Walt Disney was founded on October 16th, 1923, The Walt Disney Company is the world’s second-largest entertainment and media conglomerate after Comcast. Disney was founded as the Disney Brothers Cartoon studios by two brothers, Walt Disney and Roy O. Disney. The very first short film created by Walt Disney was “Alice in Wonderland”. (Chepkemoi, 2017)
Walt Disney’s mission is “to entertain, inform and inspire people around the globe through the power of unparalleled storytelling, reflecting the iconic brands, creative minds and innovative technologies that make ours the world’s premier entertainment company”. (Disney, n.d.)
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The company primarily operates in the United States of America and Canada. The headquarters of the company is located in Burbank, California, and has employed 166,000 people nationwide. (MarketLine, 2013). According to the company’s report, they have an annual revenue of $55,137 billion in 2017 and it increased by 11.86% by June 30, 2019. (MacroTrends, n.d.)
Walt Disney acquired Fox’s FX and National Geographic cable channels. Together both companies [ Fox and Disney] generated $16.3 billion in revenue in 2017. (Munsif Vengattil, 2017)
John Lund, Senior Vice President, Supply Chain Management at Walt Disney describes the supply chain as “the flow of material, information, and currency between suppliers and guests”. Disney has multiple supply chains which support different aspects of the business from nightmare spectators to fireworks at Magic Kingdom. The company’s largest and most complex supply chain is retail, food, and beverages.
The primary area of focus of Supply Chain Management is Disney Parks and Resorts. Disney has about hundreds of shops and restaurants around the large resorts,
Orlando, Hong Kong, Tokyo, Paris and Anaheim. Disney-specific initiatives include:
- Optimal Item assortments
- Optimal product flow
- Improved risk assessment tools. (Lund, 2019)
Visiting Disney parks does not end with just rides and attractions, the most important thing, is Disney merchandise. Disney has many warehouses but the largest has over 400,00 square feet. 500 cast members working throughout the year to deliver all merchandise. In the largest warehouse, they handle 20,000 unique items and they are constantly trying to innovate and bring new products to the theme parks and other Disney outlet stores.
Every cast member in the warehouse has a radio frequency device that tells them what products need to be re-ordered which needs to be stocked across 300 stores.
How does the cast member know which stores to replenish?
Each product in the Disney stores has a barcode, when scanned by the cast member, it shows how many of these products are left in that particular store which makes it easy for them to analyze their sales and when to send in the next batch of products. After the products are placed in totes that need to go to locations that need more products, it is put on the conveyer belt that takes them to quality assurance, where the products are checked by the vendor and also the quality assurance team runs a Disney-specific high-quality test. There are 120 tractor-trailers that Disney owns which take the products to their specific locations. Disney does not hire a third-party logistics company. They have about twenty to twenty-five trucks of merchandise that leave the warehouse every day to serve the whole Walt Disney World theme parks and the cruise lines. The team drives about 800,000 miles a year delivering merchandise.
Since data is 3-5 years old, now the distribution centers are bigger and more advanced.
According to the director of Disney’s Distribution Service warehouse, the biggest component in making sure that the operations run smoothly is having “wayfinders.”
Wayfinders are different solid-colored lines that run along and through the warehouse as a path to get around the warehouse safely. (Armor, 2015)
Multiple ERP, WMS, TMS, and APS systems were deployed but one of the main ERP systems is SAP.
Systems Applications and Products aka SAP is a software that contains a number of modules that covers every aspect of business management. It is the #1 Enterprise Resource Planning software in the market. SAP has over 140,000 installations worldwide.
Advantages of implementing SAP technology: (Poonam, 2019)
- a. Flexibility: This system of ERP allows the organization to customize their protocols inside the SAP structure.
- b. Productivity: With the use of SAP there is no requirement of repetitive data entry inside various software programs.
- c. Cost Reduction: SAP majorly helps in cost reduction by using only one software system to manage an organization’s information and produce reports.
- d. Cloud: SAP has 20+ applications on the cloud including Business ByDesign, Travel OnDemand, etc.
Disadvantages of implementing SAP technology:
- a. Complexity: To build SAP is a complicated software to build.
- b. Expensive: To implement the software, the company will incur a high cost as they need to hire a programmer or two, and buy business consultants, which can be cost-effective
- c. Issue with Flexibility: As I mentioned earlier, SAP is flexible but that depends on what is being customized.
- d. Time: Since the SAP system is so extensive, it takes a lengthy implementation time.
Disney is committed to establishing and seeking a positive environment for future generations. The company aims at conserving water, energy and ecosystems.
To reduce greenhouse gas emissions, to minimize waste, and support a sustainable environment. Disney is engaged in reporting regularly the progress of implementing the policies and achieving targets set.
Some specific green initiatives taken by Walt Disney include Wall-E inspired program that experienced an 18% increase in employees over a year, 80& reuse of wood from different movie sets, and releasing Disneynature- a documentary movie label. (Cruger, 2009)
Disney is eliminating plastic straws and other plastic items, as this help reduce the environmental footprint.
From my own experience at the parks, I have seen that throughout all the parks i.e., Epcot, Hollywood studios, Animal Kingdom, and Magic Kingdom, they had placed three big bins for food waste, tissues, bottles, and plastic cups, plates respectively with clear instructions about recycling and why recycling is good for the environment. Although now they have stopped using plastic altogether, they are contributing to conserving the environment. (Walt Disney, 26)
Lean Management Approach by Walt Disney.
- Visual Management: Walt Disney invented storyboarding where it’s a visual approach to movie-making.
- Continuous Improvement: Disney’s process of continuous improvement is based on the famous Lean Management method of Plan-Do-Check-Act by Edward Deming. This process is applied in all parks in Disney World. Walt Disney believed continuous improvement is the key to sustaining in business.
- Attention to detail: Walt Disney said: “Whatever you do, do it well”. The company should always be aware of where the project is going and what the challenges are that the teams could face. (Marmol, n.d.)
Supply Chain metrics are defined by establishing specific parameters which can be used in analyzing the company’s supply chain performance.
- Cash-to-Cash time cycle: One of several parameters in analyzing supply chain performance. Disney’s Cash to cash Time cycle is 82.55 as of Sept 2019
- Freight Bill Accuracy: While moving merchandise from their main warehouses any issue or error can occur.
- Perfect Order Rate: It measures the success of the ability to deliver the orders without any accidents, damages, delay and losses.
- Day Sales Outstanding [DSO]: Walt Disney’s DSO is at 73.96 as of September 2019
- Inventory Turnover: This helps a business understand the number of times its entire inventory has been replenished. Walt Disney’s inventory turnover is at 10.63 as of sept 2019.
- Gross Margin Return on Investment: This metric offers a fair representation of the gross profit gained on the average inventory. The gross margin return on investment for Disney is 11.96%
- On-time shipping: This is an indicator of the lead time of the products that is being sent to the Walt Disney Parks or the official merchandise stores.
- Return Reason: A lot of products are returned to the sellers due to various reasons. At Walt Disney, most items are returnable but some of the products that are seasonal, one-time launch products cannot be returned to the stores.
- Inventory Velocity: Helps optimize inventory levels by giving a high change of meeting consumer demand.
- Inventory Days of Supply: This metric gives the company a clear number of the days It would take for the product to sell out if it’s not replenished. (Durcevic, 2018)
[ Rates taken from: (Gurufocus, n.d.)]
Walt Disney is a worldwide entertainment company. The Company’s Strategic sourcing and procurement work with all our businesses and suppliers around the globe to bring the best value for Disney Company. Strategic sourcing, it provides many opportunities for partners who are major suppliers to partner with the company to provide their services. It is done by seeking out contracts with companies whether it is local or global. The Walt Disney Company focuses on Technology and continues to invest in technology which brings efficiency to procurement and other processes of the business. (Walt Disney Company)
The company believes that diversifying the suppliers will bring the company great opportunities that help develop, be innovative and cost-effective solutions. The supplier management team from Walt Disney:
- Facilitates a healthy dialogue between Disney and other external groups
- Empowers different providers to compete for sourcing openings.
They manage their suppliers through
- Identification: Disney does not discriminate. They identify LGBTQ, Women, veterans, minorities, etc.
- Qualification: The company is pertinent to different business criteria, for example, abilities, topographical extension, and limit.
- Due Diligence: Walt Disney validates diver certifications like NGLCC and the Department of Veterans. (Walt Disney )
To summarize, Walt Disney has always been a company that manages its operations in a very unique way. The Disney Company’s legacy lived on and Walt Disney’s dream finally came true. Throughout time The Walt Disney Company has discovered itself to fit with society to keep a franchise, it will constantly be equal to the agency that was created with nothing but a dream and a few dollars.
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