The urgency of the topic
In today's globalized economy, businesses must establish comprehensive supply chains to remain competitive A well-developed supply chain not only reduces unnecessary costs but also enhances product value and boosts competitiveness against rivals Effective supply chain management is essential, as it directly influences the various components of the supply chain, leading many companies to prioritize these activities to gain a competitive edge.
Recognizing the importance of supply chain management, I decided to choose the topic:
Walmart's supply chain management plays a crucial role in its global expansion, enabling the company to maintain a dominant market presence Founded by Sam Walton, Walmart focuses on serving the mass market and competing primarily on price, which is supported by its highly efficient supply chain operations.
Research objects
Know how to use the supply management theory system as the basis for researching and evaluating Walmart's supply chain management activities
Study the model and evaluate the supply situation at Walmart Corporation.
Drawing experiences, opportunities and challenges when developing globally
Research subjects and scope
Research subjects
Theoretical research project on supply chain management of Walmart.
Research scope
- Content scope: supply chain management
- Patial extent: evaluate situation at Walmart Corporation
SUPPLY CHAIN MANAGEMENT OVERVIEW
Concept
The concept of the supply chain emerged in the late 1980s and gained significant traction in the 1990s, encompassing all activities directly and indirectly involved in meeting customer demands It comprises a network of manufacturers, suppliers, carriers, warehouses, retailers, and customers, highlighting the interconnectedness of these entities in delivering products and services effectively.
The supply chain consists of interconnected departments and distribution options that handle the procurement of raw materials, the transformation of these materials into finished products, and the distribution of those products to consumption points.
A supply chain is a systematic process that involves the movement of inputs from suppliers, through storage and transportation, to manufacturers who transform these inputs into finished products These products are then distributed and stored before reaching the final consumer.
Supply chain management (SCM) is essential for overseeing the flow of goods and services from raw production to consumer consumption It involves coordinating a network of suppliers that facilitate the movement of products through various stages Effective SCM encompasses the planning and management of suppliers, manufacturers, carriers, distributors, retailers, warehousing, and the delivery of final products to the target market, making it a fundamental aspect of every business.
Supply chain management aims to enhance customer value, ensure optimal efficiency, and secure a sustainable competitive advantage It encompasses the initiatives of supply chain companies to design and operate their supply chains in the most effective and efficient manner possible.
Features of supply chain management
Electronic data interchange (EDI) systems significantly enhance operational efficiency by minimizing the buyer's order cycle time By utilizing information technologies like EDI and barcodes, businesses can effectively streamline the management of goods flow from the distribution side.
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The implementation of electronic technologies is enhancing picking and dispatch speeds across various channels However, their application often remains limited to specific functionalities or channel memberships A comprehensive supply chain management strategy evaluates the entire channel, leveraging the full potential of technological advancements.
Quality is primarily assessed based on customer satisfaction with a product It can be quantified by gauging customer expectations through methods such as questionnaires, synthesizing responses, and evaluating the results using the 5-point Likert Scale.
Customer loyalty is something that companies need to take care of.
The total duration of a business cycle encompasses the sum of days of inventory held and the days of uncollected receivables This timeframe is crucial for understanding how long it takes for a business to produce goods and receive payment.
The replenishment time can be determined by assessing the current inventory level When a consistent inventory level is maintained, the inventory period is calculated by dividing the inventory level by the rate of usage.
Effective inventory management across the supply chain—encompassing suppliers, manufacturers, wholesalers, and retailers—is crucial for timely stock replenishment Additionally, the debt recovery period plays a vital role, as it ensures that the company maintains sufficient cash flow to facilitate product turnover Integrating the debt recovery time into the overall supply chain system serves as an essential payment term indicator, enhancing operational efficiency and financial stability.
Supply chain management involves a comprehensive evaluation of costs to identify advantages in total expenses For instance, certain members of the supply chain may prioritize lower borrowing rates, particularly in international contexts Key factors for analysis include the lowest labor rates, the most efficient processes, available capital, minimal cost of capital, favorable tax rates, and optimal logistics costs While the channel lacks a high degree of coordination, each company employs its own methods to manage costs, resulting in a competitive advantage for those with lower overall expenses.
174 can allocate the savings to more efficient uses, such as research and development, or reduce its prices to customers.
The role of supply chain management
Supply chain management brings many benefits to businesses, namely:
Effective risk management in the supply chain enables businesses to save costs by minimizing warehousing expenses and reducing inventory levels By ensuring timely delivery and maintaining high-quality services, companies can enhance customer satisfaction while optimizing their operations.
Developing a competitive edge is essential for businesses, as supply chain management represents a significant portion of operational costs while also enhancing customer experiences Effective governance can lead to reduced product costs and improved service quality, ultimately benefiting both the business and its customers.
Effective supply chain management significantly influences a business's development capabilities, market dominance, and customer trust By optimizing the supply chain, businesses can enhance customer satisfaction with their products and services, ultimately allowing them to outperform competitors in their industry.
Some of the other benefits are:
Improve the accuracy of production forecasts
Increase the cost of profit after tax.
Reduce the cost of each product.
Improve the order supply chain.
Support transaction flows in the economy.
Enhance the performance of the economy as a whole.
Strengthening the integrationof the economy
Help the economy make more efficient use of its available resources
Contribute to the formation of a comprehensive cooperation culture in business.
Contribute to improving customer service; making consumers in general the center of production and business activities
Supply chain management fosters a robust business environment by promoting a win-win philosophy that optimally utilizes societal resources, including human and natural assets This efficient resource management ultimately enhances overall economic performance.
OVERVIEW OF WAL-MART CORPORATION AND SUPPLY
Introduction to Wal-mart Corporation
1.1 A brief history of Wal-mart
Walmart, founded by Sam Walton in 1962, is a leading U.S retailer and was recognized as the largest company globally by sales in the 2019 Fortune 500 list Headquartered in Bentonville, Arkansas, Walmart operates 10,524 stores worldwide as of July 31, 2021, utilizing various retail models, including convenience stores, supermarkets, hypermarkets, and superstores.
According to statistics, in 2021, Walmart recorded a revenue of 559.2 billion US dollars, a business profit of 22.55 billion US dollars and a real profit of 13.70 billion US dollars
Walmart continues to dominate the retail industry, with 20% of its sales coming from consumer goods and groceries, while 45% are attributed to toy items These statistics highlight Walmart's impressive growth over the decades, maintaining its status as the leading retailer despite increasing competition The company's effective business strategies play a crucial role in enhancing the consumer experience and driving revenue, solidifying Walmart's position as the retail king globally after years of operation.
Figure 1: Wal-mart headquarters in Bentoville, Arkansas (USA)
1.2 Wal-mart’s business model and business strategy
Walmart effectively segments its customers by focusing on a low-price strategy, attracting individuals seeking affordable yet quality products This approach primarily appeals to low-income consumers or those prioritizing the best cost-benefit ratio in their purchases.
Value Propositions: the value proposition of Walmart is a reflection of its business policy.
It povides customers with a wide variety of products, at the lowest price and in the most convenient way possible.
Channels: Walmart’s channels are widely known, such as: the brick-and-mortar stores themselves, their website, their mobile app, social and mass media.
Walmart builds strong customer relationships by offering a compelling value proposition that includes affordable, high-quality, and diverse products, all easily accessible with excellent service To enhance this experience, Walmart streamlines and automates its processes for maximum efficiency.
Walmart's key resources include its extensive network of brick-and-mortar stores, an efficient distribution and storage system, a robust e-commerce platform, a user-friendly mobile app, and a dedicated workforce.
Key Activities: Walmart’s key activities include buying and delivering goods, while controlling the costs involved Besides, the company invests in customer service, inventory control, and distribution management.
Walmart's primary partners are its suppliers, who play a crucial role in delivering the company's value proposition They ensure the availability of low-cost products and services while providing access to various global markets.
Competitors: Albertsons; Alibaba; Amazon; IKEA; etc
Walmart's business model is centered around maintaining low prices to ensure accessibility for nearly the entire population This commitment is supported by the company's extensive global supplier network, which enables Walmart to purchase in large volumes and leverage significant bargaining power to achieve the lowest prices possible.
Another tactic applied by the corporation is cross-docking, especially with regard to the Sam’s Club It is an intelligent and organized redistribution system, in which the goods
7 received in a warehouse, instead of being stored, are sent directly to the customer or point of sale For this, it allows for significant savings in logistics costs.
Walmart aims to differentiate itself by enhancing access for diverse populations, moving beyond the traditional image of large centers and supermarkets To achieve this, the corporation is strategically investing in various initiatives that broaden accessibility for customers.
Small-format stores, with fresh food;
Digital marketing and retail, by enhancing its e-commerce experience, connecting physical and digital (the customer can buy online and get in the store);
Services that are difficult to access, being the only American retailer to have its own pharmacy stores and clinics, where it offers preventive health care checkups and wellness products.
Compete on assortment: Walmart invests heavily in a variety of products and brands, from local products to international names, both in its brick-and-mortar and online.
Walmart prioritizes customer retention by delivering exceptional experiences, understanding that satisfied customers are more likely to return The company recognizes that motivated employees are essential to achieving this goal, which is why it focuses on competitive pay and comprehensive training for its staff.
Walmart has a policy of a money-back guarantee: It offers a 100% money-back guarantee if the customer is not satisfied with the services provided by the company.
1.3 Wal-mart supply chain keyfetures:
Wal-Mart stands as the world's largest retail empire, with annual sales comparable to the GDP of top nations Recognized as the retailer of the century by Discount Store News and ranked among the most admired companies by Financial Times, Walmart excels not just as a retail corporation but also as a leader in Supply Chain Management (SCM) optimization.
Figure 3: Walmart Supply Chain Overview Diagram
Highlights in the Walmart logistics systems:
The successful integration of information technology, telecommunications, and advanced information systems, in collaboration with partners like RFID, artificial satellites, and CPFR, serves as a cornerstone for enhancing the overall efficiency of the logistics system.
Pioneering in building a successful system of "Cross-docking" multifunctional
9 warehouses; quickly responding to customer needs and creating added value for goods.
Effective purchasing strategy, creating a competitive advantage in price.
Based on technology to increase the efficiency of transportation activities, the responsiveness of distribution centers, reduce inventory with the Just in time system
Wal-mart supply chain management
Figure 3: Walmart's application chain overview diagram (Source: Smartlog)
For Walmart, engineering and information technology are key to creating efficiencies and continuity throughouttheir supply chain.
Since the 1980s, Walmart has pioneered the use of a centralized database for store-level point-of-sale data and satellite networks, being among the first to implement UPC barcode technology in retail This innovation allows for the instant collection and analysis of store-level information By integrating sales data with external sources, Walmart effectively empowers its purchasing teams.
Walmart's satellite network enhances demand forecast accuracy by transmitting critical data from various points of sale This technology enables company managers to better understand market conditions and make more informed decisions for effective management.
In the early 1990s, Walmart launched Retail Link, the largest civilian database globally at that time, containing 20 years of transaction data This system enables suppliers to access sales data for their products, helping to reduce excess inventory By providing this access, Walmart encourages suppliers to proactively manage and replenish their products continuously.
In 1990, Walmart pioneered the adoption of CPRF21, an integrated planning and forecasting solution that facilitated the sharing of essential supply chain information, including promotion data, inventory levels, and daily revenue By 2003, Walmart advanced its inventory management further by implementing RFID (radio frequency identification) technology, enhancing efficiency and accuracy in tracking stock levels.
From the 1980s to the 1990s, Walmart developed advanced retail systems, including EDI technology and the Retail Link platform, to enhance communication with its suppliers EDI facilitates electronic exchanges with thousands of suppliers, while Retail Link, accessible via the Internet, integrates with EDI to ensure low operational costs This system connects Walmart stores, headquarters, distribution centers, and suppliers, enabling efficient inventory management By allowing suppliers to access sales data, Walmart helps them adjust production plans based on real-time information With 60,000 suppliers in the U.S., maintaining effective communication is crucial, and the secure internet system allows for seamless information sharing A closer relationship between Walmart and its suppliers leads to improved efficiency and reduced risks in the supply chain.
Walmart's regulation of product output has led to a significant reduction in inventory levels, enabling the company to save 5% to 10% on goods costs compared to its competitors This strategy fosters closer connections with suppliers and allows Walmart to purchase directly from manufacturers, eliminating the need for intermediary agents.
RFID (Radio Frequency Identification) technology identifies products through radio frequency by attaching small chips to items or their packaging, which emit signals to portable receivers This system allows employees to efficiently count products on shelves while moving through aisles The RFID system comprises two essential components.
Applying RFID technology to Walmart's business
Walmart has mandated that suppliers implement RFID tags on shipments to enhance supply chain management This technology enables Walmart to monitor products during their transition from distribution centers to trucks en route to stores Each product is equipped with RFID tags that store electronic information, which can be energized by radio waves from a reader to retrieve data This real-time information collection improves inventory management by increasing storage efficiency, reducing out-of-stock instances, and minimizing excessive storage costs through data analysis RFID readers are strategically positioned in warehouses to track the quantity and type of goods stored and sold Ultimately, Walmart aims to reduce inventory shortages and boost revenue through the effective use of RFID technology.
RFID systems revolutionize inventory management, demonstrating that effective inventory practices can significantly enhance profitability for businesses Walmart's impressive success can be largely attributed to its advanced inventory management capabilities, which rely on integrated information systems connecting manufacturers, suppliers, distributors, and logistics.
RFID has made it possible forWalmart to track where its goods are in the supply chain
Walmart utilizes RFID technology by installing readers at their loading docks to efficiently track products being shipped As items are unloaded from transport trucks, RFID tags transmit data about each product to the readers, which then relay this information to a computer system This process minimizes confusion during order arrivals, streamlines inventory management, and enhances planning capabilities for manufacturers Additionally, RFID technology allows Walmart to monitor product origins, temperature variations, and shelf life, ensuring optimal stock levels on store shelves while maintaining precise inventory records, ultimately leading to a more efficient supply chain.
Collaborative Planning, Forecasting, and Replenishment (CPFR) enhances the relationship between suppliers and retailers by aligning their goals Traditionally, suppliers aimed to maximize sales at higher prices, while retailers sought the lowest possible costs, leading to a lack of cooperation By implementing CPFR, both parties can work together more effectively, fostering a cohesive partnership that benefits the supply chain.
CPFR, or Collaborative Planning, Forecasting, and Replenishment, encompasses key elements such as POS data, retail analytics, logistics systems, on-demand production planning, warehousing, and shared responsibilities This data-driven approach enhances predictability and coordination among supply chain partners, making it a more effective solution compared to traditional EDI systems.
The goal of CPFR (Collaborative Planning, Forecasting, and Replenishment) is to enhance supply chain efficiency by accurately forecasting demand, ensuring timely delivery of products to appropriate locations, minimizing inventory levels, and boosting customer service Successful implementation requires close collaboration among all parties, along with a mutual willingness to share information and risks Walmart exemplifies effective CPFR implementation across its supplier network, fostering a collaborative environment that benefits all suppliers and enhances decision-making processes.
The CPFR solution is a plan in which suppliers and Walmart work together to forecast customer demand, in order to optimize supply operations CPFR offers the following benefits:
Improve forecasting for all supply chain partners and implement the sharing of forecast information.
Walmart and its suppliers regulate related logistics operations
Diagram 1: Parts of the CPFR solution
CRM, or Customer Relationship Management, is a software solution that enables Walmart to enhance customer relationships across various direct and indirect channels By utilizing CRM, businesses can implement effective strategies tailored to customer preferences, ensuring strong relationships and maximizing profits while prioritizing customer needs.
Enterprise Resource Planning (ERP) is an integrated information technology solution that consolidates all business management applications into a unified system This automation streamlines various company activities, including human resource management, production line oversight, supply chain management, internal financial operations, and sales and marketing efforts By utilizing ERP, businesses can reduce costs and enhance their competitiveness in the market.
ASP (Advanced planning and scheduling) is a program that uses algorithms to find optimal solutions to complex planning problems
Evaluate of supply chain management of Wal-mart Corporation
For a long time, Walmart has been committed to improving its customer service, thus minimizing operating costs effectively (to offer customers low prices).
Walmart's supply chain strategy is primarily focused on minimizing costs, reflecting its corporate philosophy known as the Walmart Way This approach emphasizes advanced logistics, efficient distribution, streamlined transportation, and innovative technology to enhance overall supply chain effectiveness.
Walmart's supply chain strategy is integral to its goal of leading the global retail market, driving its commitment to low pricing and reduced transportation costs, which are key features of its operational framework.
Walmart's low-price strategy enables most of its suppliers to easily break even and generate profits, making collaboration with the retail giant beneficial Ultimately, the greatest beneficiaries of Walmart's cost-effective approach are the customers, who enjoy access to affordable prices.
Walmart serves approximately 175 million customers weekly, demonstrating the effectiveness of its business strategy The introduction of grocery sales has significantly impacted the market, leading to the closure of many small retail competitors that once challenged the regional giant.
Just-In-Time distribution strategy
Walmart's operations stand out due to its exceptional integration of IT tools within its supply chain, recognized as the best among private companies globally The company employs a just-in-time delivery approach, utilizing RFID technology to enhance logistics operations Additionally, the creation of distribution centers has strengthened Walmart's cost strategy, while automated warehousing processes and cross-linking technology have significantly boosted supply chain efficiency.
Walmart is committed to enhancing its supply chain's sustainability in response to environmental challenges For over 15 years, the company has partnered with various stakeholders to promote positive changes throughout global supply chains.
Walmart is prioritizing high-carbon items like dairy and meat in its strategy to encourage suppliers to adopt more sustainable shipping practices The company aims to significantly impact the environmental footprint of these products through its initiatives.
23 goods are manufactured and packaged (use 100% recyable, reusable or industrially compostable packaging, etc)
Walmart faces a significant supply chain challenge when items sold are not promptly replaced or replenished after purchase, resulting in customers struggling to find desired products Addressing this issue is crucial for maintaining customer satisfaction and ensuring a smooth shopping experience.
Businesses must address the disconnect within their supply chain operations to enhance efficiency Understanding customer needs is a critical factor driving this trend.
Customer shopping habits have changed over the years Their preferences continue to change frequently As such, keeping up can be quite challenging for major retailers such as Walmart
GLOBAL EXPANSION OF WAL-MART CORPORATION
Oppotunities
The successful integration of advanced information technologies, including EDI, RFID, artificial satellites, and CPFR solutions, alongside a robust retail connection system, has established a highly efficient supply chain The company has effectively implemented a "Cross-Docking" warehouse system, enabling rapid responses to customer demands and enhancing the value of its products.
An effective purchasing strategy creates a competitive advantage in price Based on technology to improvethe efficiency of transportation activities, the responsiveness of distribution centers, reduce inventory by Just in time,
In 1990, Walmart surpassed Target and Kmart to become the largest retail company in the United States, and by 2006, it significantly outpaced all other competitors in revenue within the retail market.
Challenges
Size and scale of operations
Walmart operates over 10,000 stores in 24 countries and employs more than 2.2 million people, which creates significant logistical challenges due to its massive scale The complexity of Walmart's supply chain, involving a vast network of stores, distribution centers, and suppliers, results in millions of products being transported daily over long distances This intricate system necessitates effective coordination and management to ensure timely and cost-effective delivery of goods to stores and customers.
Sourcing goods from various suppliers and vendors
Walmart faces significant challenges in managing its supply chain, particularly in sourcing goods from a vast network of suppliers and vendors With thousands of suppliers and millions of products, effective relationship management is crucial to ensure the availability of desired products at competitive prices and quality This necessitates a sophisticated procurement process along with robust tools for tracking and evaluating vendor performance Additionally, this challenge highlights the growing importance of sustainability in the supply chain, emphasizing the need to reduce greenhouse gas emissions and adopt more sustainable practices and technologies.
Effectively managing inventory levels poses a significant challenge for Walmart, which operates thousands of stores and warehouses globally The company must strike a balance in inventory amounts across locations to meet customer demand while minimizing capital tied up in unsold products To efficiently manage its extensive inventory, Walmart requires real-time data access and the integration of online and offline operations, enhancing the speed and efficiency of its supply chain.
The Rapidly changing nature of the retail industry
Walmart's supply chain faces significant challenges due to the rapidly evolving retail landscape, particularly with the rise of eCommerce and online shopping To remain competitive, Walmart has had to invest in advanced technologies and streamline its operations, enhancing both speed and efficiency This evolution involves integrating online and offline services to meet consumer demands effectively Consequently, Walmart must continuously innovate and adapt to stay ahead in the highly competitive retail sector.
Solutions
Advanced technologies and data Analytics
Advanced technologies and data analytics present a viable solution to supply chain challenges Retail Dive reports that Walmart is investing in artificial intelligence and machine learning to enhance its supply chain operations This investment allows Walmart to achieve a comprehensive and precise understanding of its supply chain, track order progress, pinpoint potential delays or bottlenecks, and implement corrective measures, ultimately enabling more informed operational management.
Walmart is actively pursuing strategic partnerships and collaborations to address its supply chain challenges By partnering with companies like IBM, Walmart is leveraging shared resources and expertise to enhance supply chain transparency and traceability through innovative technologies such as blockchain This trend of collaboration is expected to grow as Walmart seeks effective solutions to improve its operations.
Walmart is committed to enhancing the sustainability of its supply chain by setting ambitious goals, including a target to reduce greenhouse gas emissions by 1 billion metric tons by 2030 To reach these objectives, the company collaborates with suppliers to adopt sustainable practices and technologies, such as renewable energy solutions and eco-friendly packaging.
Lesson learned by Walmart and proposed solutions for Vietnamese retail
Expand your network from the inside out
Walmart's unique strategy involves opening stores in close proximity to one another, particularly in rural areas like Arkansas, which is a key aspect of their business model The locations of these stores are strategically planned around a central distribution center (DC), allowing Walmart to maintain a single DC for multiple stores This contrasts with other retailers, whose stores are often over 200 miles away from their distribution centers As a result, Walmart significantly reduces shipping times from the DC to its stores, ensuring that shelves are quickly replenished with products.
Predict demand accurately for optimal inventory stocking
Walmart's 'Daily Low Price' strategy effectively merges customer focus with business insight, offering reassurance to shoppers through consistent discounts on everyday items By strategically avoiding sales during national holidays and festivals, Walmart mitigates the typical demand surge, allowing for stable inventory management This approach enables the company to accurately forecast demand by analyzing local purchasing patterns over time.
Embrace technology to improve efficiency
Walmart has been a leader in technology adoption, which has helped the company sustain its low-cost leadership in the retail sector The use of RFID technology enables Walmart to obtain detailed information about products, including specifications, manufacturing dates, locations, and current status.
Walmart utilizes a centralized tracking system to monitor products throughout their entire life cycle, from manufacturing to arrival at the store Upon a product's arrival at the docking center, all supply chain components receive immediate notifications Additionally, if a product sells out rapidly, manufacturers are promptly informed to boost production levels.
Walmart has pioneered the use of a unique generic product code to identify each item and track its life cycle This innovative approach is supported by a digital network that connects all Walmart stores, enabling the sharing of crucial sales data, volume requests, and visitor statistics, solidifying Walmart's leadership in retail technology.
Always leading the way in adopting the technology and integrating it with their supply chain operations, Walmart has achieved unprecedented efficiencies in the retail industry
In 1989, Walmart earned the title of Retailer of the Decade, boasting a remarkable distribution cost of only 1.7% of sales, significantly lower than competitors like Kmart at 3.5% and Sears at 5% A crucial element in achieving these unprecedented cost reductions is Walmart's strategic integration of technology into its supply chain.
4.2 Proposing solutions for Vietnamese retail business
Effective supply chain management in Vietnamese retail enterprises hinges on robust information systems and technology applications A significant challenge has been the inadequate flow of information across the supply chain To address this, businesses must establish a centralized data system that connects supermarkets and distribution centers with suppliers This system should facilitate information sharing among all chain components, enabling sales staff to access the warehouse management system and monitor inventory levels When items are available, employees can request restocking, and the system can efficiently manage picking, packing, and shipping to stores This approach enhances inventory management, demand forecasting, and production planning, ensuring a seamless supply chain without interruptions.
Transforming traditional warehouses into distribution centers is essential for modern logistics These centers should be strategically designed and located based on geographical factors and the types of products they handle Many Vietnamese businesses still view warehouses as simple storage spaces, with operations centered around the storekeeper However, contemporary warehouses function as dynamic distribution centers, playing a crucial role in the supply chain by enhancing efficiency and responsiveness.
A distribution center plays a crucial role in the supply chain by ensuring the smooth and efficient flow of goods, significantly enhancing order fulfillment It serves as a vital balance point between supply and demand, adding substantial value to the overall logistics process.
Vietnamese retail businesses must enhance their relationships with customers and suppliers to ensure a seamless and efficient supply chain Currently, customer service and relationship management in these businesses often fall short of expectations To improve customer service quality and effectively manage customer relationships, Vietnamese retailers should adopt and implement specific operational processes.
The customer relationship management (CRM) process is essential for maintaining and enhancing relationships with customers by identifying strategic target customers This involves segmenting customers based on their value to the company and developing tailored product and service agreements (PSAs) to improve customer loyalty A dedicated team from various departments is formed to design these PSAs, which outline the expected outcomes for the company, including profit margins and the financial dynamics with each client Additionally, the CRM team collaborates with strategic customers to streamline processes and minimize demand fluctuations while eliminating non-value-adding activities.
Customer service management is the face of a company, serving as the primary contact for managing Product Service Agreements (PSAs) and providing essential information to customers This department plays a crucial role in assisting customers with the operation of product applications, ensuring a seamless experience.
Demand management process: Requires a balance between customer requirements and supply capacity With a correct process, managers can actively balance Supply
To effectively meet demand while executing plans at minimal cost, it is essential to focus on more than just prediction activities This approach also encompasses supply-demand synchronization, enhancing flexibility, and minimizing volatility.
A robust demand management system effectively utilizes insights from strategic sales and customer data to minimize demand volatility and ensure a smooth supply chain flow Additionally, it fosters collaboration among marketing and production teams, enhancing overall operational efficiency.
The order-to-order process encompasses essential activities aimed at identifying customer needs and designing an efficient network to fulfill these requirements while minimizing delivery costs Although the logistics department primarily handles these tasks, successful execution relies on effective coordination with other internal departments and collaboration with suppliers and customers.