Criticality of Supplier Focus - Case Study

8/7/2019 Criticality of Supplier Focus - Case Study

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Case Study The case examines the supply chain

management practices at Wal-Mart, theleading retailer in the world

It highlights the benefits reaped by Wal-Mart due to its efficient and effectivesupply chain management system andsupplier relations

Problems it is creating on the suppliersfront

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Walmart was founded in 1962, with theopening of the first Walmart discount storein Rogers, Ark

Wal-Mart has 8,500 stores in 15 countries,with 55 different names

With 2.1 million employees worldwide,the company is the largest privateemployer in the US and Mexico,and one of the largest in Canada


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Relation with SuppliersA. Supplier Sustainability Assessment

Webinar They recently launched the Supplier Sustainability

Assessment to help suppliers evaluate theirsustainability. The questions focus on four areas :

Energy and Climate

Material efficiencyNatural resourcesPeople and community

B. Supplier Diversity ProgramWalmarts Supplier Diversity Program helps bring

minority- and women-owned businesses into their vastnetwork of suppliers. The Supplier Diversity program aims to expand and

advance their current 2,500 diverse suppliers whoprovide products and services for their customersvaried needs

They have created business and networking relationshipswith national supplier development and certification


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Relation With Suppliers

1. Supplier Diversity program is created with3 simple goals:Strengthen and expand their business relationships withminority- and women-

owned suppliers.Make them a part of our day-to-day businessEducate consumers and associates about Walmartscommitment to these businesses

2. Supplier CertificationSupplier certification carries many benefits:

Network Opportunities

Expand network with access to a national organization base.Marketing ToolsIncrease visibility among key potential business partners.

Procurement InclusionList their business in national supplier directories, allowingcorporations to find them when seeking diverse suppliers.

Education and MentoringLearn from the experience of respected businesses throughprograms offered by diverse supplier organizations.


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Relation with Suppliers

2. Supplier Diversity AwardsThis helps to encourage these suppliers anddevelop a long term relation with them.

The suppliers can find out how their product isperforming vis-a-vis competitors products ina particular product category.


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Benefits Reaped

Reduction in lead timeFaster inventory turnover (measure of the number of timesinventory is sold or used in a time period such as a year)

Reduction in safety stockReduced inventory storage cost

Working capital utilization ( efficient use of w.c.)Savings on cost are always passed on to the

consumers, thereby adding value at every stageand process. This sees increase in sale and thecustomer base.

Justifies their tag line Always low Prices, Always


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Going the wrong way

Norway Calls Wal-Mart's Human RightsViolations "Serious" and "Systematic.

In 2006, Norway sold its 2.5 billion kroner ($415million) worth of Wal-Mart, citing "serious" and"systematic" human rights violations in Wal-Mart'ssupply chain

Wage Violations at Supplier FactoriesSeveral serious violations are still found consistently

at the factory level, including problems withpayment of overtime compensation, coaching of workers for worker interviews, and the use of `double-books' to hide true numbers of hoursworked or wages/benefits paid


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Going the wrong way

Toys Built in South China SweatshopA China Labor Watch report detailed the

mistreatment of workers in a factory makingsmall toys for Wal-Mart

Wal-Mart has been accused of usingmonopsony (market form in which only one buyerfaces many sellers) power to force its suppliers intoself-defeating practices.Barry C. Lynn, a senior fellow at the New America

Foundation (a think tank), argues that Wal-Mart's constant demand for lower prices causedKraft Foods to "shut down thirty-nine plants, tolet go [of] 13,500 workers, and to eliminate aquarter of its products


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Conclusion

Walmart is benefiting from their supply chainmanagement

It is providing benefits through several programs

and initiatives to build better relations

However, one can see that on the other side it isbeing accused of violating human rights of

workers, pressurizing suppliers to offer lowerprices etc.

Being such a well known brand, such sort of bad

publicity will not only hurt its reputation within


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Criticality of Supplier Focus - Case Study