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Logistic and Operational Management

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Introduction to Logistics and Operational Management

The main aim of logistics and operations management is to produce appropriate goods and services in the right quantity and quality. It also aims to distribute all these goods to the right place, at the right time by making the proper and greatest contribution to the people. In this competitive business environment, logistics and operations management is directly related to the design, implementation and management of systems so that efficient deployment of all the personnel, physical facilities, raw materials, in-process inventories, finished goods and other related services.

Wal-Mart is the biggest American multinational retailer in the world with its headquarters in Bentonville, Arkansas. The company has over 11, 453 stores in 27 countries and produces almost 71 products under its own banner (Corporate Walmart, 2015). It employs almost 2.2 million employees and last year profit of the company was $485.651 billion. The company has different types of products that range from retail products to financial products, etc.

In order to understand the importance of logistics and operations management, this report has been made and it also covers its different prospects by taking the company Wal-Mart. Further, the analysis of the company's logistics components and their effect on the performance of the company has also been discussed.

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Assessment 1: Component activities of logistic and operational management in Wal-Mart

There are different components activities of the logistics and operations management that are used in Wal-Mart and some of them are-

Warehouse Management- Walmart is the biggest retailer in the world and therefore it is very important for it to manage its inventory in appropriate manner (Greasley, 2007). This particular part of the operations helps the company maintain the balance between the cost of all the available products against the risk of not having the products at the time when the customer demands those goods. It is one of the biggest issues that companies have to face as many companies are not able to manage their inventories in a proper manner and when those inventories are required, the demands of the customers are not fulfilled due to the non-availability of these goods. It is very important for companies like Walmart to manage their entire logistics systems so that an appropriate level of inventory can be managed and it also does not affect the services to customers (Kloppenborg, 2011). Walmart is one of the best companies in terms of managing the inventory of all the finished goods, and raw materials and because of that, it has been able to fulfil all the needs and demands of customers in a suitable manner. It has also helped the company in terms of reduction of low sales, shortage of goods, etc.

Manufacturing- One of the most important parts of the retail company is related to manufacturing because it is directly related to the brand image of the company. Wal-Mart not only sells the products of other companies but also sells the products under its own brand name. It is important for a company to maintain its manufacturing in a proper manner so that all the needs of customers can be fulfilled in terms of quality, price, etc. (Knudsen, 2013). In order to manufacture in a proper manner, raw materials are outsourced from the appropriate places so that the company can get good quality materials at the best prices. It is also important to maintain the level of raw material while manufacturing so that goods in proper quantity can be developed. The company has installed all the latest machinery which helps them to do the production with minimum resources while maintaining quality and minimizing wastage.

Human Resources- It is one of the most important components in the company as it helps them to appoint the people that can help the company in its growth. Human resources help the company to manage all the employees in terms of motivating them, fulfilling their all needs and demands, setting the rules and standards in the company and guiding them to work in the appropriate manner (Nagarajan, 2004). Without the proper human resource department, Wal-Mart can never carry out its operations. HR also helps Walmart in deciding some strategies that can be used in order to fulfil all demands of customers in an appropriate manner.

Financing- One of the most important activities that is required in each and every organization is called finance and without it, no company can work in an appropriate manner. It might be possible that a company has good people, machines, a manufacturing department, etc but if they do not have finance then nothing can be done (Persson, 2010). In Wal-Mart, it is one of the most important activities as most of the money that the company arranges is through internal sources and retained earnings. Further, sometimes company also takes loans and grants from the government so that some important functions in the company can be done in an appropriate manner. In order to manage the finances, the company has also adopted many techniques like zero-base budgeting, balanced scorecard, etc. Companies also try to pay all the salaries and money to the employees and suppliers in proper time (University of San Francisco Online, 2015).

Retail- It is the most important function of the company and it helps them to provide the right goods to the customers, at the right place and at the right time. In this competitive environment, it has become very important for companies to inform about the products that the company sell in an appropriate manner (Safsten, 2009). Wal-Mart try to manage its retail function in a most appropriate manner by managing different functions like buying and assembling, selling, packaging, supply of the market information, etc. All these retail functions have helped the company to gain a respectable position in the market.

Assessment 2: Performance objectives of each component activity in Walmart

It is very important for Wal-Mart to maintain its performance in each and every component and for that, it can use the 5 performance objectives which are called cost, quality, speed, dependability and flexibility. All these objectives will help the company to manage its functions in a suitable manner.

Warehouse Management- It is crucial for a company to manage the performance of its warehouse so that goods can be made available to people in the most appropriate manner. In terms of cost, it can be said that the company can use the ABC analysis in order to segregate all the products. It has also helped them to maintain a level of inventory in the warehouse. CRM technique is also used by companies which has helped them to track each and every product in the warehouse and it has saved lots of cost for them (Toni, 2012). In terms of speed, the company has arranged the items as per their usage which helps them to provide items from the warehouse to stores in a much quicker time. For dependability, the company try to order the inventory before it gets finished. In terms of flexibility, the company order different types of inventory so that the changing needs of people can be met. Quality in the warehouse means that everything is arranged in the proper manner so that the quality of storage can be maintained.

Manufacturing- In terms of cost it can be said that a company can use good machinery in order to produce goods at low cost (Boer, 2003). It will also help them to minimize wastage in a suitable manner. To maintain the quality in manufacturing, the company try to maintain good relations with the suppliers and also with customers so that good materials can be procured. For dependability, the department makes sure that it is in regular touch with the research people so that things can be developed as per the needs and demands of people. Speed can be maintained in the company by minimizing the lag and lead time in an appropriate manner. Further, flexibility in manufacturing means to mix and match the value of output so that all the needs and demands of customers can be maintained (Cervone, 2006).

Human Resource- In terms of cost, it is important for a company to use techniques that can appoint good people. Further, retaining the employees will also help to reduce costs. Speed can be maintained by giving proper training to employees as it will help them to work hard. In terms of flexibility, rules in the company should be changed from time to time so that it can match with changing needs of employees (Evans, 2011). Dependability can be maintained if the department is in regular touch with employees as well as other departments. Quality in HR will be maintained if good techniques are used in terms of doing different HR functions like recruiting, motivation, etc.

Finance- The company can arrange the finance from its internal sources easily by maintaining the retained earnings. Speed in finance will be maintained if all the suppliers are given money on time with the salaries of employees, etc. For flexibility, it is important to make budgets as per changing market situation so that in case of emergencies extra budgets that have been assigned can be used (Matsui, 2011). For dependability, the company can ask departments regarding their needs and wants so that proper budgets can be assigned to them Lastly quality can be maintained by using techniques like Zero base budgeting, balanced scorecard, etc.

Retail- In terms of quality, all the showrooms and warehouses of the company should be maintained and also the quality of goods should be as per the standard. Speed can be maintained in terms of reducing the time of queuing in order to reduce transaction time and also new products can be launched as per the changing needs of people in terms of flexibility. Dependability will be maintained by making good relations with people in order to improve the retail function and address their issues (Pitinanondha, 2009). Cost can be reduced by proper planning of all the functions and using proper strategies in order to get the attention of people.

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Assessment 3: Critical evaluation of the performance objectives of each component activity in Walmart

Retail- From the above assessment it can be said that the quality of the different goods that are manufactured and sold in the company is good but still the company has not been able to manage the complaints of customers appropriately (Söderlund, 2012).

Manufacturing- In terms of manufacturing, the company has not been able to minimize the wastage of goods in an appropriate manner and it has increased the manufacturing cost in the company. There is a lack of the use of new technologies (Corporate Walmart, 2015).

Warehousing- Most of the warehousing functions in a company are good but there are still problems in terms of loading and managing the inventory to maintain a level of stock. Companies use very small trucks and loading vehicles to load the commodities which takes more cost and time (Wikner, 2001).

Human Resource- The Company has not been able to motivate its employees in an appropriate manner and because of that turnover rate in the company is increasing day by day.

Finance- The company has failed to assign proper budgets for emergency situations like recessions, and natural hazards and has suffered many losses due to that.

Assessment 4: Recommendations in order to improve the performance of Wal-Mart

There are various ways in which a company can improve its performance in terms of its components, etc.

  • It is important for a company to use techniques like Just in Time as it will help the company to reduce wastage and will increase the efficiency in business. Further, it will also check that there is no under and overutilization of resources (Aesthetica Technica, 2010).
  • Different motivation techniques like Herzberg two factor theory and ERG theory can be applied as it will help the company to motivate employees in most appropriate manner.
  • In order to manage finances, the company can use different capital budgeting techniques and also zero-base budgeting. It will help them to allocate the budget in an appropriate manner.
  • Companies can also go for the SAP technology as it will help them to maintain the coordination between different departments.
  • In order to handle the materials well in the warehouse, material handling tools will allow the company to move from one point to another (Functions of Different Departments, 2014).
  • Workshop planning and layout methods will also help them to arrange machines in the proper manner and it will also allow the company to save time and produce more units.

Conclusion

By summing up the report, it can be said that logistics and operations management is one of the most important parts of the company and it helps to manage every aspect of business in a suitable manner. Walmart is one of the best companies in the world and the techniques it uses to manage its operations are appropriate but still, there are some fields that can be improved by using techniques like layout design, ERG theory, etc. It is important for a company to manage components like HR, Finance, etc in a most appropriate manner by maintaining their performances.

References

  • Boer, 2003. Guest editorial: New challenges in operations management. International Journal of Operations & Production Management
  • Cervone, F. H., 2006. Project risk management. OCLC Systems & Services. 22(4). pp.256 - 262.
  • Evans, 2011. A project manager's optimism and stress management and IT project success. International Journal of Managing Projects in Business.
  • Matsui, 2011. Relationship between quality management information and operational performance: International perspective. Management Research Review.
  • Pitinanondha, T., 2009. A Framework for Systematic Management of Operational Risks. Asian Journal on Quality.
  • Söderlund, J., 2012. Project management, interdependencies, and time: Insights from Managing Large Systems by Sayles and Chandler. International Journal of Managing Projects in Business.
  • Wikner, J., 2001. Long-term capacity management: Linking the perspectives from manufacturing strategy and sales and operations planning. International Journal of Production Economics.
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