Supply chain

management at
Wal-MART

 Started in 1962 by Sam Walton with a new trend of discount retailing

based on driving high volumes of product through low cost retail outlets
In U.S retail sales reached $2.8 tn in 2005 in which general
merchandise constituted $525.7bn i.e 18.38%
Top 10 global retailers reached sales of $867.2bn in which Walmart
constituted 36% i.e $312.5bn in 2006
Walmart U.S stores sales reached $209.9bn(67.2% of total firm
sales),SAMs club reached $ 39.6bn(12.7%) and international reached
$62.7bn(20.1%)
Private labels sales constituted 20% of total Walmart revenue and 8%
of walmarts sales was from suppliers P&G and Gillete after its aquisition

Walmart competitors in different areas:

In general merchandise Sears and Target
In department store Dillard,Federated,J.C.Penney
In grocery store Kroger,Albertson,safeaway
Membership only warehouse Costco
Walmart had 6500 stores of which 3900 were in U.S and 2600 in
other countries ,90,000 suppliers globally with 114 U.S distribution
centres located approximately 139 miles away from stores and
1,00,000 SKUs
It has 1.3mn U.S employees and 1.8mn worldwide and on average
138mn customers are served per week
Strategy: To provide a broad assortment of quality merchandise
and services at EDLP

Logistics division:

It had 75000 persons and had a private truck fleet with 7800 drivers
Backhaul revenue generated per year by the trucks is $1bn
Purchasing:
Directly worked with buying offices and role of middleman was removed
to ensure that correct mix of staples and new items were ordered
Distribution process:
Products are picked up at suppliers warehouse by inhouse trucking
Shipped to distribution centre
Cross docked or directly transferred to stores
Retail strategy:
EDLP which smoothed out demand.Worked with suppliers on rollback
campaigns

Information systems:

Retail link which stores data on every sale made during 2 decade
period
Implemented CPRF,VMI
Video message broadcasting
Goal:
To keep inventory growth slower than sales growth
Supply chain improvement initiatives:
Remix: Redesign of network of distribution centres,fast moving
merchandise to be shipped from High velocity food distribution
centres
RFID: For tracking inventory with goal of increasing instock rates at
store level,16% fewer out-of-cost on RFID products was achieved

Issues:

In U.K ASDA is lagging behind Tesco

It sold 16 stores in south korea to its biggest discount chain
Exited from german market with losses of $1bn after 8 years of
its failure to turnaround its 2 acquisitions
It is also suffering in its core domestic market and posted its first
decline in profit in aug-2006

ensuring supply chain a key competitive

advantage for the firm?

Some inventory can be had at the stores for emergencies

Collaborate with distributors to avoid the cost of transport

20 years data-can be reduced to lower time frame-as it eats up lot of

memory

Some flexibility to the manufacturer-in shelfing

Go online

Favour memberships

Lessons that Indian Marketing firms draw

to manage marketing logistics better

Use of technology

Higher gains after the implementation of technology

Integration with suppliers-efficiency increases