous and optimized workflow, with carefully planned and measured work-cycle times and on-demand movement of goods, reduces the cost of wasted time, materials and capacity. Team members can concentrate on their tasks without interruption, which leads to better quality, timely delivery, and peace-of-mind for Toyota’s customers.Just-in-time is itself, based on four key principles that work together to support this unique concept at every level: 1. Heijunka Heijunka is the elimination of uneveness in workload. This is done by levelling volumes to produce a smooth, continuous and efficient flow. With heijunka, processes are designed to enable products to be switched easily, producing what is needed when it is needed. Heijunka also eliminates overburden or strenuous work that can lead to safety and quality problems.2. Elimination of WasteWaste is defined as anything that does not add value. This includes areas that might not normally be considered as waste, such as overproduction, holding too great an inventory, and all unnecessary movement, processing and waiting.3. Takt time ” the heartbeat of productionTakt is the rate of customer demand. Takt time is the term given to a work-cycle that fulfils each customer’s demand.The key is that the work-cycle should be synchronized with demand to avoid either underproduction or overproduction.4. KanbanThe kanban card is a simple, highly visible device that the Toyota Production System uses to call-up components as they are required, meaning only a minimal stock of components is held in the assembly area. Before stocks need replenishing a kanban card instruction from the operator ensures a just-in-time delivery.