Wal –Mart

Presented By

Divya Boddu (07) Nitika Singh(22) Dhaval Parmar(25) Rishika Mittal(30) Sachin Lakade(32) Raj Saxena(35) Swati Randhawa (42) Zahid Anwar (48)

Wal-Mart is the World’s Largest Retail Company 2

About Wal-Mart
Founded in 1962, with the opening of the first Wal-

Mart discount store in Rogers, Arkansas.

 The company incorporated as Wal-Mart Stores, Inc.,

on Oct. 31, 1969.

 The company's shares began trading on OTC markets

in 1970 and were listed on the New York Stock Exchange two years later.

About Wal-Mart
Today, Wal-Mart….  Servers Customers and members more than 200 million times per week at more than 8,692 retail units under 55 different banners in 15 countries. With fiscal year 2010 sales of $405 billion, Wal-Mart employs 2.1 million associates worldwide.

Wal-Mart is ranked first among retailers in Fortune Magazine’s 2010 Most Admired Companies survey.

Wal-Mart mission is to be the place where prices are low

and value and customer service are high everyday.

Background on the Wal-Mart's SCM

Wal-Mart has established critical strategies in multiple functional areas to hit its goals for supply chain management excellence: v v v v 

Financial Operations Logistics Processes People

Wal –Mart’s Supply Chain

Hub and Spoke System
In the early 1970s, Wal-Mart became one of the first

retailing companies in the world to centralize its distribution system, pioneering the retail huband-spoke system. assembled at a massive warehouse, known as ‘distribution center’ (hub), from where they were dispatched to the individual stores (spoke).

 Under the system, goods were centrally ordered,

Hub and Spoke System…
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 U.S.

Wal-Mart’s Procurement
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.

Wal-Mart’s Procurement…

spends a significant amount of time meeting vendors and understanding their cost structure including the supplier’s point of purchase. no early or late shipment is accepted. (eg Levis) certain that the manufacturers are doing their best to cut down costs.

 Wal-Mart has high expectations on its suppliers and

 By making the process transparent, the retailer can be

Using EDI for Procurement
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.

Logistics Management

important feature of Wal-Mart’s logistics infrastructure was its fast and responsive transportation system. 3500 company owned trucks.

 The distribution centers were serviced by more than

Wal-Mart’s trucks generate “Back-Haul” revenue by

transporting unsold merchandise on trucks that would otherwise be empty.(private fleet acts as forhire carrier)

Logistics Management…
Wal-Mart believed that it needed drivers who were

committed and dedicated to customer service.

 The company hired only experienced drivers who had

driven more than 300,000 accident-free miles, with no major traffic violation.

Uniform operating standards ensured the avoidance

of miscommunication between traffic coordinators, truckers and store level employees.

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.

The system reduced the handling and storage of

finished goods, virtually eliminating the role of the distribution centers and stores. place called the “staging area.”

 The manufacturer directly forwarded the goods to a  The goods were packed here according to the orders

received from different stores and then directly sent to the respective customers.

Inventory Management

invested heavily in IT and communication systems to effectively track sales and merchandise inventories in stores across the country. good communication system.

 With the rapid expansion, it was essential to have a  Hence,

Wal-Mart set up its own satellite communication system in 1983.

Inventory Management…

was able to reduce unproductive inventory by allowing stores to manage their own stocks, reducing pack sizes across many product categories, and timely price markdowns. Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most, while reducing the overall inventory levels.

 Instead of cutting the inventory across the board,

Inventory Management…
Employees at the stores had the “Magic Wand,” a

hand-held computer which was linked to instore terminals through a radio frequency network.
 These helped them to keep track of the inventory in

stores, deliveries, and backup merchandise in stock at the distribution centers.

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.

Voice-based Order Filling (VOF)
In 1998, Wal-Mart installed a voice-based order

filling (VOF) system in all its grocery distribution centers.

 Each person responsible for order picking was

provided with a microphone/speaker headset, connected to the portable (VOF) system that could be worn on waist belt. the distribution centers.

 They were guided by the voice to item locations in

Voice-based Order Filling (VOF)…
The VOF system also verified quantities picked, and

could respond to a variety of requests such as providing product detail (type, price, barcode number, etc.)

 By installing the VOF system, Wal-Mart eliminated

mispicks and product labeling costs since the system did not require paper lists and labels to be affixed on the goods.

Inventory Management… (quick replenishment)
Since the floor area of any Wal-Mart store varied

between 40,000 to 200,000 square feet, movement of goods within the store was an important part of logistics operations.
 Wal-Mart made significant investments in IT to

quickly locate and replenish goods at the stores.

Inventory Management… (pretty darn quick displays)
The company asked its suppliers to ship goods in

store-ready displays called pretty darn quick (PDQ) displays. the stores ready to be boarded on the racks.

 Goods were packed in PDQ displays that arrived at  Wal-Mart’s employees could directly replace the

empty racks at the stores with fully packed racks, instead of refilling each and every item at the racks.

Inventory Management… (retail link system)
In 1991, Wal-Mart had invested approximately

billion to build a retail link system.


 More than 10,000 Wal-Mart retail suppliers

used the retail link system to monitor the sales of their goods at stores and replenish inventories. day) were processed through this system.

 Details of daily transactions (~10 million per

Inventory Management… (retail link system)
Wal-Mart owned the largest and most sophisticated

computer system in the private sector.

 The

company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels. passed on through an communication system. advanced satellite

 All information related to sales and inventories was

Inventory Management… (retail link system)
Retail Link connected Wal-Mart’s EDI network with

an extranet, accessible to Wal-Mart’s thousands of suppliers.

 The suppliers have access to real time sales data on

the products they supplied down to individual SKUs.
 The suppliers could find out how their product was

performing vis-a-vis competitors’ products in a particular product category.

 

By the mid 1990s, Retail Link had evolved to not

confined to inventory management alone, but also covered CPFR.

In CPFR, Wal-Mart worked together with its key

suppliers on a real-time basis by using the Internet to jointly determine product-wise demand forecast. partners to share forecasts and results data through the Internet, in order to reduce inventory costs while at the same time, enhancing product availability across the supply chain.

CPFR is defined as a business practice for business

CPFR: Hard to implement
Though CPFR was a promising supply chain

initiative aimed at a mutually beneficial collaboration between Wal-Mart and its suppliers, its actual implementation required huge investments in time and money. implement CPFR complained that a significant amount of time had to be spent on developing forecasts and analyzing sales data.

 A few suppliers with whom Wal-Mart tried to

In October 2002, Wal-Mart asked its 14,000

suppliers to switch over from the existing Value Added Networks (VAN) EDI to web enabled EDI. customers.

 VANs route and manage EDI messages for their  By implementing web-EDI, Wal-Mart can save

millions of dollars in the form of license fees to the private VANs.

RFID Technology
(Radio Frequency Identification)
In efforts to implement new technologies to

reduce costs and increase the efficiency, in July 2003, Wal-Mart asked its top 100 suppliers to be RFID compliant by January, 2005. with RFID technology.

 Wal-Mart planned to replace bar-code technology  The company believed that this replacement

would reduce its supply chain management costs and enhance efficiency.

RFID Technology
(Radio Frequency Identification)
Because of the implementation of RFID, employees

were no longer required to physically scan the bar codes of goods entering the stores and distribution centers, saving labor cost and time.
 Wal-Mart expected that RFID would reduce the

instances of stock-outs at the stores.

RFID Technology
(Radio Frequency Identification)
  Although Wal-Mart was optimistic about the benefits of

RFID, analysts felt that it would impose a heavy burden on its suppliers. to incur an estimated $20 Million.

  To make themselves RFID compliant, the suppliers needed   Of this, an estimated %50 would be spent on integrating the

system and making modifications in the supply chain software.

Wal-Mart and its Indian Venture
In August 2007, Wal-

Mart announced an agreement with Bharti Enterprises to establish a joint venture (50-50), Bharti Wal-Mart Private Limited, for wholesale cash-and-carry and back-end supply chain management operations in India.

 

First Best Price Modern Wholesale opened in May

2009. Now there are 3 such retail outlets.

 Walmart’s office in Bangalore serves as Walmart’s

Global Procurement (GP) hub for the sourcing of merchandise from India and Sri Lanka to Walmart stores and Sam’s Clubs globally

Benefit of SCM to Wal-Mart

vIncreasing visibility into all business transaction on a timely basis v vStreamlining the physical pick pack process leading to reduced errors

and redundant labor
v vEliminating charge backs and fines by retailer compliance and

permitting access to all data from EDI through shipping
v vKeeps inventory costs down v vQuickly and effectively predict the needs of customers in different

areas and from different backgrounds

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