Literature Review on SCM and Material Management Approaches

In the present scenario, supply chain management (SCM) is significant for business to optimizing the operation related to supply chain (SC) and enhances the efficiency of SC with a higher speed which is important for delivering products to the consumer at right time (Christopher, 2016; Tang and Musa, 2011). In this regard, the present report discusses the literature about the SC and practices adopted for material management for smooth operation of the business.

For this purpose, different supply chain practice like supplier selection, sustainable supply chain (SSC) and different inventory management approaches which are collected from various academic journals and books. Apart from this, for gaining a deeper knowledge of SCM primary research on Walmart’s SC activities is also carried out with the help of the questionnaire method. Hereby, a report is also constructed for analyzing the consistency between primary and secondary data.   

SCM is helpful for delivering the high excellence products at the right time to the end users because it ensures the effective management of SC activities (Cao and Zhang, 2011). In this context, the Just In Time (JIT) inventory management approach identifies mistakes in the final product and helps to fix that error faster with the help of integrated SC (Wild, 2017). Similarly, it reduces wastages in the inventory because it focuses on the storing of a low volume of the products (O’Grady, 2012).

It decreases the inventory management cost because of a low volume of material are easy to handle. Thus, this approach enhances management efficiency to handle the inventory in a cost-effective manner.  At this juncture, if the demand of the particular product is instantly going upwards then the Safety Stock Inventory (SSI) approach is helpful because it focuses to ensure the few amounts of stock for the unexpected demands (Van Kampen, Van Donk and Van Der Zee, 2010). For instance, Walmart, a multinational retailer faces issue related to stock out due to the poor focus on the inventory management (Rosenblum, 2014).

In this context, Bertazzi, Bosco, Guerriero and Lagana (2013) asserted that the stock out is the most difficult situation for the business because it decreases the sales and vanished the goodwill. Therefore, for a retailer selection of inventory management system is most important to elevate the sales and generate a high financial output of the business with a productive inventory management. On the other hand, uncertainty in the environment also affects the approach of just in time because it creates the barrier in transportation in the products and suffers the organization from the unavailability of the stock (Beutel and Minner, 2012). Therefore, the SSI method is helpful for ensuring the continuity in the supply chain operations by preventing the stockout issue.

  In the present scenario, the sustainability of supply chain is significant for enhancing the effectiveness of supply chain (Barney, 2012). In this regard, the sustainable supply chain (SSC) has a low harmful impact on the environment because it fosters the minimization of the CO2 emission from the supply chain activities like transportation (Carter and Liane Easton, 2011).

Just In Time Inventory Management Approach

For example, UK’s one of the top fashion retailer (Walmart) targets to remove the discharge of hazards chemical in the supply chain activities and ensuring the sustainability of supply chain (Sustainable Brands, 2018). In this context, Walker and Jones (2012, p. 15) asserted that the sustainable supply chain diminishes the negative consequences of a business on the environment, society and the economy by considering the factors which affect the supply chain.

Thus, management focus on the sustainable supply chain for avoiding the hazards in business activities and ensures the business growth. For instance, Australian government set a standard for reducing greenhouse emission in Australia through the vehicles and the commercial firms because it continuously going at a high stage which is more extensive (Jericho, 2018; Parliament of Australia, 2018). By imposing these policies, Australian government make sure the harmful emission of greenhouse gasses in the environment reduces and business are gets aware for the minimization of harmful emission in the environment by business activities.   

According to several studies, supply chain management (SCM) is crucial for a business to improve the quality of end products because it truly depends upon the quality of raw material supply by the suppliers (Barney, 2012). Apart from this, the selection of a supplier is playing a vital role in the development of sustainable supply chain because the ethical behaviour of supplier also affects the society and environment (Grover, Grover, Rao and Kejriwal, 2016).  

In this context, Molamohamadi, Ismail Leman and Zulkifli (2013) mentioned that the supplier selection process required a huge amount of financial resources of the organization; thus, the management focus on the supplier selection is significant to prevent the firm from the financial losses. If the firm selects those suppliers who are highly valued in the environment protection criteria then it increases the probability for providing advantages to the firm else the firm faces many harmful circumstances like negative publicity, financial losses etc.

For example, low focus on the supplier selection adversely influenced the brand reputation of UK’s retailer Tesco because suppliers supplies the horse meat patties instead of beef patties which consequent in the financial losses of Tesco (Fletcher, 2013; Lawrence, 2013). It reveals that a firm should focus on the selection of those suppliers who take parts in the progress of supply chain in the direction of sustainability. With the help of effective supplier, a firm ensures the growth of the business.  

The supplier selection is also important for effective material management in the regular business operation through supplying right material at the right time with required quantity from the right sources at the affordable price (Bai and Sarkis, 2010). If the supplier fulfils all the needs then it helps for turning a conventional supply chain into a sustainable supply chain. In this regard, Qu et al. (2012) asserted that the material management is also significant for streamlining the production process of a business because it organizes the storage,

flow and supply process in an effective manner. On the other hand, technological advancement also helps in the collaboration with the supplier and helpful for a firm to get the right material at right time (Jean, Sinkovics and Kim, 2010). However, when an organization deals with a large amount of supplier then it becomes hard to balance among suppliers. For example, in the case of Walmart, large numbers of vendors enhance complication of management for the allocation of profit interest in suppliers (Shin and Tucci, 2015).

Safety Stock Inventory Approach

In this context, Sundtoft Hald and Ellegaard (2011) indicated that poor allocation of profit interest in the supplier enhances the dissatisfaction in them and may result in the failure of supply chain practices. It shows that allocations of profit interests in the suppliers are important for dealing with supplier effectively. Therefore, for effective management of manufacturing operation and elevates the productivity, the supplier selection and profit allocation are considerable tasks for the management.    

Primary research on the supply chain of Walmart

The primary study has been carried out by gathering information from managers of Walmart. Since the purpose of the study is to evaluate the supply chain practices so the respondents from production and sales managers are targeted. They are selected on the basis of purposive sampling by keeping into mind the constraint related resources and time. Furthermore, the questionnaire method has been selected wherein closed-ended questions have been added in the easy to understand language. Apart from this, thematic analysis has been carried out on the basis of a questionnaire. In this regard, separate themes have been constructed along with the frequency tables which provide the evidence of the collected data.

Findings and outcomes to ensure the SC practices best fit with the strategy, performance and objectives of the Walmart

Issues in the SC of Walmart

• Inventory management- On the basis of the analysis, it has been found that Walmart has a major issue related to inventory management because sometimes it faces issue related to stock out. This reflects the poor supply chain of the business because the study carried out by Bertazzi, Bosco, Guerriero and Lagana (2013) revealed that stock out is the main problem behind the customer dissatisfaction which also affects the competitive edge of the business. This indicates the consistency between the primary and secondary data that due to stock out issues companies have to suffer from a lower rate of return as their customer switch from one to another brand.
• Supplier dissatisfaction- On the basis of primary research it is found that majority of suppliers are dissatisfied from the Walmart’s profit margin allocation system which consequent in an ineffective SC practices and decreases the return rate of business. In this regard, the study of Sundtoft Hald and Ellegaard (2011) shows that supplier dissatisfaction is the main reason of suppliers’ turnover and creates a barrier in business growth. It reflects that the primary and secondary data are in consistence manner and it negatively affects the clients’ retention towards the firm.     

Walmart approach to handle SC issues

• Integrated SC- According to primary research, integrated SC is the key strength of Walmart because it helps to prevent the issue related to stock out which is the main reason for customers’ turnover. However, poor focus on the inventory management, the stock out issues may arise. In this regard,Wild (2017) asserted that the integrated SC ensures the continuity in the arrival of goods because it fills the inventory in just in time. This facilitates corporation to work with integration and increase the competitive edge of the business in the marketplace.
• Technology advancement- On the basis of primary research, technological advancement also helps Walmart for establishing better collaboration with the suppliers. It was evidenced in the study of Jean, Sinkovics and Kim (2010) which shows that the logistic practices in SC are effectively handled with the help of advanced technology. Apart from this, technological advancement also helps Walmart for establishing an effective relationship with the supplier and prevents the issue related to supplier dissatisfaction due to poor profit margin allocation. It builds a healthy relationship with key business clients and effectively handles SC issues. Thus, it prevents delay in the arrival of new goods.
• Sustainable SC- On the basis of primary research, Walmart uses the fleet truck in the SC activity and reduces the transportation cost by eliminating the shipping of small amount of goods and decreases the CO₂emission in the environment. In this context, the study of Carter and Liane Easton (2011) revealed that by reducing greenhouse gas in the environment, the firm shows its responsibility towards society and contributes to the environment protection. Apart from this, it indicates primary and secondary data in a consistence manner and by focusing on sustainable SC practices, the firm ensures long-term growth without affecting the environment and elevates reputation in the market.  
• Supplier selection- On the basis of secondary data, supplier selection is the most important aspect of business because the wrong supplier affects business productivity and profitability (Bai and Sarkis, 2010). In this manner, by selecting the quality and ethical supplier, Walmart offers high-quality products to the customers and retain them for the long-term which helps in revenue generation in the continuous manner.  
• Cost effective SC- On the basis of secondary data, cost-effective SC is most important for increasing the financial outcome of the business and offer product and services to the potential customers in the affordable price (O’Grady, 2012). In this manner, primary research on Walmart reveals that by adopting recycling the SC activity, Walmart ensures cost-effective production with lessening the harmful impact on the environment. It indicates the consistency between primary and secondary data.

Conclusion

On the basis of the above report, it has been concluded that effective management of SC is most crucial for a business to ensure business growth. Hereby, SCM is also important for creating a better relationship with customers as well as with the clients of the business. Apart from this, on the basis of primary research, it can be concluded that by using a different approach like integrated SC, technological advancement and SSC, the efficiency of SC is increasing.

On the other hand, effective SCM reduces the harmful impact of commercial activity like CO₂ emission in the environment which helps in the protection of the environment and ensures the long-term growth by elevating the competitive edge. It further helps in retaining more customers and loyal suppliers. At the same time, it can be also concluded that by selecting an appropriate supplier a firm enhances the effectiveness of production operation. Therefore, consideration on SCM is the most significant task for the management of an organization.       

References 

Bai, C. and Sarkis, J., 2010. Integrating sustainability into supplier selection with grey system and rough set methodologies. International Journal of Production Economics, 124(1), pp.252-264.

Barney, J.B., 2012. Purchasing, supply chain management and sustained competitive advantage: The relevance of resource?based theory. Journal of supply chain management, 48(2), pp.3-6.

Bertazzi, L., Bosco, A., Guerriero, F. and Lagana, D., 2013. A stochastic inventory routing problem with stock-out. Transportation Research Part C: Emerging Technologies, 27, pp.89-107.

Beutel, A.L. and Minner, S., 2012. Safety stock planning under causal demand forecasting. International Journal of Production Economics, 140(2), pp.637-645.

Cao, M. and Zhang, Q., 2011. Supply chain collaboration: Impact on collaborative advantage and firm performance. Journal of operations management, 29(3), pp.163-180.

Carter, C.R. and Liane Easton, P., 2011. Sustainable supply chain management: evolution and future directions. International journal of physical distribution & logistics management, 41(1), pp.46-62.

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

Fletcher, N., 2013. Horse meat scandal wipes £300m off Tesco’s market value. [Online]. Available at:< https://www.theguardian.com/business/marketforceslive/2013/jan/16/horse-meat-tesco-market-value-shares>. [Accessed on 15November 2018].

Grover, R., Grover, R., Rao, V.B. and Kejriwal, K., 2016. Supplier Selection Using Sustainable Criteria in Sustainable Supply Chain Management. World Academy of Science, Engineering and Technology, International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, 10(5), pp.1775-1779.

Jean, R.J.B., Sinkovics, R.R. and Kim, D., 2010. Drivers and performance outcomes of relationship learning for suppliers in cross-border customer–supplier relationships: The role of communication culture. Journal of International Marketing, 18(1), pp.63-85.

Jericho, G., 2018. Australia’s emissions are rising. It’s time for this government to quit pretending. [Online]. Available at:< https://www.theguardian.com/business/grogonomics/2018/jan/09/australias-emissions-are-rising-its-time-for-this-government-to-quick-pretending>. [Accessed on 15November 2018]

Lawrence, F., 2013. Horsemeat scandal: where did the 29% horse in your Tesco burger come from? [Online]. Available at:< https://www.theguardian.com/uk-news/2013/oct/22/horsemeat-scandal-guardian-investigation-public-secrecy>. [Accessed on 15November 2018].

Molamohamadi, Z., Ismail, N., Leman, Z. and Zulkifli, N., 2013. Supplier selection in a sustainable supply chain. Journal of Advanced Management Science, 1(3).

O’Grady, P.J. ed., 2012. Putting the just-in-time philosophy into practice: a strategy for production managers. Springer Science & Business Media.

Parliament of Australia, 2018. Emissions control policies. [Online]. Available  at:< https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook43p/emissioncontrol>. [Accessed on 15 November 2018].

Qu, T., Yang, H.D., Huang, G.Q., Zhang, Y.F., Luo, H. and Qin, W., 2012. A case of implementing RFID-based real-time shop-floor material management for household electrical appliance manufacturers. Journal of Intelligent Manufacturing, 23(6), pp.2343-2356.

Rosenblum, C., 2014. The Walmart Out-of-Stock Problem: Lessons Learned. [Online]. Available at:< https://www.rsrresearch.com/research/the-walmart-out-of-stock-problem-lessons-learned>.[Accessed on 19November 2018].

Shin, S. and Tucci, J.E., 2015. Wal-Mart’s Dilemma in the 21st Century: Sales Growth vs. Inventory Growth. Journal of Applied Business Research, 31(1), p.37.

Sundtoft Hald, K. and Ellegaard, C., 2011. Supplier evaluation processes: the shaping and reshaping of supplier performance. International Journal of Operations & Production Management, 31(8), pp.888-910.

Sustainable Brands, (2018). Primark Sheds Light on Supply Chain with Global Sourcing Map Tool. [Online]. Available at: <https://www.sustainablebrands.com/news_and_views/supply_chain/sustainable_brands/primark_sheds_light_supply_chain_global_sourcing_map_>. [Accessed on 10 November 2018].

Tang, O. and Musa, S.N., 2011. Identifying risk issues and research advancements in supply chain risk management. International journal of production economics, 133(1), pp.25-34.

Van Kampen, T.J., Van Donk, D.P. and Van Der Zee, D.J., 2010. Safety stock or safety lead time: coping with unreliability in demand and supply. International Journal of Production Research, 48(24), pp.7463-7481.

Walker, H. and Jones, N., 2012. Sustainable supply chain management across the UK private sector. Supply Chain Management: An International Journal, 17(1), pp.15-28.

Wild, T., 2017. Best practice in inventory management. Routledge.