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Supply Chain Management of Wal-Mart

Wal-Mart Stores, Inc.

 Founded by Sam Walton in 1962, runs a chain of large, discount
department stores.
 In Mexico as Walmex, in the United Kingdom as Asda, in Japan
as Seiyu, and in India as Best price.
 It has 7,870 stores, including 890 discount stores, 2,970
supercenters which are combinated discount and grocery stores
and 600 warehouse stores (Sam's club). 14 countries, 2 million
 Strategy - to target low-income families in rural areas by offering
significantly lower costs.
Four core principles
 focus on the improvement of sales,
 constantly reducing costs to be passed on the customers,
 the adoption of efficient distribution and logistics
management systems for constant flow of the goods
 highly-advantageous innovative information technology (IT)
tools that makes the operating processes even faster,
Insight to World’s Best Supply Chain
Management Practices by Wal-Mart: -

 It always emphasized the need to reduce its purchasing costs
 procured goods directly from manufacturers, bypassing all
 tough negotiator on prices- the products being bought were not
available elsewhere at a lower price.
 Wal-Mart was able to provide replenishments within two days
(on an average) against at least five days for competitors.
 Walmart has around 120 distribution centers around US.
 Goods meant for distribution within the country arrived in pallets,
while imported goods arrived in re-usable boxes or cases.
 Some suppliers delivered goods directly to the stores.
 85% of the goods which were available at the stores passed
through the distribution centers.
 Employees had an access to real-time information regarding the
inventory levels of all the products in the center.
 He has to make two scans _ one to identify the pallet, and the
other to identify the location of stock
 Different barcodes are used to label different products,
shelves and bins in a center.
 The hand-held computer guides the employee with regard to
the location of a particular product from a particular bin or
shelf in the center.
 The quantity of the product required from the center is
entered into the hand-held computer by the employee and
then the computer updates the information on the main
Logistics Management:
 The distribution centers are serviced by more than 3,500 company
owned trucks.
 These dedicated truck fleets shipped goods from DC’s to the stores
within two days and replenish the store shelves twice a week.
 Private Fleet Driver Handbook- purpose is to educate the drivers with
regard to the code of conduct.
 These retail stores were considered as customers by the distribution
 Coordinators give information to the driver as to what is the expected
time of arrival or delivery of the goods .
 There was a gap of two hours between unloading of each
 Wal-Mart also invented unique “Cross-Docking” technique.
 This reduced cost of sales and made everyday low prices
 reduction in lead time, speedy inventory turnover, accurate
forecast of inventory levels, reduction in safety stock,
 reduction in the dependency of the distribution center,
reduction in errors.
 Wal mart used in IT and communications systems to
effectively track sales and merchandise inventories in stores.
 Wal-Mart has its own satellite communication system

-technicians sit in front of the computer screens talking on

the phone to any stores that might be having a problem with
the system,

-important or urgent to communicate to the stores and

distribution centers

-Wal-Mart executive can walk back to TV studio and get on

that satellite transmission and get it right out there.
 Had collaboration with P&G for maintaining the inventory in its stores
 built an automated re-ordering system, which linked all computers
between P&G and its stores and other DC’s.
 The computer system at Wal-Mart stores identified an item which was
low in stock and sent a signal to P&G.
 The system then sent a re-supply order to the nearest P&G factory
through the satellite communication system.
 Wal-Mart also made use of bar coding and radio frequency technology
to manage its inventories.
 used a centralized inventory data system using which the personnel at
the stores could find out the level of inventories
 It has a retail link system were in 10,000 Wal-Mart retail
suppliers used it to monitor the sales of their goods at stores
and replenish inventories.
 details of daily transactions were processed through this
integrated system and were furnished to every Wal-Mart
store by 4 a.m., the next day.
 It also showed whether a product was being loaded in the
distribution center or was in transit on a truck.
 Once the goods were unloaded at the store, the store was
furnished with full stocks of inventories of a particular item
and the inventory data system was immediately updated.
Radio frequency identification
 RFID tag is a small microchip with an antenna to enable them to
receive and respond to radio-frequency queries from an RFID
 Reduces costs of inventory management unique ID code to tell
wherethe product came from and where it was purchased at.
 The store could then figure the purchase done most and try to
advertise such things to you as you shop in their store.
 It helps to manage stock more accurately due to the availability
to track their merchandize so that the shelf in the stores will
never be found empty.
• Retail Inventory Control: product inventory, theft
detection, point-of-sale verification
• Manufacturing: track a product’s progress through
the manufacturing cycle ;track when it was
• Logistics & Supply Chain: moving goods through
loading docks
• Container/Pallet Tracking
• ID Badges and Access Control
• Fleet Maintenance
 individual objects (pallets, cases, boxes,
packages) are equipped with an inexpensive tag
that contains a digital memory chip.
 This chip carries product-related data such as
quantity, price, color, purchase date and
manufacturing date.
 The tag has its own electronic code that can be
read by an interrogator, which is an antenna
containing a transceiver and decoder.
 This interrogator can, from anywhere in the world, send a
signal to the chip and read the information contained in it,
then pass the information on to its host computer.

 The tag is also activated if it passes through an

electromagnetic zone that detects and reads the chip and
then sends the data to the computer.
“Green” logistics
 Wal-Mart in 2000 adopted a new strategy of making logistical
processes more economically friendly.
 “Green” logistics, means implementing a system that can
independently monitor overseas suppliers to make sure they meet
social and environmental standards.
 As per customers environmental concerns, the company launched
a campaign to convince its suppliers to provide environmentally

safe products in recyclable or biodegradable packaging.