15-01-2013, 04:52 PM
Cross-Docking In Retail
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INTRODUCTION
Wal-Mart Stores, Inc., branded as Wal-Mart since 2008 and WAL★MART before then, is an American multinational retailer corporation that runs chains of large discount department stores and warehouse stores. The company is the world's third largest public corporation, according to the Fortune Global 500 list in 2012. It is also the biggest private employer in the world with over two million employees, and is the largest retailer in the world. Wal-Mart remains a family-owned business, as the company is controlled by the Walton family who own a 48% stake in Wal-Mart. It is also one of the world's most valuable companies.
The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the New York Stock Exchange in 1972. It is headquartered in Bentonville, Arkansas. Wal-Mart is also the largest grocery retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the U.S. from grocery business.[7] It also owns and operates the Sam's Club retail warehouses in North America.[8][9]
Wal-Mart has 8,500 stores in 15 countries, under 55 different names.[10] The company operates under the Wal-Mart name in the United States, including the 50 states and Puerto Rico. It operates in Mexico as Wal-mex, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best Price. It has wholly owned operations in Argentina, Brazil, and Canada. Wal-Mart’s investments outside North America have had mixed results: its operations in the United Kingdom, South America and China are highly successful, whereas ventures in Germany and South Korea were unsuccessful.
Advantages of retail cross-docking
Streamlines the supply chain from point of origin to point of sale
Reduces handling costs, operating costs, and the storage of inventory
Products get to the distributor and consequently to the customer faster
Reduces, or eliminates warehousing costs
May increase available retail sales space.
Disadvantages of cross-docking
Potential partners don't have necessary storage-capacities
or an adequate transport fleet to operate Cross-Docking
Need of adequate IT-System
Additional freight handling can lead to product damage
Typical applications
"Hub and spoke" arrangements, where materials are brought in to one central location and then sorted for delivery to a variety of destinations
Consolidation arrangements, where a variety of smaller shipments are combined into one larger shipment for economy of transport
Deconsolidation arrangements, where large shipments (e.g. railcar lots) are broken down into smaller lots for ease of delivery.
Cross dock facility design
Cross-docks in practice are generally designed in an "I" configuration, which is an elongated rectangle. The goal in using this shape is to maximize the number of inbound and outbound doors that can be added to the facility while keeping the amount of floor space inside the facility to a minimum. In 2004, Bartholdi & Gue demonstrated that this shape is indeed ideal for facilities with 150 doors or less. For facilities with 150-200 doors a "T" shape is more cost effective. Finally, for facilities with 200 or more doors the cost minimizing shape will be an "X".
Wal-Mart’s Keys to Successful Supply Chain Management:
As the following case study demonstrates, a successful supply chain management strategy can lead to lower product costs and highly competitive pricing for the consumer. Over the past ten years, Wal-Mart has become the world’s largest and arguably most powerful retailer with the highest sales per square foot, inventory turnover, and operating profit of any discount retailer. Wal-Mart owes its transition from regional retailer to global powerhouse largely to changes in and effective management of its supply chain.
Wal-Mart began with the goal to provide customers with the goods they wanted when and where they wanted them. Wal-Mart then focused on developing cost structures that allowed it to offer low everyday pricing. The key to achieving this goal was to make the way the company replenishes inventory the centerpiece of its strategy, which relied on a logistics technique known as cross docking. Using cross docking, products are routed from suppliers to Wal-Mart’s warehouses, where they are then shipped to stores without sitting for long periods of time in inventory. This strategy reduced Wal-Mart’s costs significantly and they passed those savings on to their customers with highly competitive pricing. Wal-Mart then concentrated on developing a more highly structured and advanced supply chain management strategy to exploit and enhance this competitive advantage.
Components of Supply Chain Management (SCM) :
The main elements of a supply chain include purchasing, operations, distribution, and integration. The supply chain begins with purchasing. Purchasing managers or buyers are typically responsible for determining which products their company will sell, sourcing product suppliers and vendors, and procuring products from vendors at prices and terms that meets profitability goals.
Supply chain operations focus on demand planning, forecasting, and inventory management. Forecasts estimate customer demand for a particular product during a specific period of time based on historical data, external drivers such as upcoming sales and promotions, and any changes in trends or competition. Using demand planning to develop accurate forecasts is critical to effective inventory management. Forecasts are compared to inventory levels to ensure that distribution centers have enough, but not too much, inventory to supply stores with a sufficient amount of product to meet demand. This allows companies to reduce inventory carrying costs while still meeting customer needs.
Wal-Mart’s Method of Managing the Supply Chain
Wal-Mart has been able to assume market leadership position primarily due to its efficient integration of suppliers, manufacturing, warehousing, and distribution to stores. Its supply chain strategy has four key components: vendor partnerships, cross docking and distribution management, technology, and integration. Wal-Mart’s supply chain begins with strategic sourcing to find products at the best price from suppliers who are in a position to ensure they can meet demand. Wal-Mart establishes strategic partnerships with most of their vendors, offering them the potential for long-term and high volume purchases in exchange for the lowest possible prices. Suppliers then ship product to Wal-Mart’s distribution centers where the product is cross docked and then delivered to Wal-Mart stores. Cross docking, distribution management, and transportation management keep inventory and transportation costs down, reducing transportation time and eliminating inefficiencies.