Many population wonder how Wal-Mart is able to fee such low prices and continue to make a profit. There are some factors in their company model that lead to this ability, but a big one is their capability to adapt to an ever-changing global marketplace. Some criticize Wal-Mart's efforts to deliver to their customers a capability goods at low prices, but in reality, Wal-Mart has been able to deliver low prices by being efficient. This efficiency is present in some areas but one of the most important places is how they are able to originate products all over the world and get them to retail outlets, which are also all over the world. This capability requires a flawless logistical system that allows goods to be shipped everywhere at a moments notice.
One of the keys to Wal-Mart's efficient logistical system is the flexibility that it has when choosing suppliers. When Wal-Mart negotiates with suppliers and the suppliers know that Wal-Mart will only pay the most competing prices. This is because it is very easy for them to find another victualer of that singular material with a lower price and very few logistical problems. This gives Wal-Mart a huge estimate of leverage when dealing with suppliers. If a singular victualer knows that a company has found a lower price, it will lower its price accordingly. However, if the victualer also knows that it will be incredibly difficult for the company to make the permissible adjustments to ensure a level transition to a different supplier, then they will be less inclined to lower their price as much. This is not how existing suppliers deal with Wal-Mart; when they see that Wal-Mart has found a victualer that will give them a lower price, the current suppliers lower their prices accordingly. They know that Wal-Mart's logistical system can handle transition seamlessly and therefore they gain no further leverage since it won't be difficult or high-priced for Wal-Mart to select another supplier.
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Another guess that Wal-Mart's prices are so competing is because they buy in such large quantities that communication from one end of the supply chain to another is not as high-priced for further units. This aspect of the logistical system does not come from skill or expertise it plainly comes from the sheer size of the company, but this is still a factor. Wal-Mart buys so many supplies from different places throughout the world, that they have the luxury of using bigger trucks and using less fuel to go back and forth. Also if by opening they have to use shipping services to converyance material from one location to another, Wal-Mart will give them so much company that they will get huge discounts.
The logistical system that Wal-Mart uses is so efficient because it is so flexible. This is why Wal-Mart is able to offer things much cheaper than other associates can. Wal-Mart has a reputation for being able to offer these things in a cheap manner because of low worker pay and human proprietary violations but this is plainly not the case.
Logistics At Wal-Mart
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