Question

Explain how Wal-Mart employs JIT throughout their stores. How does the use of JIT affect the vendors for Wal-Mart?

In your opinion, do you find that Wal-Mart's use of JIT as a management tool is a good business practice, or does it cross the line ethically with its vendors? Summarize your findings and share your impressions in the discussion board.

Answer 1

Wal-Mart makes extensive use of JIT(Just in time) system. The company uses JIT mainly for a system called " Cross Docking". In this system Vendor trucks and Walmart trucks meet at company warehouses or distribution centres. Goods from the Vendor trucks and shifted directly to Walmart trucks, which then move to supply the goods to various stores. Thorugh this method, Walmart does not need to store all the goods in its warehouses as they are directly shifted to its trucks. Therefore the compnay saves space in its warehouses, needs lesser inventory in warehouse and as a result saves on inventory costs. Futher, as the goods are moved directly to the stores, the chances of goods getting damaged or reaching their expiry dates, are minimal.

The use of JIT by Walmart affects Walmart's vendors also. JIT implementation means that Vendors will have lesser time to respond to Walmart demands. They will need to send their trucks to Walmart with all required goods in a short span of time. Product demands from Walmart may have sudden increase or decrease based on customer demands. This sudden rise and fall of demand is passed on to the vendors, who have to quickly arrange for the required goods and ship them to to Walmart at a pre-defined time. The vendors need to be on their toes for aligning themselves with Walmart's JIT system. There may be cases when then dont have sufficient goods to supply to Walmart, given the short notice and also they have to make sure that their trucks reach Walmart on time. Walmart may penalise them if there is any dispcrepancy from their side.

Vendors face a tough situation in handing Walmart's JIT. However, on the postive side, it also allows them to improve their own systems, so that they can smoothly manage Walmart's product demands and any sudden rise or fall in demand. Good planning from the Vendor end, shall make them smoothly align to Wlalmart's JIT and make their internal systems strong.

In my opinion, Walmart's JIT is a good business practice. It may be sometimes harsh to Walmart's suppliers but gives them ample opportunity to better their own management systems.