The most difficult challenges in supply chain optimization is Estimating or forecasting future demand. The coordinating activities are also important to meet the demand in the organization because forecast demand is not enough. There are three strategic levels of goals and plans which shape the tactical level and the operational level to save money and live better. The strategic goals and plans are established by the vice president and chief operating officer of Walmart who give a commitment to both organizational efficiency and effectiveness.
The search to increase store efficiency by connecting in-store merchandising which guide merchandising assortment decisions. The cut-in merchandise allows Walmart will be more selective about which product necessary to carry and more committed to selling in high volume. The responsibility for tactical goals and plans is taken by the head of major divisions or functional units that mainly pay attention to the major actions. So top management sets up a strategic plan and major division must take to fulfill its part.
For example, Walmart wants to easier shopping and maximizing demands so it does super promotion aisle to shuffled departments for the customer. The main purpose of operational plans identifies the specific procedures or processes which is necessary for lower levels of the organization or inventory such as individual departments and employees. For instance, the operational plans develop by front line managers mostly concentrate on specific tasks and processes. It helps meet tactical and strategic goals by focusing on customer satisfaction. The shopping experience of customers is increased to provide access and visibility to departments of the store that previously difficult to shop in Walmart.
Features, information used, factors, model, and monitoring: The main purpose of Walmart is to have items in inventory for a minimal amount of time going from manufacturer to the shelves rapidly. The time horizon of Walmart which focuses on the markets in short term it has actually created an opportunity for longer-term investors. According to the forecasting process, Walmart will be having two features: hierarchy and function-based definition. The vertical or horizontal lines of command pertain by the hierarchy feature and authority throughout the organizational structure, constant mean so it is easy to predict.
In contrast, the function-based definition feature of the company’s organizational structure will involve groups of employees to fulfill certain functions. Walmart follows a hierarchical structure so different information will be used in different departments like senior manager, senior business analytics. The department of the information system will very structure and formal that track the time spent on projects down to increment of fifteen minutes. The seasonable demand behavior of Walmart is a regular repeating itself as the seals of Walmart increases on the weekend because people have enough time at the weekend. Walmart do not follow linear trend because the data or sales of Walmart often increase or decrease. For example, the estimated inventory investment and cost analyses derived return on investment for the shelf space, and illuminated category trends. The cycle of Walmart is difficult to predict because it is created by economic fluctuation and the main reason for that can be inflation or a product’s life cycle.
Model: There are two types of forecasting models: Qualitative and Quantitative. But according to our perspective, Walmart follows quantitative model forecasting which refers to formal statistical methods employing time series, cross-sectional or longitudinal data, or alternatively to less formal judgemental methods. A common data model or trend for all data of interest regardless of the data’s source provide by a data warehouse in Walmart. It predicts that the three layers which are main data warehouse functions are staging, integration, and access. The first is used to store raw data for use by developers or second layer is used to integrate data and have a level of abstraction from users. The getting data out for users in third layer. It makes it easier to report and analyze information than it would be if multiple data models were used to retrieve information like as sales invoices, order receipts, general ledger charges, and many more. So this is the easiest way Walmart use to forecast the inventory demand.
For instance, Walmart use the operating income data from the previous two years, then divided by two, so that is also the way for another three and five-moving average, use three or five previous data Walmart do this for two year moving average. Walmart’s forecasting of operating income is continuously increasing time by time this only show by the calculation of these years. The demand of forecast for inventory based on the moving average data. Therefore, it predicts that the percentage of Wal Mart’s forecasting demand are positively related to the increasing of moving average forecasted. This model must test and monitor to see whether it has accuracy or not. In his way, effective monitoring and control are achieved by Walmart’s hierarchical functional organizational structure. But the disadvantage of this organizational structure is that it has minimal support for organizational flexibility.
For example, it is argued by Supplier X that Walmart should dedicate more shelf space to its products because of its high sales volume and high-profit margin. But on the other side it is argued by Supplier Y should reduce shelf space of its brand might not seem so negative on its face. But that shopper of its product also often buys additional products that carry high margins for Walmart. Supplier X and Supplier Y providing greater insight with each analysis owing to this Walmart gained a wealth of understanding about what was going on time in the business.
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