Walmart in China

T satisfactoryt of Contents The Beginning of Walmart Logistic 3 Magic of the stripes. 3 Walmarts Cross enter.. 5 Downf in all of Barcode System 6 Power to the RIFD.. 7 Walmarts RFID caboodle in mainland chinaware.. 9 The Chinese RFID enthronisation. 10 Chinese market potential 11 Conclusion. 12 The Beginning of Walmart LogisticWal-Mart as we all know it, it is an Ameri piece of tail multination corporation that operation in a largest arrange discount stores in the humans. surface-to-air missile Walton, the successful business art object from Arkansas began his retail store in 1940, worked at J. C. Penney and later on started a small retail chain store called Ben Franklin. It wasnt till 1962 Mr. Walton opened the commencement ceremony Walmart store. In the beginning, Walton had his strategy set to low income families and offered a considerably lower cost than his competitors, the low price strategy allowed Walton to jumper lead forward with his real goal to become the comm unicate chain logistics giant.By 1987, Walton harbor led the store into a leavening rampage, Walmart had 1,198 nationwide, gross sales in the 15. 9 billion and had 200,000 associates (Walmart, http//walmartstores. com/aboutus/7603. aspx, 2011), In the same year the company also became the largest semiprivate satellite net work in the country and implemented the kickoff distri only whenion monitoring carcass, it is a linked satellite remains that offers devil centerings data , voice and one way video conference amongst Walmarts driver and distri thation center which increases stock list accuracy and ability to quickly restock store inventories (Wailgum, 2007).Magic of the stripes In admission to the satellite establishment, Walmart has guided the way to former(a) ground-breaking technologies that had other retailers follow. In 1988, Walmart was the for the first time retail company who utilize the barcode system as the universal labeling system (Walmart, http//walma rtstores. com/aboutus/7603. aspx, 2011). The efficiently of the barcode system gave Walmart the capability to humble store inventories and the cost of property tips in w atomic number 18house.The barcode system also makes it possible for Walmart to record sales of some(prenominal)ly item for much accurate sales analysis, because the barcode system worked so well, 99 percent of Walmart stores adapted this applied science(Walmart, http//walmartstores. com/aboutus/7603. aspx, 2011). But it also created a nonher problem for Walmart providers. adept of the key pieces of the barcode system is the Universal Product Code (UPC), the UPC is a pinnace with black and white stripes and numbers on the bottom that allows a barcode s preemptner to scan the product.Getting the UPC code isnt as easy as print it on the box and ships it out to Walmart. First, Walmart requires all their potential suppliers to accommodate an evaluation with Dun & Bradstreet for an evaluation of the companys f inancial standing, second, defile a membership from Uniform Code Councils GS1 that cost at least(prenominal) $750 plus an annual fee that bases on the companys sales plus cost of each UPC on the product (Washingtonpost, 2007).Base on the cost, if you be large company like PepsiCo or Johnson Johnson the fees are relatively small, but if you are a small mom and pop business the fees can eat up most of your sales revenue. However, Jon Lehman who was a Walmart Manager who managed six-spot stores said during an interview with PBS. org(PBS. org, 2004) you can track sales on particular proposition items, specific weeks, specific days, specific hours of the day, when you sell merchandise the most. You can line up out what size of toothpaste is your best seller, what quantifys of the year you sell that toothpaste.You can track sales spikes during the year, during certain seasonal periods. the eudaemonia of the barcode system gives Walmart the leverage power to realize all their sup pliers include barcode in their products, which was the first sequence, a retailer turn over power over the supplier. Walmarts Cross Docking In the retail race for survival, more and more retailers are determination ways to reduce inventory cost and transportation cost. Then in the 1980s, Walmart began to use a logistic technique call the cross- go in.This is a way for the finished rights to directly be interrupt up from a suppliers manufacturing plant, and then transport the goods to the customers without storing it. The cross dockage provide grand benefit, First, reduce handling and transportation cost, the product volition not stool to go to another storage location to be wait for pick up. Second, Cut product wait time, the product will spend little time in warehouse and more time on the avenue to deliver to the customer, it is especially important if the products are time sensitive, such as milk or produces.Walmart stores can decrease the financial lost from having to reduce price of the product because it is close to the expiration day. Third, product now withstand less chances to be shamed during shipping, in the old days, products often save to be transported though many different locations before it is shipped to the stores, the cross docking eliminates the needs of going to different dispersion locations, as figure 1 shows, all products now will only go to a centralized sorting facility before its shipped to various Walmart stores.However, the most satisfying proceeds of cross docking is the reduced warehousing, one of the cross docking main benefits is the ability to quickly move products, therefore, increase the turnaround time during warehousing. Walmart stores can carry more products and can stored more in the warehouse. find 1 Downfall of Barcode System The barcode system provided undeniable logistical benefit since Sam Walton started the company, but as time move forward and more supplies need to be move across warehouse floor the time is up for a replacement. The technological constraints of the barcode system are speed, range and durability.The first major shortfall is that the barcode requires the line-of-sight technology(RFID-Journal, 2011), which means for the barcode to be subscribe to, there has to be a laser digital scanner within the line of sight for it to pick up the nurture in the barcode. According to International Logistics by Richard Stewart and Pierre David raptus is dependent on an foundation that allows the movement of goods. Due to the line-of-sight constraint logisticians have to design the warehouse certain ways to allow barcode system to be read or introduce expensive human labors into the picture.Second, because it requires laser scanner to scan the products, only one item can be read at a time. Third, barcodes labels are vulnerable to daily wear and tear. vacate me to ask, have you experienced a time where you or the store demolish try to scan the barcode and you placed th e barcode over the red scanner several times, but the scanner failed to pick up the barcode. Thats an example of damaged barcode. Due to the nature of barcode, once the widths of the black and white lines are damaged, it is out of the question for the scanners to pick up.As a result of the limitations in barcode technology, Walmart implemented a overbold technology call RFID (Radio oftenness Identification) in its logistic system. Power to the RIFD In 2003(Webster, 2008), Walmart had started the preparation to flux the RFID technology into its supply chain. The RFID united the improvements over barcode system in range, reading rate and durability into a single chip. It is a system of small electronic stickers that can instantly broadcast piano tuner signal to the RFID receiver and consistently update its location.This way, logisticians can link between the digital and physical world without any human communication. The RFID had another advantage its able to read the data and kn ow precisely what item it is and the expiration date on the item. For example, the RFID can tell Walmart which orange juices in which refrigerators are going to endure, so the employees can move the soon to expire orange juices in the front row. Walmart then required its 100 suppliers to integrate RFID technology in their packaging and hoping it will solve the issues where items are not ready on the selife. According to Ron Moser, RFID strategy leader at Walmart, some 2 percent of all lost sales are delinquent to the simple fact a store has run out of an item, but 41 percent of the lost sales are due to inventory problem, If RFID can fix just 10 percent of that problem, then Wal-Mart will gain $287 million per year by avoiding lost sales. Since 2007, Walmart has benefited a 30 percent reduction of out-of-stocks reduction of excess inventory in the supply chain says Walmart CIO and Executive Vice professorship Rollin Ford(Walmart, Wal-Mart Continues RFID Technology Expansion, 20 07). And If combine the numbers from Moser and Ford, that is a saving of 861 million a year, since the integration of RFID.The technology has turn up itself as the divine money savior for Walmarts logistic system. On top of that, Walmart has also pushed the RFID into one of their most profitable foreign market, mainland chinaware. Walmarts RFID Influence in China In speaking of transnational logistics, if Walmart requires all their suppliers to include RFID chips, then they will also need to require international companies to do the same. Started in 2009(ChinaRetailNews. com, 2008), Walmart impacted the Chinese supply chain by forcing all Chinese suppliers to have RFID chips build into their products.Not only so, Walmart also created tougher standards on the Chinese suppliers which created a much stressful time for the Chinese manufactures to adapt. firing back to day one, the Walmart RFID movement started in January 2005 in a distribution center in Dallas says com jellerworld. com (Songini, 2006). At first, Walmart required about 100 of its suppliers in to have RFID chip installed, then in two years later that, in January 2007, 600 suppliers implemented the technology. Base on the historical review of the U. S. companies, it was easier for U. S. ompanies to put into practice of the RFID chip, kick upstairs the information system and warehousing technologies. On the other hand, most of the Chinese companies were still using human labors for their supply chain management. It wasnt that the Chinese manufactures didnt want to upgrade to RFID. The technology infrastructure just wasnt there. According the physorg. com, most of the companies in South China Dont understand and are not familiar with the technology there was a number of problems that Walmart needed to solve before implementing the RFID theme into the mind of Chinese suppliers.First, at what level would it affect China? noncombatant standards or government regulations or both(prenominal)? Seco nd, how many of Chinese suppliers are capable of deploying the RFID technology third, how many of them have heard of RIFD technology. The Chinese RFID investment Two of the very important market entry strategies that an international logistician ought to understand before entering a foreign market are the technology infrastructure and the characteristic of different levels of development. Does the Chinese have it what it takes to upgrade its Infrastructure?And does the potential trade benefit outweigh cost? Fortunately, the Chinese government had a plan to expand its logistics infrastructure in 2007. The China State Radio Regulation Committee (SRRC) has approved the bandwidths needed to manoeuver RFID frequency in China, the two UHF bands 840. 25 to 844. 75 megacycle per second and 920. 25 to 924. 75 MHz (Swedberg, 2007). The Chinese governments target of this approval is bring itself up to speed with rest of the world. According to Craig K. Harmon, President and CEO of Standards development organization can be viewed as good news for U.S. and European companies. Chinas 920 to 925 MHz band overlaps the 902 to 928 MHz band used in the United States, so U. S. RFID tags will be readable by interrogators approved for use in China. In other word, The Chinese government did not blindly upgrade its RFID infrastructure it made current the radio frequencies are compatible with foreign companies like Walmart. In other to support and keep up with rest of the world, the Chinese government is reservation an enormous amount of investments in the RFID market.Between 2009 and 2014, the Chinese market will have grown to $1. 4 billion in 2010, and by 2014, the RFID will concern $2. 4 billion, more than double the total form 2009, said by an iSuppli, a China market research firm. The RFID infrastructure is growing, and will dramatically develop to a mature stage that has the same level playacting field with the United States. Chinese market potential Since the early 90s, the world has witnessed Chinas huge reaping economy and the potential to grow more, the logistics in China also have been growing along.Nevertheless, international logistics is a part of international business, the market, supply & demand, and gross domestic product those elements are the support beams of the logistics infrastructure. In addition, The Chinese and Walmarts RFID infrastructures are depended on this growth. In 2010, the Chinese gross domestic product growth was 10. 3 percent. In the same year, the Chinese domestic logistics grew to $15. 75 Trillion and will have 9% compound annual growth rate between 2011 to 2013, said by (Logistic Industry in China set for Tremendous Growth, 2011).On a general level, rapid market and GDP growth is a perfect business incubator for Walmart to accelerate the RFID adaption among Chinese suppliers. Conclusion The Logistics infrastructure is a key component for Walmart to penetrate Chinese market, in view of the fact that the countrys econ omy is exporting oriented. The RFID is one of the most important technologies for both Walmart and China to communicate both in the physical level and software level. But without the physical warehouse planning of Cross Docking, introducing the RFID can only win half of the battle.Ever since, Sam Walton created Walmart, moving products to customers have been the key development for the company, from human labor to barcode system and finally the RFID. With the pushing and help from Walmart, local Chinese manufactures and logistics companies are able to adapt this piece of technology and continue to compete with rest of the world. There are also noticeable evidences that the Chinese government is aware of the problem and taking action on, for example approving the RIFD spectrums. So far, the Chinese logistics information system that can support the RIFD is still smaller than the U.S. , even with that, Walmart should not back down in pushing the RFID technology to rest of the Chinese manufactures. We have to remember, what happen from the 100 supplies in the U. S. will happen to the Chinese suppliers. The adaption rate is slow and painful, but Walmart will get there. Works Cited China faces barriers in RFID adoption. (2005, 12 22). Retrieved 04 25, 2011, from www. physorg. com http//www. physorg. com/news9312. hypertext mark-up language ChinaRetailNews. com. (2008, 11 06). Wal-Mart To Adopt Radio Frequency Identification On Chinese Mainland. Retrieved 04 26, 2011, from http//www. chinaretailnews. om http//www. chinaretailnews. com/2008/11/06/1730-wal-mart-to-adopt-radio-frequency-identification-on-chinese-mainland/ Geography, D. o. (2011). THE GEOGRAPHY OF TRANSPORT SYSTEMS. Retrieved 04 18, 2011, from Hofstra University http//people. hofstra. edu/geotrans/eng/ch5en/conc5en/crossdocking. html Gu, V. (2011, 01 03). Press Release. Retrieved 05 01, 2011, from isuppli http//www. isuppli. com/China-Electronics-Supply-Chain/News/Pages/Chinas-RFID-Market-Set-to-Double -by-2014. aspx Logistic Industry in China set for Tremendous Growth. (2011, 03 09). Retrieved 05 08, 2011, from whattech. com