Wal-Mart

A Symbol of Success
‘n’
Innovation
 Group Members

• Tauseef Ahmed Roll No. 16

• Rajesh Roll No. 30
• Chandan Kumar Roll No. 46
• Ajay Singh Roll No. 47
• Satyesh Kumar Singh Roll No. 48
 Introduction
 Founder: Sam Walton (Applied 10ft rule)
 Year Founded: 1962
 Primary Products: Softgoods, Hardgoods,
Electronics, Groceries.
 Revenue: $404.16 Billion (2009)
 No. of Employees: 2.1 million (2009) approx
 Major Competitors: Costco Wholesale, Kmart,
Target
 Headquarters: Bentonville, Arkansas
 India Operation: Begun from May, 2009
 Retailing Formats

Mom-and-Pop Stores
Mass Discounters
Warehouse Stores
Category Killers
Departmental Stores
Boutiques
 Catalog Retailers
 Franchise
 Convenience Store
 Vending
 Wal-Mart Figures
 Market Capitalization: US $ 228 billion*
 Revenue: US $ 387 billion*
 Operating Income: US $ 22 billion*
 Net Income: US $ 12.7 billion*
 Total Assets: US $ 163.54 billion*
 Total Equity: US $ 64.6 billion*
 Employees: More than 2,100,000+
Information Technology @ Wal-Mart
 Technology Innovations
Introduced POS system in 80s:

A computerized system for item identification, price

determination, sales receipt and sales data
maintenance.

Benefits:
 Handles data efficiently
 Avoids overstocking
 Better inventory management
 Technology Innovations (contd.)
Centralized Communications in 90s:

 $600 million telecommunications link

 First stage - Stores to Central computer system
 Second stage - Central computer system to supplier’s

Benefits:
 Direct reordering and coordination
 Lesser money in inventory
 Lower manufacturing costs
 Technology Innovations (contd.)
Bar Code History & RFID

Bar Code came into being in 70s

Development of Universal Product Code (UPC)
RFID – radio frequency identification devices
Incoming shipments with RFID tags

Benefits:
One stop information
Control on physical movement
Lesser time to find
 Technology Innovations (contd.)
UCCnet
 Non profit subsidiary of Uniform Code Council (UCC)
 Provides data registry service for SCM
 Collaboration between suppliers and marketers
 Came into being to counter lack of data synchronization
 Suppliers need to be UCCnet compliant

Benefits:
 Product details made available electronically
 Reduces product data-entry time
HUB AND SPOKE
SYSTEM
In the early 1970s, Wal-Mart became one
of the first retailing companies in the
world to centralize its distribution system,
pioneering the retail hub-and-spoke
system.

Under the system, goods were centrally

ordered, assembled at a massive
warehouse, known as ‘distribution center’
(hub), from where they were dispatched
to the individual stores (spoke).
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 The hub and spoke system enabled Wal-Mart to achieve
significant cost advantages by the centralized purchasing of
goods in huge quantities and distributing them through its
own logistics infrastructure to the retail stores spread
across the US

Retail
stores

Retail Distribu Retail

tion
stores center stores

Retail
stores
POINT OF
SALE
Introduced POS system in 80’s

A Computerized system for item identification, price

determination, sales receipt and sales data
maintenance.

Benefits:-
-Handles data efficiently
-Avoids overstocking
-Better inventory management
OICE-BASED ORDER FILLIN
(VOF)
In 1998, Wal-Mart installed a voice-based order filling
(VOF) system in all its grocery distribution centers.

Each person responsible for order picking was

provided with a microphone/speaker headset,
connected to the portable (VOF) system that could be
worn on waist belt.

They were guided by the voice to item locations in

the distribution centers.
 The VOF system also verified
quantities picked, and could respond
to a variety of requests such as
providing product detail (type, price,
barcode number, etc.)

By installing the VOF system, Wal-Mart

eliminated mis picks and product
labeling costs since the system did not
require paper lists and labels to be
affixed on the goods.

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VOF Model
 Flow-Time Analysis: Wal-Mart
 Wal-Mart’s merchandise replenishment cycle is no more than
48 hrs.
Point-of-sale Data is Orders are Merchandise is
Customer Merchandise The store will re-
system transmitted to generated from loaded onto
made a is delivered to stock the shelves
captures data warehouses previous-day trucks using
purchase the store with merchandise
in real-time for Inv. Mgmt. sales cross-docking

Retail Link Merchandise is

Merchandise
transmits manufactured
is shipped to
data to based on historical
warehouses
supplier and real-time data

 Retail Link – real-time point-of-sales (POS) data transmission

 Cross Docking

 Fleet of 7,000 trucks in US

 Flow-Time Analysis: Wal-Mart
W a lm a rt’s C e n tra lize d H u b -a n d -
S p o k e S y s te m o f W a re h o u s e s a n d
D is trib u tio n C e n te rs

2 5 0 m ile
ra d iu s
Flow-Time Analysis: Advantages of
Cross Docking
 Reduces operating costs.

 Increases throughput.

 Reduces inventory levels.

 Helps in increase of sales space.

 Eliminates unnecessary handling and storage of product.

 Reduces product damages and product obsolescence.

 Supplier Management: Retail Link
 Retail Link is a decision support system

 It is a bridge between Wal-Mart and its suppliers

 It is an address you can visit via Internet to retrieve

the sales data, inventory data, information on its
development
 Inventory Management
Point-of-sale Data is Orders are Merchandise is
Customer Merchandise The store will re-
system transmitted to generated from loaded onto
made a is delivered to stock the shelves
captures data warehouses previous-day trucks using
purchase the store with merchandise
in real-time for Inv. Mgmt. sales cross-docking

Retail Link Merchandise is

Merchandise
transmits manufactured
is shipped to
data to based on historical
warehouses
supplier and real-time data

• Inventory Management:
 Reducing critical activity times
 Eliminating non-value-adding activities
 Moving work from critical to non critical activities
 Redesigning the process to replace sequential with parallel processing
 RFID
Radio Frequency Identification
 Automated Data collection
based on an electronics –
not a barcode
 Tag can be imbedded in the
product or stuck on the
exterior case or pallet
 Reader instead of a barcode
scanner
 Allows fully automated data
collection with the use of
portals
 Can read many ID tags at a
time
How does an RFID work?
 Inventory Management: RFID
 Wal-Mart is the most famous retailer implementing
RFID in its supply chain management system in
2005.

 It required its top 100 suppliers to use RFID

technology at the pallet and case level by January
2005, 200 by January 2006, 300 by January 2007,
and so on…
 RFID Read Points

WAL-MART STORE READ POINTS

Application of RFID
In
Wal-Mart
 Why RFID?
• Reduce the possibility of inventory shrinkage and out-of-stock situation.

• Improve fulfillment rates.

• Improve the customer service.

• Reduce inventory and labor cost.

• Eliminate many manual process and improve the operation efficiency.

• Give suppliers visibility into shipments.

 RFID Study?
Reducing out of stock?

• 8% of all items are out of stock (at any point of

time)
• Estimated potential lost sales:
» Retailers: 3.4%
» Suppliers: 2.6%
• 26% improvement from no RFID to full RFID
 CENTRALIZED
COMMUNICATION
Centralized Communications in 90s

$600 million telecommunications link

First stage - Stores to Central computer system

Second stage - Central computer system to supplier’s

Benefits:
Direct reordering and coordination
Lesser money in inventory
Lower manufacturing costs
RETAIL LINK SYSTEM
 In 1991, Wal-Mart had invested approximately $4
billion to build a retail link system.

More than 10,000 Wal-Mart retail suppliers used the

retail link system to monitor the sales of their goods
at stores and replenish inventories.

Details of daily transactions (~10 million per day)

were processed through this system.

Retail Link connected Wal-Mart’s EDI network with an

extranet, accessible to Wal-Mart’s thousands of
suppliers.

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 The suppliers could find out how their product was
performing vis-a-vis competitors’ products in a
particular product category.

Wal-Mart owned the largest and most sophisticated

computer system in the private sector.

The company used Massively Parallel Processor (MPP)

computer system to track the movement of goods and
stock levels.
All information related to sales and inventories are
passed on through an advanced satellite communication
system.

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 Electronic
Data
Interchange
EDI allows Wal-Mart to exchange business critical
information, such as purchase orders, invoices,
advance ship notices, etc with its suppliers.

EDI enabled the suppliers to download purchase

orders along with store-to-store sales information
relating to their products sold.

On receiving information about the sales of various

products, the suppliers shipped the required goods
to Wal-Mart’s distribution centers.

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In October 2002, Wal-Mart asked its 14,000 suppliers to
switch over from the existing Value Added Networks (VAN)
EDI to web enabled EDI

VANs route and manage EDI messages for their customers

This increased efficiency in turn allows Wal-Mart to improve

customer services, lower expenses and increase
productivity

By implementing web-EDI, Wal-Mart can save millions of

dollars in the form of license fees to the private VANs

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 Bibliography
• www.cio.com
• www.walmart.com
• www.wikipedia.org
• www.stanford.edu
Thank you for Your Patience &
Support