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 employees
 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,
efficient.
Insight to World’s Best Supply Chain Management
Practices by Wal-Mart: -

PROCUREMENT
 It always emphasized the need to reduce its purchasing costs

 procured goods directly from manufacturers, bypassing all

intermediaries.

 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.
DISTRIBUTION
 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
server.
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 centers.

 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
trailer.

 Wal-Mart also invented unique “Cross-Docking” technique.

 This reduced cost of sales and made everyday low prices

possible.

 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.
INVENTORY MANAGEMENT
 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)
 RFID tag is a small microchip with an antenna to enable
them to receive and respond to radio-frequency queries from
an RFID transceiver.

 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
manufactured
• 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.