Wal-Mart

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 Wal-Mart Introduction
 Wal-Mart is an American public multinational corporation that runs a chain
of large discount department stores and a chain of warehouse stores.
 Wal-mart ranked first in the global fortune 500 list in the financial year
2001-02 earning revenues of $ 219812 millions.
 Wal-mart was able to achieve a leadership status because of its effective
supply chain

Revenues
Rank Companies
($ millions)
1 Wal-Mart Stores 219812
2 Exxon Mobil 191581
3 General Motors 177260
4 Ford Motor 162412
5 Enron 138718
“Offering significant discounts on prices, he became
successful and acquired a second store in 3 years.”
 SO
SIMPLE

If you sell something

at a really low
price…
 SO
SIMPLE

Wal-Mart will sell it even cheaper…

 Key Issues
 Inflation Rate.

 Growing Competition & Globalization.

 Strategy of Cost Leadership.

 Maintaining and Managing Bulk Inventories.

 Maintaining IT.

 Catering of Customer needs.

 Key Issues
 Highly Automated DC’s & Reducing Transportation and
Shipping Cost.

 Relationship with Vendors, Employees & Customers.

 Efficient Distribution Process & Cross Docking.

 Continuous Demand Chain.

 Wal-Mart Strategy and Structure

WAL-MART STRATEGY & OPERATIONS

STRUCTURE
Enable everyday low prices and above average profitability by procuring, distributing, and
selling products, when and where needed, at lower costs than any competitor.

Operations Structure
Operations Strategy
• Fast Transportation System
• Cross Docking
• Short Response Times
• Low Inventory Level
• Retail Link
• RFID
 Strategies
Procurement & Distribution
 Wal-Mart’s focus has always been to sell goods at a lower
price to the customers.

 They ensured direct purchase form the companies

bypassing the intermediaries. This by passing is one of
the ways to reduce cost.

 Wal-Mart preferred local and regional vendors to the big

players however the vendor who provides the best price
qualifies and gets the deal.
 Strategies
Procurement & Distribution
 Because of bar code technology and hand held computer
systems, managing the center become easier.

 Different bar codes were used to

label different products, shelves and
bins in a center.

 The hand held computers guided an

employee with regard to the location
of a particular product from a
particular bin or shelf.
 Strategies
EDI
 The computer systems of Wal-Mart were connected
to those of its suppliers.
 EDI enabled the suppliers to download purchase
orders along with store-to-store sales information
relating to their products sold.
 On receiving information about the sales of various
products, the suppliers shipped the required goods
to Wal-Mart’s distribution centers
 Strategies
Logistic Management
 Wal-mart has fast and responsive transportation system

 The distribution centers were serviced by more than

3,500 company owned trucks.

 Wal-mart believed that, it needs driver who are

committed and dedicated to customer service.

 The retail stores were considered customers by the

distribution centers.
 Cross Docking

 To make its distribution process more efficient,

Wal-Mart also made use of a logistics technique
called “cross-docking.”

 In this system, the finished goods were directly

picked up from the manufacturing plant, sorted
out and then directly supplied to the customers.
Cross Docking
 Benefits

Benefits from
Cross Docking

Reduces product
obsolescence

Reduce
Reduce
inventory
handling costs storage costs

Reduce Labor
Costs
 Strategies
Inventory Management

Heavily investment in IT and communication

systems.
 Satellite communication system
Walton Said, “ I can walk in the satellite room, where our
technicians sit in front of the computer screens talking on the
phone to any stores that might be having a problem with the
system, and just looking over their shoulders for a minute or two
will tell me a lot about how a particular day is going. On the
screen, I can see the total of the day’s bank credit sales adding
up as they occur. If we have something really important or
urgent to communicate to the stores and distribution centers, I,
or any other Wal-Mart executive can walk back to our TV studio
and get on that satellite transmission and get t right out there. I
can also go every Saturday morning around three, look over
these printouts and know precisely what kind of work we have
had.”
Inventory Management Strategies

IT
Systems

MPP

Retail
Retail
Link
Magic
Link
System
System Wand

POS
RFID system
 Impacts
 Wal-Mart’s Supply chain management practices
resulted in increased efficiency in operations and
better customer service.

 Wal-Mart was one of the first retailers that seriously

invest in it's IT infrastructure. This gave Wal-Mart
stronger foundation in information technology
comparing to competitors.

 Cross Docking also helped Wal-Mart to reduce

inventory storage cost.
 Impacts

 To gain maximum out of cross-docking, Wal-Mart had

to make fundamental changes in its approach to
managerial control.

 Traditionally decisions about merchandising, pricing

and promotions had been highly centralized.

 The cross-docking system change this practice.

 The system change the focus from supply chain to

demand chain
 Benefits Reaped
Wal-Mart
Wal-Mart enjoyed
enjoyed the
the benefits
benefits of
of low
low transportation
transportation cost
cost since
since itit has
has its
its own
own transportation
transportation system.
system.
This
This helps Wal-Mart in delivering the goods to different stores within ( or sometimes less
helps Wal-Mart in delivering the goods to different stores within ( or sometimes less than)
than) 48
48
hours
hours

The
The company
company enjoy
enjoy good
good bargaining
bargaining power
power as
as it
it purchased
purchased huge
huge quantities.
quantities.
The company offered higher discounts than any other retailer
The company offered higher discounts than any other retailer . .

The savings on cost were passed on to the customers,

thereby adding value at every stage and process
 Benefits

Faster Inventory Turnover Elimination of Stock out

Increased Other
Reduction in
Warehouse Spaced Benefits safety stock

Reduction in Lead Time

Bar coding enabled
accurate distribution of goods
 Conclusion

 The case examines the supply chain management

practices at Wal-Mart, the leading retailer in the
world.

 Wal-Mart has been able to achieve respectable

leadership in the retail industry because of its focus
on supply chain management.

 They used the innovative information technology

tools that benefited Wal-Mart’s supply chain
management.
Wal-Mart Supply Chain Flow
Raw Material Manufact
Supplier urer

Distributio Inbound
n Center Logistics

Outbound Retailers
Logistics or Stores

Customers
 Concepts

Introduction and Strategies

Information Other Concepts

Technology
• Bar Code
• RFID Procurement
• Replenishment
• MPP • Just in Time
• Satellite Logistics
• Cross Docking
System and types
• Retail link Inventory
• Driver Handbook
System • Flowcharts of
• Magic Wand Concepts
• EDI
• POS
Systems Benefits and Lesson
Thanks for your attention!