Logistics and Supply Chain Management Essay Example | Topics and Well Written Essays - 2000 words

Logistics and Supply Chain Management - Essay Example It is observed that storage cost increases when transportation is available but on the other hand, no cost cutting is experienced when the stock density is good, given the better accessibility through transportation of goods (Skipper, 2008). Holmes (2011) explains the trade-off between storage density and immediate accessibility of products throughout the Wal-Mart’s network. Wal-Mart’s strategy has been to leverage through the dense chain of its stores. The stores are vertically involved into distribution. Analysis of its distribution and warehouse network reveals that the general goods are supplied by Wal-Mart’s own regional distribution centres (RDCs) while the groceries for supercentres are delivered via its own food distribution centres. When stores are densely stocked, it is not hard to start a distribution chain that keeps stores near to a distribution centre and when the Wal-Mart stores are near to a distribution centre, it can spare the transporting costs . Other than that, such closeness permits Wal-Mart to react fast to demand jolts. Fast reaction is hugely known to be a leading trait of the Wal-Mart model. It needs to be appreciated that Wal-Mart restocked its shelves with American flags on the very day of 9/11. While stating the benefits of storage density of Wal-Mart, the job is tough as the Company does not reveal inside information out for information purpose. A direct analysis of Wal-Mart’s data pertaining to logistics cost to density is, therefore, not easy. Even if the Company readily reveals the information over the supply chain network, the leverage it is getting by reacting fast to demand jolts can not be approximated with the available accounting figures. Wal-Mart’s revealed priority can only be ascertained indirectly. Density allows leverage but it comes at a price. A testing of Wal-Mart’s attitude of unseen trade-off against the seen cost can help in getting the clue over how it succeeds in gettin g the leverage from the trade-off (Holmes, 2011). In the case of Wal-Mart, the high storage density is created when stores are in close proximity and their market fields converge. It offers the opportunity to new stores to benefit from the convergence, increasing their sales from established stores. The limit of such leverage can be measured by sourcing relevant data from different providers such as getting store level sales output from ACNielsen and regional data from the U.S. Census at a quite zeroed-in degree of geographical location. This information can be used to approximate a model of demand wherein consumers select among all the Wal-Mart stores in the general region where they reside. The demand model suits the data finely. Further, inherent meanings can be explained for the limit of leveraging from the store density with specific revelations made by Wal-Mart in its yearly reports. Analysis of the sales model helps in finding how Wal-Mart faces crucial diminishing returns in sales from its storage density because of the nearness of the stores to the adjoining area (Holmes, 2011). Wal-Mart worked on a changing structure for its stores across the time ranging from 1962-2005. The structural model of Wal-Mart developed by Holmes (2011) is quite huge. It can find out the correct position of each single store and the position of each distribution centre, the kind of store (routine Wal-Mart or supercentre), and the type of distribution cent