Humanitarian Logistics in Disaster Management
Disasters are inevitable in human life across the world. Not only are they predictable but they can also result in great harm to infrastructures and to people. Planning for disaster prevention and mitigation thus forms a very crucial part of the activities of any national government as well as a variety of other organizations mandated to address disaster situations across the world. Planning for logistics in such scenarios can be very challenging due to the characteristics of disaster environments such as complexity of needs and diversity of supply requirements. Many stakeholders have to take part in the activities to ensure that at the end of it all, the number of victims is reduced significantly. However, this does not prevent disasters from occurring every year, as much as preventive actions are made on a daily basis.
In 2010 alone, more than 207 million people suffered immensely as a result of environmental disasters. This means that only natural disasters resulted in 296,800 deaths and losses of more than 109 billion USD. According to Bean et al (2011) disasters can cause serious disruption of resources and interference with community functionality. The impacts of such disasters, whether natural or man- made are immense and many scholars in the past have attempted to explore disaster environments through many features of the same. In particular, humanitarian logistics has been reviewed by several authors including Bean et al (2011), as an essential part of disaster response and management. The present paper forthwith attempts to explore the extent of humanitarian logistics in disaster areas through various characteristics of such logistics. The specific objectives of the paper are therefore:
- To explore the characteristics that define humanitarian logistics during disasters
- To determine the challenges faced in disaster humanitarian logistics
Disasters and Humanitarian Logistics
Disasters are defined as unexpected events that cause serious disruptions in the society functioning, by causing widespread material, environmental and human losses beyond the capability of the affected to cope (Bean et al., 2011). Scarpin and Silva (2014) also define disaster as any low probability event with a high consequence potential, which can affect human life as well as causing damage to infrastructures. The inability of the affected to cope with the impacts of disasters in their environment implies the need for assistance through various platforms. Sahay, Gupta and Menon (2016) assert that disasters can be either natural or man- made. The natural disasters comprise of events such as earth quakes, floods, tsunamis and adverse droughts. The man- made disasters on the other hand include chemical leaks and large scale explosions among others. In each case, the efficiency of the relief processes depends to a large extent on the scope of humanitarian logistics on the ground. Proper disaster management thus requires early preparation for mitigation strategies and how to conduct proper logistics at the time of disaster. Natural disasters in particular can result in very intensive impacts on the humans, as observed in the Chilean, Indonesian and the Haiti earthquakes of 2010, which were of magnitudes 8.8M, 6.4 t0 7.8 M and 7 M respectively (Bean et al., 2011). While there are some areas that are more prone to natural disasters, preparation for the mitigation of the same should take place across the world. Countries with high vulnerability however have the obligation to make more serious humanitarian logistics plans than in other countries. Vulnerability to disasters is heightened in areas with a large percentage of informal settlements, where it is difficult to control individual behaviors with respect to disaster control.
Sahay, Gupta and Menon (2016) purport that the extent of disaster impacts can be large, as to limit the extent of the humanitarian assistance and the response operations within the disaster area. Weak and inefficient responses can hamper recovery and relief of the affected persons and property. Moreover, the challenges of disaster environments also make it difficult for humanitarian assistance procedures to function wholly within the disaster environment. Any disaster requires the input of different stakeholders for the relief process to occur more efficiently, and each of the role players have to perform their objectives effectively in their assigned areas. The objective of any such humanitarian assistance would be to foster the relief of the injured persons and to reduce the number of casualties as much as possible. Humanitarian logistics therefore entail any form of preparations for and logistics in a disaster environment, which are aimed at bringing about relief for the affected. This can be through the supply of materials needed, transportation of casualties to hospitals and safe places as well as transportation of rescue teams to the disaster environments (Sahay et al., 2016). Each of these practices has to occur within a definite time span and with articulate plans to reduce the tendency to panic as well as improve the response rates for the affected.
Humanitarian Logistics Practices
Scarpin and Silva (2014) have attributed humanitarian logistics to any process that entails planning, implementing and efficiently controlling the flow of goods, persons and information to and from the point of origin to the consumption point, which is mainly done with the objective of alleviating suffering among those affected by disasters. Humanitarian logistics have to focus on low costs, goods storage, and storage of information before consumption. In any of these practices, effective planning is a mandatory starting point for the disaster management operations. Pateman, Hughes and Cahoon (2013) also describe some of the features of humanitarian logistics, including: planning for disaster mitigation; preparation for disaster management; transportation of goods and people; acquisition of suppliers and transportation means; storage of the goods and supplies, monitoring the progress of the disasters and the humanitarian logistics actions and tracking the eventuality of disasters and movement of goods and people. In all these practices, there are numerous roles to be played and a significant number of stakeholders to take part in these roles.
According to Bean et al (2011), the key role players in humanitarian logistics include government agencies, the military, the police, private sector organizations involved in disaster management, non- profit organizations, research institutions, the media, the general public, the relief institutions and the victims. Each of these categories of people has specific roles to play. For instance, Bealt and Mansouri (20017) have described some of the stakeholders of humanitarian logistics during disasters. These include suppliers, donors, distribution centers and beneficiaries. As each of these stakeholders has a different role to play in the process, different characteristics have to be used to define them. For instance, Pateman et al (2013) opine that for the suppliers, the most important characteristics are reliability. The donors provide financial assistance hence should be able to cater for the needs of the suffering communities, the distribution centers should be able to address challenges pertaining to distribution while the beneficiaries pose the challenge of requiring short and long term relief from the disaster impacts. Bean et al (2011) describe the functions of the stakeholders as tactical, strategic and operational. Some of the clear roles include creation of awareness to the general public, provision of early warnings of impending disasters; providing information to the populace on disaster management and response; provision of timely and accurate information on disasters; facilitation of communication between the victims of disasters and the role players in any given situation. In all these however, challenges are inevitable and handling the disaster victims can pose even a greater challenge due to panic and fear among them.
Challenges in Humanitarian Logistics
A disaster environment is a complex scenario in which events cannot be exactly clarified as straight forward. The ability of any agency or stakeholder to perform its role effectively depends extensively on the cooperation and collaboration between the stakeholders involved. The objective of collaboration in such an environment, as pointed out by Pateman et al (2013) is to enable information sharing, effectiveness in management and learning among the role players. The collaboration has to be across a wide range of boundaries and with a diversity of individual complexities. Various issues arise in association with the different stake holders. For instance, the distribution centers can experience challenges with regards to technological limitations which make it difficult to track inventories, as well as with unsolicited donations which are a challenge to storage planning and efficiency (Bealt & Mansouri, 2017). On the one hand, the unsolicited donations can be of great help due to the challenge of resource constraints, which is prevalent in humanitarian logistics. On the other hand, unsolicited donations, since unplanned for, can cause strains in the storage areas, both in form and in means.
Safeer et al (2014) describe some of the challenges associated with resource constraints in humanitarian logistics. For instance, resources such as supplies, people, the finances, transportation capacities and the technologies in use can limit disaster management practices in various ways. People have great impacts on the activities of humanitarian logistics and can hinder access to more victims when the response rates are low. The people affect the process through attitudes as well as absence and can be a serious source of concern where the need is urgent. Pateman et al (2013) mention issues such as unpredictable demands, sudden demands, high stakes and constraints as the challenges of humanitarian logistics. The unpredictability of demands implies that disaster environments pose strains to response organization through the differences in needs, timing, location and the type and size of demands that would satisfy the humanitarian relief objective of the responding organizations. In each of the disaster environments, the victims face different challenges resulting in different needs and demands. Also, the sudden requirement of supplies in large quantities can be a challenge due to the short lead times and the variety of supplies required. The stakes on timely delivery and adequate supplies also mean that at any given time, there are victims who could lose their lives due to limitations of supplies (Pateman et al., 2013).
The challenge of humanitarian logistics also affects the outcomes of disaster response. According to Scarpin and Silva (2014) most of the disaster response organizations place greater emphasis on the pre- disaster preparedness with limited or no thought of the post disaster management practices. As such, beneficiaries of humanitarian logistics inevitably become affected through loss of their resources and their materials even in the post disaster environment. This means that strategies have to be put in place to ensure that such victims are assisted to brow beyond the disasters and to reconstruct their lives within the new environments. This however requires the input of a variety of personnel including counselors and psychologists, which may be difficult to accomplish given the human resource challenges in the humanitarian logistics practice. Safer et al (2014) asserts that the resource constraints in humanitarian logistics have wide implications on the organizational human resources. Implications are felt on the recruitment practices; remunerations; in-country human resources preparedness, training of personnel for pre- departure operations; health and safety concerns for the personnel, inherent stress and lack of definite career paths for the staff. The overall implication therefore, is high employee turnover, which is characteristic of the humanitarian logistics environment.
Most of the studies selected for inclusion into the present study satisfy the needs for information on the research objectives. However, most of them also focus on the descriptive aspect of humanitarian logistics, without any in depth concern for the qualitative features of operations. This however can best be addressed through a qualitative research design.
In order to effectively address the objectives of the study, a qualitative research design was deemed the most appropriate in answering the study questions. The qualitative approach has been established as appropriate in obtaining and exploring information from respondents’ first perspective. In the present study, an interview technique was adopted as the qualitative research approach of choice. The chosen technique was a semi- structured, open and close ended design, whose main objective was to obtain information that would help to confirm the accuracy of information depicted in the reviewed literature from the respondent’s perspective. A total of 10 respondents were interviewed randomly from relief organizations such as World Vision International and the American Red Cross. These organizations are considered more global and the respondents capable of giving a more global view of the humanitarian logistics features in disaster areas. The chosen respondents were thus considered to be a perfect representation of humanitarian logistics participants cross the world and their views reflective of the world views.
The interview questions were segmented into two sections. The first section comprised of only 3 questions and was aimed at determining the biographic details of the respondents. This included questions on the age, the duration of service to the organization and the general perception on working within a humanitarian organization. The second section comprised of seven questions, whose objective was to determine the challenges associated with working in the humanitarian logistics field, the implications of those challenges and the perceptions developed by the beneficiaries of the help given. Some of the questions were open- ended while others were close ended.
Findings and Discussion
The humanitarian logistics research was aimed at determining the practices involved in humanitarian logistics and the challenges associated with the humanitarian logistics. The practices as described through various pieces of literature indicate that disasters and humanitarian logistics are intricately connected and that the key objective of humanitarian logistics is to provide relief to victims of disasters. The practices entail activities which are aimed at planning, implementing and efficiently controlling the movement of people and resources from the point of origin to the consumption point. In all these activities, there are a variety of role players, each associated with a specific role in the logistics of disaster management. The findings show that the extent of humanitarian logistics can immensely affect the relief efficiency in disasters and that the different stakeholders have distinctive roles to play within the disaster management prospects. Disasters are more common in informal settlements, and managing them requires intensive understanding each person’s roles in the entire process of humanitarian logistics. Government organizations, the military, the police, the general public and the relief institutions among others have specific roles in disaster management and the subsequent humanitarian logistics. The roles played can be strategic operational or tactical. Based on the responses obtained from the respondents, most of the relief organizations provide operational support to the other role players through provision of resources, organizing operations and initiating response to the disasters. The government institutions mainly provide tactical support by creating awareness and educating potential victims through providing factual and timely information to the populations. In spite of the efforts of the role players in ensuring success of the relief processes, some challenges still prevail in humanitarian logistics.
Various authors such as Pateman et al (2013) show that the challenges that prevail in humanitarian logistics. Through the interviews, some of the most eminent challenges mentioned include: unpredictability of events, resource constraints and sudden demands. Some of the respondents also mentioned technological limitations as a potential limitation in humanitarian logistics. From the interviews, it was also indicated that employee turnover is one of the greatest human resource challenges in the relief organizations, and that recruitment practices, stress and absence of a clear career path are some of the indicators of the same. Contrary to the findings of the literature review, the respondents asserted that poor remuneration is not characteristic of the relief organizations. However, they also reported that most of those who may face the remuneration challenge are volunteers who also leave their roles frequently. The main reason given for this is that the relief organizations get donations even when there are no disasters, these are the finances that support the organizations in terms of worker remuneration.
The role of humanitarian logistics in disaster management and relief provision is undoubted. Disasters come about unexpectedly and can result in greatly negative impacts on the victims. As such, humanitarian logistics aim at providing relief to those affected by natural as well as man- made disasters. The roles associated with humanitarian logistics include planning, implementation and efficient control of activities that pertain to movement of supplies and people towards the point of need. In these roles, various organizations and individuals are engaged in conducting different roles and have different impacts on the success of the process. The efficiency of relief in any disaster depends on the scope of humanitarian logistics, making it an inevitable part of operations in disaster management. In spite of this, humanitarian logistics still faces challenges due to features of disasters such as unpredictability of demands, stakes in delivery timelines and quantities, resource constraints and technological challenges among others.
Bealt, J. and Mansouri, S.A. (2017). From disaster to development: A systematic review of community driven humanitarian logistics. Disasters. Retrieved from onlinelibrary.wiley.com/doi/10.1111/disa.12232/pdf
Bean, W.L., Viljoen, N.M., Ittmann, H.S., Kekana, E. (2011). Disaster management and humanitarian logistics – A South African perspective. Journal of Transport and Supply Chain Management. Retrieved from www.jtscm.co.za/index.php/jtscm/article/viewFile/20/18
Pateman, H., Hughes, K. and Cahoon, S. (2013). Humanizing humanitarian supply chains: A synthesis of key challenges. The Asian Journal of Shipping and Logistics, 29(1): 81 – 102. Retrieved from www.sciencedirect.com/science/article/pii/S2092521213000254
Safeer, M., Anbuudayasankar, S.P., Balkumar, K. and Ganesh, K. (2014). Analyzing transportation and distribution in emergency humanitarian logistics. Procedia Engineering, 97: 2248- 2258. Retrieved from ac.els-cdn.com/S1877705814035395/1-s2.0-S1877705814035395-main.pdf?_tid=093a81e6-ad04-11e7-aa73-00000aab0f02&acdnat=1507562030_381b6f2f90915df589f2bf548b3fcada
Sahay, B.S., Menon, N.V. and Gupta, S. (2016). Humanitarian logistics and disaster management: The role of different stakeholders. In Sahay, B., Gupta, S. and Menon, V. (Eds.) Managing humanitarian logistics. Springer Proceedings in Business and Economics. Springer, New Delhi. Retrieved from link.springer.com/chapter/10.1007/978-81-322-2416-7_1#citeas
Scarpin, M.R. and Silva, R.O. (2014). Humanitarian logistics: empirical evidences from a natural disaster. Procedia Engineering, 78: 102 -111. Retrieved from www.sciencedirect.com/science/article/pii/S1877705814010327
Appendix: Interview Questions
Part A: Biographic Information
- Which organization do you work for and how long have you been there?
- How old are you?
- 18 – 25
- 26- 30
- 31- 35
- 36 – 40
- Above 40
- How do you like working at your organization?
Part B: Humanitarian Logistics
- Which of the following activities does
your organization engage in?
- Planning evacuation practices
- Providing funding for relief aid
- Transporting supplies and human resources to disaster areas and out
- Engaging other organizations in disaster management
- Updating the public on disaster situations and outcomes
- Which other organizations do you collaborate with?
- What roles do donors play in humanitarian relief?
- What are the challenges that your organization faces during disaster management?
- Does your organization experience high employee turnover?
- Which of the following can you describe
as the potential causes of high employee turnover rates in the organization?
- Low probability of career growth
- Recruitment practices
- Health and safety concerns
- Stress in the disaster environments
- Do you believe that employee remuneration is a challenge for your organization?
Light Up My Light, Inc.
To: Mrs. Elise Ennis (The CEO)
From: The Senior Logistician
CC: Tom Perkins (The VP and Head of Logistics)
Date: September 4, 2017
Subject: Response totheLogistics Discussions ontheWeekly Briefing
As per the earlier discussions, the purpose of this memo is to respond to the questions raised during the weekly briefing concerning logistics. It seeks to answer the questions raised by the company CEO and give any other facts of concern in this area. It will highlight the logistics processes of the company and recommend the best possible practices for the department.
#1: Factors of Success in Accomplishing Logistics Objectives
The integration of adequate technology into the process. Luo (2013) states that the involvement of information technology processes as well as adequate logistics equipment in the process will enhance the logistical and supply chain management operations in the organization. This will improve the overall efficiency of the unit and the entire organization. It will allow the organization to easily monitor the movement of its products and services in and out of the organization and minimize losses.
The logistics staff also plays a critical role in enhancing the performance of the sector. According to Clausen, Ten, & Klumpp, (2013), an organization needs to have the right employees working in the logistics department to succeed. Apart from having an adequate number of logistics staff, the employees should be well trained on handling logistics matters and are dedicated to the work.
Creating a good logistics network and having the right service providers. Logistics links the organization with its suppliers and customers. The firm should create a good network and understand it clearly (Luo, 2013). This will minimize the chances of loss due to the inadequacy of goods and services in the chain or oversupply of the same.
The supply chain adopted in the organization affects logistics. The chain adopted in the organization should be clear and favorable to the logistical processes in use (Clausen,Ten, & Klumpp, 2013).
The existing relationship between the functional units in the organization and the outside networks affects the success of logistics(Luo, 2013). There should be a cordial relationship between the various departments of the organization and with other stakeholders outside the organization.
2. Modifications in Logistics
Logistics is concerned with meeting the needs of the customer and satisfying them at all times. According to Luo (2013), the business environment is very dynamic and thus customer tastes and preferences would often change. Following these changes, logistics ought to change to match them. The logistical systems which make up the support plan, the logistics engineering and support management, the designs of the system and the flow of information in the system must work adequately and change in response to the changes. The change in these procedures, therefore, completes the life-cycle of logistics and change management.
3. Fitting ideas into the firm
The ideas of supply chain and supply chain management must be utilized in every organization that has the various business components such as suppliers, customers, processes and other stakeholders interested in the activities of the organization(Clausen, Ten, & Klumpp, 2013). These ideas are needed for the proper management of the movements of goods and services in and out of the firm. In our case, there is need to produce the right amount and quality of products and supply them at the right time and by the cheapest means possible to the customers or other vendors. Raw materials getting into the organization are also sourced from suppliers through a supply chain.
Logistics and logistics management ensure that the right goods and services are produced and sold in the firm. There is need to ensure that there is a sufficient quantity of goods flowing in the supply chain system at all times (Clausen, Ten, & Klumpp, 2013). The organization must operate at all times and thus must have the raw materials required all the time. At the same time, the raw materials held in the warehouses of the organization should not be too much to increase the costs incurred by the firm.
4. Review of Costs
A. The measures of effectiveness in logistics include a number of sales of the firm, the degree of efficiency, customer satisfaction and the costs incurred in the department.
B. Analytic Results
Figure 1: Analysis of Effectiveness
The figure 1 above indicates the degree of efficiency of different options. The horizontal axis shows the option from option A to option G whereas the vertical axis represents the degree of efficiency.
4c. Favorable Option
From the figure, option G represented by 7, is the most efficient at a level of 5 with option A represented by 1 being the least efficient.
4d. Reason for the Recommendation
As a strategic move, the management should settle on option G which is the most efficient and with an average cost.
5. Other Information
Logistics plays a key role in every
organization and that the management must ensure that the sector is functional
and efficient by adopting the right success strategies for the sector. The
dynamic nature of the business environment also affects the sector greatly and
thus the management should be willing and ready to adopt other strategies to
counter this changes (Clausen, Ten, & Klumpp, 2013). The success of the
logistics department significantly affects the performance and profitability of
Clausen, U., Ten, H. M., &Klumpp, M. (2013). Efficiency and logistics. Heidelberg: Springer.
Luo, Z. (2013). Technological solutions for modern logistics and supply chain management. Hershey PA: Information Science Reference.
Walmart is one of the largest and most successful retailers in the world. Founded in 1962 by Sam Walton, the company moved from being a series of grocery stores to a Fortune 500 company posting the highest sales for any company in 2007 (Khade & Lovaas, 2009). The company has three segments, with a commanding presence in the US, which is its major source of revenue, Sam’s Club and International, which denotes its operations outside the US (Buckley, DeFina & Roots, 2016). Today, the company has moved from its traditional brick-and-mortar mode of business through its 11,526 stores to generation of sales through its website Walmart.com.
As a core business, Walmart is a retailer with retail stores across the world. The company’s core business is to “help people around the world save money and live better-anytime and anywhere,” a goal that the company pursues through its retail stores and through e-commerce and mobile capabilities (Walmart, 2016). The company relies on its innovation to deliver seamless products and services to its customers on both its digital platform and its extensive network of physical shops (Walmart, 2016). Over the past few years, the company has moved from a traditional brick-and-mortar retail chain, adopting an omni-channel model that includes online sales (Khade & Lovaas, 2009). Walmart has especially adopted this (omni-channel) model as a means of competing Amazon, the world’s largest online retailers, which has been eating into its store traffic.
Walmart is perhaps the world’s largest retailer by revenue. It has a long history in the retail business having previously been founded in 1945 by Sam Walton, and incorporated in 1969 (Walmart, 2016). The company has grown over the years to become the largest retailer in the world, with an exemplary logistics and warehousing system. Khade and Lovaas (2009) argue that Walmart’s success in the retail business is a result of a logistics system that has delivered great results for the company. Walmart’s supply chain logistics include point of sale and supply chain technologies, as well as superior warehousing logistics, all of which have enabled the company stay ahead of its competitors. Perhaps what makes Walmart stand out from the rest of the retailers is its investment in logistics technologies and deploying the technologies to ease its work. According to Khade and Lovaas (2009), Walmart purchased a satellite, which the company uses for Electronic Data Interchange. The technology therefore allows the company to not only deliver massive point of sale data on customers, but also helps in transportation, and with the company’s foray into online retailing, the satellite and data are instrumental in the management of its online business.
Perhaps most interesting is how Walmart handles its warehousing functions. Khade and Lovaas (2009) inform that unlike other retailers that use third party logistics to handle their warehousing, Walmart has its own fleet of trucks for the distribution of shipment within its supply chain. Walmart’s stores, therefore, expand around distribution centers, which are the company’s main warehouses. Walmart’s stores are therefore within a one-day drive from a distribution center ensuring that supplies get to the stores within the shortest time possible. The proximity of the warehouses to the stores also means that online customers get their products as fast as possible (Walmart, 2016). Internationally, the company has a central global procurement warehouse in Shenzhen, China, from where the company sources products from more than 65 countries. From the sources, Walmart uses land bridges, which make transportation to its warehouses not only cheaper, but also faster than traditional means.
Buckley, C., DeFina, P., & Root, L. (2016). Walmart vs. Amazon. Shidler College of Business
Khade,A., S. & Lovaas, N. (2009). Improving supply chain performance: A case of Wal-Mart’s logistics. International Journal of Business Strategy, 9(1)
Walmart (2016). Walmart Inc. retrieved from http://d1lge852tjjqow.cloudfront.net/CIK-0000104169/46c5c2e3-666c-4865-b437-eb351ae5dbfe.pdf
Wal-mart is facing significant threat to maximize sales and profits because of the stiff competition from similar stores, such as Dollar General and Amazon (Mark 1). Because of stiff competition from other stores, Wal-mart has experienced nine consecutive declining sales in all fiscal quarters. The competitors have copied Wal-mart’s distribution channel strategy to increase regional presence and sales. Some of the distribution channel strategies that competitors have copied include using cross-docking systems to reduce storage duration, the positioning of distribution stores near distribution centers and the adoption of an electronic system of communication with suppliers to manage ordering and shipping services of goods.
Sustainability of distribution strategy
Wal-mart’s current distribution strategy is sustainable because of the high reduction of operational cost. The current distribution policy implemented by Wal-mart is to deal directly with a manufacturer, controlling distributing systems and monitoring sales of products. The current strategy has enabled the company to maintain a sustained cost reduction in transportation, improve routing tools and improvising visibility (Mark 6).
Effect of EDLP
Wal-mart implemented an EDLP policy between 1970 and 1980 to ensure that products were undiscounted on a regular basis. The EDLP (every day low price) enabled Wal-mart to refrain from advertising products through different media platforms (Mark 6). The company used the saved money to reduce costs. () agrees that an “every day low price” strategy allows a company to cut advertising costs because it is improbable to advertize each sale product. The relationship between the business and its suppliers strengthened because of the increased volume of goods that Wal-mart requested from the suppliers. Also, the price roll back campaigns helped improve the relationship between buyers and suppliers, further enhancing the connection between the company and its suppliers.
Wal-mart monitors demand by conducting analytical work used to forecast demand. Also, the company works with suppliers to control demand for products. The company’s store level operations are efficient because the distribution centers have real time information regarding the level of stock in the stores. Therefore, in the case of a shortage of a particular product in the warehouse, wal-mart can automatically contact suppliers. Furthermore, the company can manually input orders or override impending deliveries (Mark 7). The system applies both for distribution of products from suppliers to the distribution centers to the distribution of the same products to local stores.
Advantage of RFID
The company adopted the RFID (radio frequency identification) policy in 2003 to facilitate tracking and assortment of inbound products (Mark 8). With the RFID system, the company ensures that products move swiftly through all distribution centers. Compared to other competitors, the RFID system enabled the company to increase stock visibility. Furthermore, the RFID system enabled the company to track the promotion of goods. According to Ray (394), an RFID system enables a company to keep track of inventories in warehouses. Also, the RFID is advantageous because it can help a company keep track of vehicles. In the case of Wal-mart, the use of the RFID tags enables the company to differentiate products in the sales floor and storeroom.
In consideration of the data provided in the case, it is possible for other companies to implement a similar strategy. Competitors managed to gain a competitive advantage over Wal-mart by copying its distribution system to distribute goods to a large area while reducing the costs of operations. Similarly, by understanding Wal-mart’s new distribution strategy, it is likely that they can copy the new system. However, it will take time for the companies to implement a similar system because they might incur additional costs to change the distribution strategy. Also, the competitors are using Wal-mart’s prior distribution strategy, which has enabled them to expand and open new stores across the country.
Mark, Ken. Half A Century Of Supply Chain Management At Wal-Mart. Richard Ivey School Of Business Foundation, 2013.
Ray, Rajesh. Supply Chain Management for Retailing. New Delhi: Tata McGraw-Hill Education, 2010. Print.
Stiving, Mark. Impact Pricing: Your Blueprint for Driving Profits. Irvine, Calif.: Entrepreneur Press, 2011. Print