Wal-Mart and Levi Strauss and Competitive Advantage
Competitive advantage is important for businesses. However, without assistance from an organizations entire supply chain, competitive advantage is quickly lost. Whether in the form of technology, cost factors, or customer support, the supply chain plays a critical role in achieving and maintaining competitive advantage. Wal-Mart and Levi Strauss are two companies that have successfully used their supply chains to gain competitive advantage.
Wal-Mart is the largest and most profitable retailer in the world. In the United States, Wal-Mart is the largest grocer and private employer. Wal-Mart attains competitive advantage in different ways such as its cost structure, product offerings, and distribution assisted by technology, and customer support through empowerment of its employee associates.
Levi Strauss jeans created in 1873 began as a manufacturer of denim workpants with copper rivets used to strengthen the pocket stitching. By listening to its customers, Levi Strauss created the most popular piece of clothing in the world-blue jeans. Levi jeans sold in more than 110 countries has gained competitive advantage through its product offerings, distribution, and customer support.
How Does Supply Chain Usage Gain Competitive Advantage within an Industry
Wal-Mart’s supply chain assists Wal-Mart gain competitive advantage within its industry through the use of effective information technology (IT). By implementing radio frequency identification (RFID) technology into its supply chain, Wal-Mart recognized the potential to track inventory and customer demand while “pushing out the infrastructure costs to suppliers, limit its own exposure to costs, and reap the benefits through its own supply chain” (Evans, 2004, p. 1, para. 4).
Using this information system prevents excess stock by allowing suppliers to access Wal-Mart’s warehousing data to activate automatic reordering of goods. As a result, only 10% of Wal-Mart’s floor space is dedicated to inventory holding versus 25% for the industry.
Levi Strauss with assistance from customer support created the ‘personal pair’ kiosks that allow women to custom fit and design their own jeans. This innovation, which is part of an eight step process, involves taking four measurements from women with preprogrammed data in the kiosks and with assistance form a sales clerk a final inseam measurement made. After the measurements are made, a pair of jeans can be built to order.
The process is guaranteed with home delivery for an additional $5. Even though the “personal pair’ jeans cost $15 more than off the shelf jeans, Levi Strauss’s sales and profits have increased. For example, custom cut jean styles sales were up 49%, manufacturing and distribution costs were reduced by 47%.In addition with the increased price on personal pair jeans along with costs reductions, an increase in pretax profit increased by 467% or from $6 to $34 per pair of jeans (Carr, Lawler, & Shank, 2002, p. 3).