In addition to your CLA2 (Nordstorm & Walmart), please prepare a PowerPoint presentation summarizing your findings for CLA2. The presentation will consist of your major findings, analysis, and recomme

Introduction

Rarely do businesses succeed if they cannot maintain a proper vendor management strategy. The success of a business and its profitability is largely reliant on proper vendor management policies. This has led to the emergence of pedagogical concern of what constitute good vendor management practices. From practice, the traditional approach has often centered on the thinking that vendor policies involve squeezing suppliers for the lowest prices. However, the vendor as part of the external stakeholders has variable expectations which should be met by a company for a symbiotic vendor partnership. These partnerships if managed properly can be beneficial for both the company and the suppliers. This paper examines how successfully managing vendors can lead to a company achieving a competitive advantage in the marketplace. It examines the value chain activities as well as whether the outsourcing policy reflects a strategic alliance. It focuses on Walmart and Toyota vendor policies to examine how both companies have successfully managed the attribute.

Critical definition

Vendor strategy can be defined as the art of organizing suppliers as one of the external attributes with an aim of achieving a competitive edge in the market (Dess, 2016). It includes all the constructs and policies that a company puts in place with an aim of creating an enabling environment for its suppliers. Vendors are an important part of a company’s overall strategy because they supply the company with vital trade products which can lead to superior quality or cost-cutting benefit in the marketplace (Hitt, 2016). Vendor strategy has a two-way connotation in that while the company must seek maximum utility from the vendor relationship, it must ensure the sustainability of business criteria and partnership. In addition, it must ensure commitment to shared values, honoring of obligations whether monetary or quality. The vendor on the other hand must reciprocate with constantly supplying to avoid stock-outs.

Walmart Inc.: Vendor policies

Walmart a fortune five hundred company has one of the most diversified and progressive vendor policies in the retail industry. The company, which boasts of revenues amounting to USD $500 billion, it owes its success largely to marinating a price leadership in the market (EDGAR, 2017). This implies that the retail giant has to ensure that it sources affordably while still maintaining quality. To ensure this there being Walmart has a vendor strategy dating back to its inception. First, the company buys only from manufacturers (Walmart, N.D) In addition, the retail giant value chain outsourcing involves collecting supplies directly from the manufacturers as opposed to the traditional practice whereby a supplier delivers products to stores (Jurevicius, 2018). This ensures that the company has a bargaining edge. This is also boosted by the fact that the company also buys in bulk from the suppliers.

The retail giant vendor checklist has a very high threshold which makes several vendors to miss out an opportunity to supply to its stores. This is aimed at enhancing a strategic outsourcing alliance. However, every year, the procurement department process millions of applications globally owing from the fact that the retailer has a history of honoring supplier payment obligations. In addition, the retailer organized weekly webinars every week from which its suppliers can keep abreast with market trends. More also, vendors have access to sale information every week from the stores which ensures that they keep tracks of the sales trend. This also has an added advantage to Walmart because it helps the retailer to be a haven for promotion and discounts as it encourages healthy competition among the suppliers. Overall Walmart vendor policy has always been exemplified as one of the pillars of its success. This is because such a strategy cannot easily be replicated by existing competitors because it requires among another discipline, commitment, and a financial muscle.

Toyota

There is no doubt that successfully managing supplier relationships is the most vital management attribute that turned Toyota from a small company to a large multinational selling quality vehicles globally. The main aim of Toyota vendor relationship was eliminating the complexity of managing thousands of suppliers to fostering strategic alliance relationships that are mutually beneficial (Lee & Kim, 2014). Toyota strategic alliance vendor policy can be argued as strategic partnering techniques whereby the automobile company imports parts globally from a few suppliers it has entered into a contract with. This ensures the growth of the vendors alongside the company. This has ensured that Toyota standards remain the same for several years. In addition, Toyota production capacities are replicated with its suppliers to enhance efficient, timely and standard deliveries. The value chain outsourcing strategy involves localized outsourcing. The purchasing strategy is also driven by collaboration as opposed to squeezing the suppliers. Logistically, suppliers deliver the parts to the company’s assembly plants. Of special importance in the value, chain strategy is that Toyota directly supervises their suppliers to check for consistency of quality. In addition, they also transfer capability to these vendors.

Conclusion

Vendor strategy entails organizing supplier attributes to ensure that relationships are successful and beneficial to both parties. The value chain and strategic alliance approach have often been cited as two main components of a Vendor strategy. By looking at Walmart, the vendor strategy can easily be demystified as one that successfully enhances mutual benefits for both the retailer and vendors. The retailer’s value chain is responsible for the company success in the marketplace as it involves engaging directly with manufacturers and ensuring that the company collects supplies directly from the vendors. The need for mutually beneficial supplier relationships is also at the heart of Toyota. The company strategic outsourcing alliance strategy has been hailed as the most pertinent variable that led to the growth Toyota (Lee & Kim, 2014) into a global automobile company. The value chain activity of the automobile involves supervising the vendors, technology and capacity transfer and delivery of parts to Toyota manufacturing plant.

References

Dess, G. (2016). Strategic management: Text and cases ninth edition. New York: McGraw- hill Education.

EDGAR. (2017). Walmart INC. Retrieved august 2018, from USA security and exchange commission: https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000104169&owner=exclude&count=40&hidefilings0

Hitt, M. (2016). International strategy: From local to global and beyond. Journal of World Business, Volume 51, Issue 1, Pages 58-73.

Jurevicius. (2018). SWOT analysis of Walmart (5 Key Strengths in 2018). Retrieved August 2018, from https://www.strategicmanagementinsight.com/swot-analyses/walmart-swot-analysis.html

Lee, S., & Kim, D. (2014). An optimal policy for a single-vendor single-buyer integrated production–distribution model with both deteriorating and defective items. International Journal of Production Economics, 147, 161-170.

Walmart. (N.D). Becoming a supplier. Retrieved August 2018, from Walmart: https://corporate.walmart.com/suppliers