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Wal-mart Stores Inc was the worlds largest retailer and was started by Sam Walton in

1962 who named it as Wal-Mart Discount City. However before Wal-mart; Sam Walton
owned a number of Ben Franklin Store Chains. Due to this prior experience of owning
smaller variety stores and dealing with its franchised supply chain, he learnt various
business concepts and also was able to selectively purchase merchandise in bulk from
new suppliers and then transport these goods to his stores directly. And then he realized
a new trend of discount retailing which was based on driving high volumes of product
through low cost retail outlets. He also started a new concept of Everyday Low Price
(EDLP) strategy which meant that the products were displayed at a steady price and not
discounted on a regular basis due to which the demand was smoothed and also Wal-
mart did not need to advertise as frequently as the competitors and hence helped in
price reductions. In year 2005, the net sales of Wal-mart was 285.222 billion U.S dollars
which was 7.7% of total retail sales in U.S that was 3.7 trillion U.S dollars


(Figures in US$ mn)| 2000| 2001| 2002| 2003| 2004| 2005| 2006| Net Sales| 1,56,249|
1,80,787| 2,04,011| 2,29,616| 2,56,329| 2,85,222| 3,12,427| Growth % (Y-O-Y)| -|
15.70%| 12.85%| 12.55%| 11.63%| 11.27%| 9.54%| Inventories| 19,296| 20,987| 22,053|
24,401| 26,612| 29,762| 32,191| Growth % (Y-O-Y)| -| 8.76%| 5.08%| 10.65%| 9.06%|
11.84%| 8.16%|

From the year 2000 to 2006 net sales have increased 99.95%. In 2001 to 2002 inventory
levels grew at only 5.53% and then more than doubled to an increase of 10.65 % in
between 2002 and 2003.

(Figures in US$ mn)| 2000| 2001| 2002| 2003| 2004| 2005| 2006| Gross profit (in
millions)| 34,424| 40,067| 44,914| 51,317| 57,582| 65,429| 72,036| Gross profit return
on...The companys founder is Sam Walton.

This phenomenal growth of Wal-Mart is
attributed to its continued focus on customer needs and reducing cost through efficient supply
chain management practices.

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).
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
Wal-Mart believed that it needed drivers who were committed and dedicated to customer

Wal-Mart emphasized the need to reduce purchasing costs and offer the best price to the customer.
The company directly procured from manufacturers, by passing all intermediaries.
Wal-Mart finalizes a purchase deal only when it is fully confident that the products being bought is
not available else where at a lower price.
Logistics Management
An important feature of Wal-Marts logistics infrastructure was its fast and responsive
transportation system.

Inventory Management
The order management and store replenishment of goods were entirely executed with the help
of computers through the Point-of-Sales (POS) system.
Through this system, it was possible to monitor and track the sales and merchandise stock levels
on the store shelves.
RFID Technology
Wal-Mart planned to replace bar-code technology with RFID technology.
The company believed that this replacement would reduce its supply chain management costs
and enhance efficiency.
It gives us vivibility to where the product is .smart application will be able to direct our associates to
where the product is .so we can replenish our shelf sooner .we are still working through most of
issues .
This technology help to to reduce cost and over sock expense
Research analysis shows that 25 percent of tehe out of stock inventory in the united state was not
really out of stock .it is miss placed on the floor wal mart stores with RFID shows net improvement of
16 percent fewer out of stock on the rfid tagged products that were tested