Each distribution center was divided into different sections on the basis of quantity of goods received. Over 80000 items were stocked in these centers. wall mart was a tough negotiator on prices and finalized a purchase deal only when it was fully confident that products being bought were not available else where at a lower price.WAL-MART’S SUPPLY CHAIN MANAGEMENT Wal-Mart Stores. (branded as Walmart) is an American public corporation that runs a chain of large. and listed on the New York Stock Exchange in 1972. discount department stores. 1969. while it was forced to pull out of Germany and South Korea when ventures there were unsuccessful. WalMart is the largest private employer and the largest grocery retailer in the United States. WAL-MART’S SUPPLY CHAIN Procurement and distribution Wal-mart always emphasized the need to reduce its purchasing costs and offer best prices to its customers . The company was founded by Sam Walton in 1962. Wal-mart had over 40 distribution centers located at different geographical locations in the US. Brazil. Canada. Wal marts own warehouses directly supplied over 85 % of the inventory as compared to 65% by competitors. in Japan as Seiyu. Inc. It is the world's largest public corporation by revenue. The distribution center ensured a steady supply and consistent supply of products to support the . It has wholly-owned operations in Argentina. Wal-Mart's investments outside North America have had mixed results: its operations in South America and China are highly successful. and in India as Best Price. The company procured goods directly from manufacturers bypassing all intermediaries. according to the 2008 Fortune Global 500. others point out that Wal-Mart's rapid growth and logistical efficiency has enabled it to bring lower prices to consumers and more low paying jobs and new small businesses to the communities in which it operates. Walmart operates in Mexico as Walmex. in the United Kingdom as Asda. incorporated on October 31. and Puerto Rico. It also owns and operates the Sam's Club retail warehouses in North America. Conversely.

Inventory management Wal mart had developed an ability to cater to the individual needs of its stores . This vast fleet allowed the company to ship goods from distribution centers to stores within two days and replenishes the stores shelves twice a function. Wal mart generally moved the merchandise loaded trailers from the distribution centers to the retail stores serviced by each distributing center. wal mart was able to reduce unproductive inventory by allowing stores to manage their own stocks. The system reduced handling and storage costs. To make the distribution process more efficient wal mart made use of a logistics technique known as cross docking.Wal mart used sophisticated bar-coded technology and hand held computer systems. Logistics management An important feature of wal marts logistics infrastructure is that it was fast and responsive transportation system. Instead of cutting inventory across the board wal mart made full use of its it capabilities to make more inventories available in case of items customers most wanted while reducing overall inventory levels. Wal mart invested heavily in IT and communication systems to effectively track sales and merchandise inventories in stores across the country . Every employee had access to real time information regarding inventory levels of all products in the center. managing the center became easier and more economical. Stores could choose from a number of delivery plans . The distribution centers were serviced by more than 3500 company owned trucks. wal mart set up its own satellite communication system in 1983 . Retail stores were considered as customers by the distribution centers. It also helped in identifying items which were low in stock and automated . In this system the finished goods were directly picked up from the manufacturing plant of a supplier sorted out and directly supplied to customers. Wal mart networked its suppliers through computers. reducing pack sizes across many product categories and timely price mark downs. For instance there was an accelerated delivery system by which stores located within a certain distance of a geographical center would receive replenishment within a day.

Stock outs were also completely eliminated . it invested 4 billion to build a retail link. It also made use of bar-coding and RFID to manage its inventories . It also helped in reducing the dependency on distribution center management personnel resulting in minimization of training costs and errors. By making efficient use of technology in all its operations wal mart successfully provides uninterrupted service to its customers suppliers stock holders and trading partners Conclusion The benefits of an efficient supply chain management included reduction in lead time faster inventory turnover accurate forecasting increased warehouse space reduction in safety stock and better working capital utilization.ordering.

retailers and logistics support providers) playing large roles. with a number of third party players (distributors. To implement their vision while retaining their focus on farmers.000 litres of milk from 2. Every day Amul collects 447. packaged products. The distribution network Amul products are available in over 500. The distinctive features of this paradigm involves managing a large decentralized network of suppliers and producers. this today forms the robust supply chain behind GCMMF’s endeavors. . lean and efficient supply chain. GCMMF transacts on an advance demand draft basis from its wholesale dealers instead of the cheque system adopted by other major FMCG companies. and breakthrough leadership.000 retail outlets across India through its network of over 3. The vast and complex supply chain stretches from small suppliers to large fragmented markets. Managing this supply chain efficiently is critical as GCMMF's competitive position is driven by low consumer prices supported by a low cost system of providing milk at a basic. a hierarchical network of cooperatives was developed. affordable price. through its innovative practices. for India to become the world’s largest milk producer. This practice is consistent with GCMMF's philosophy of maintaining cash transactions throughout the supply chain and it also minimizes dumping. simultaneous development of markets and suppliers.500 distributors.AMUL SUPPLY CHAIN MANAGEMENT PRACTICES AMUL is a dairy cooperative in the western India that has been primarily responsible. converts the milk into branded.12 million farmers . and delivers goods worth Rs 6 crore (Rs 60 million) to over 500.000 retail outlets across the country. Management of this network is made more complex by the fact that GCMMF is directly responsible only for a small part of the chain. There are 47 depots with dry and cold warehouses to buffer inventory of the entire range of products.

• The network explicitly includes secondary services to the farmer-suppliers. All GCMMF branches engage in route scheduling and have dedicated vehicle operations. GCMMF takes responsibility for coordinating with the distributors to assure adequate and timely supply of products. AMUL adopted the network as the basic model for long-term growth. This just-in-time inventory strategy improves dealers' return on investment (ROI). cheese etc. The distribution network. product allocations and in developing production plans. and with liquidity problems as they lack direct access to financial institutions. It also works with the Unions in determining product mix. logistics and transportation services are typically not professionally managed. THE BUSINESS MODEL from the very beginnFng. Traditional methods practiced in western economies are not adequate to realize the market potential and alternative approaches are necessary to tap this market. Customers: In comparison with developed economies. in the early 1950s.Wholesale dealers carry inventory that is just adequate to take care of the transit time from the branch warehouse to their premises. on the other hand. Third Party Logistics Services: In addition to the weaknesses in the basic infrastructure. traditional market mechanisms are not adequate to assure sustenance and growth of these suppliers. poor. with little regard for quality and service. Again. The Unions. the market for dairy products in India is still in an evolutionary stage with tremendous potential for high value products such as ice cream. is quite reasonable with access to rural areas of the country. In addition to outbound logistics. • Several of the entities in the network are organized as cooperatives linked in a hierarchical fashion. coordinate collection logistics and support services to the . on the other hand. Suppliers: A majority of the suppliers are small or marginal farmers who are often illiterate.

These include logistics of milk collection. This is particularly critical for a perishable product such as liquid milk. Some interesting mechanisms exist for coordinating the supply chain at GCMMF. and many are not professionally managed. some veterinary services etc. the procurement prices were set so as to provide fair and reasonable return. only part of the surplus generated by the Unions is paid to the members in the form of dividends Managing Third Party Service Providers: Unions focused efforts on these activities and related technology development . All other activities were entrusted to third parties. Hence. cash payments for the milk supply was made with minimum of delay. the Unions and GCMMF have developed a number of mechanisms to retain control and assure quality and timely deliveries. The marketing efforts were assumed by GCMMF. distribution of dairy products. In what follows we elaborate on these aspects in more detail and provide a rationale for the model and strategies adopted by GCMMF. Coordination for Competitiveness Coordination is one of the key reasons for the success of operations involving such an extensive network of producers and distributors at GCMMF. The member-suppliers were typically small and marginal farmers with severe liquidity problems. First. It is worth noting that a number of these third parties are not in the organized sector. the cooperative realized that sustained growth for the long-term was contingent on matching supply and demand. Simultaneous Development of Suppliers and Customers: From the very early stages of the formation of AMUL. the Unions followed a multipronged strategy of education and support. sale of products through dealers and retail stores. while third parties perform the activities. These mechanisms are: . AMUL and other cooperative Unions adopted a number of strategies to develop the supply of milk and assure steady growth. For example. This practice continues today with many village societies making payments upon the receipt of milk. For the long-term. for the short term. Second.member-farmers. aware of the liquidity problems. illiterate and untrained.

This helps in coordinating decisions across different entities as well as speeding both the flow of information to the respective constituents and decisions. They manage the procurement of milk that comes via trucks & tankers from the VSs. They negotiate annual contracts with truckers.Inter-locking Control The objective for developing such an inter-locking control mechanism is to ensure that the interest of the farmer is always kept at the top of the agenda through its representatives who constitute the Boards of different entities that comprise the supply chain. Coordination Agency: Unique Role of Federation Its objective is to ensure that all milk that the farmers produce gets sold in the market either as milk or as value added products and to ensure that milk is made available to an increasingly large sections of the society at affordable prices Supplier Enhancement and Network servicing Their objective is to ensure that producers get maximum benefit and to resolve all their problems. This form of direct representation also ensures that professional managers and farmers work together as a team to strengthen the cooperative. ensure availability of trucks for procurement. establish truck routes. . monitor truck movement and prevent stealing of milk while it is being transported.


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