Sri Sharada Institute Of Indian Management -Research

Approved by AICTE
Plot No. 7, Phase-II, Institutional Area, Behind the Grand Hotel, Vasant Kunj,
New Delhi 110070 Website: www.srisiim.org

INTEGRATED CASE STUDIES (DM505)

PROJECT REPORT
ON

WALMART CASE STUDY

IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT OF 5th TRIMESTER

Submitted To:Prof. V.P. Gupta

Faculty of SRISIIM

Submitted ByAnmol Raina (20130108)

Amit Singh (20130104)
Nitesh Verma (20130130)
Anurag Choudhary (20130109)

DECLARATION
We hereby declare that the following project report of WALMART CASE STUDY is an
authentic work done by us. This is to declare that all work indulged in the completion of
this work such as research, analysis of activities of macro is a profound and honest
work of ours.

Sri SIIM
Place: New Delhi
Anurag Choudhary(20130109)
Amit Singh(20130104)
Anmol Raina(20130108)
Nitesh Verma(20130130)

PGDM
Batch: 2013-2015

ACKNOWLEDGEMENT
We would like to express our hearty gratitude to our faculty guide,
Prof.V.P.Gupta for giving us the opportunity to prepare a project report on
WALMART CASE STUDY and for his valuable guidance and sincere
cooperation, which helped us in completing this project.

Amit Singh (20130104)

Anmol Raina(20130108)
Anurag Choudhary(20130109)
Nitesh Verma(20130130)

PGDM: 2013 15

TABLE OF CONTENTS
HISTORY OF WALMART................................................................................................................................................1
CURRENT SITUATION......................................................................................................................................................1
GENERAL ENVIRONMENT...............................................................................................................................................2
INDUSTRY ENVIRONMENT..............................................................................................................................................3
COMPETITORS.......................................................................................................................................................................4
STRATERGY............................................................................................................................................................................5
STRATEGIC CHALLENGE......................................................................................................................................................6
CASE STUDY FOR WALMARTS SUPPLY CHAIN MANAGEMENT...................................................................................8
WALMART CASE STUDY QUESTIONS(WITH SOLUTIONS).............................................................................................16
BIBLOGRAPHY/ REFERENCES................................................................................................................................................18

History
Walmart was founded in 1962 by Sam Walton in Rogers, Ark. It is an American multinational retail
corporation that runs chains of large discount department stores and warehouse stores. They focus on
making a difference in the lives of their customers, and helping customers and communities save money
and live better. In 1969, the company officially incorporated as Walmart Stores, Inc. Walmart started its
public trade on the New York Stock Exchange in 1972. With the continued rapid growth, Walmart was
operating in 11 states with 276 stores by the end of 70s decade. In the 1980s, the first Sam's Club opened,
serving small businesses and individuals, and the first Walmart Supercenter opened, combining a
supermarket with general merchandise. In the late 1980s and early 1990s the company rose from a
regional to national giant, Walmart was the number-one retailer in the nation. In 2000s, Walmart focus on
offering customers a seamless shopping experience, whether they are online, in a store or on a mobile
device. Also, during these times, Walmart put some effort in implement several environmental measures
to increase energy efficiency. Today, the company has grown to be the worlds largest and arguably, the
most emulated retailer (History Timeline, 2013).
Current situation
According to Fortune Global 500 list in 2013, Walmart is the worlds second largest public corporation in
world. By 2012, the company employs 2.2 million associates worldwide and serves 200 million
customers each week at more than 10,000 stores in 27 countries (History Timeline, 2013). David Glass, the
CEO of Walmart, states out the two objectives that they focus on:
I.
II.

Providing the customers what they want, when they want it, all at a value.
Treating each other as we would hope to be treated, acknowledging our total dependency on our
associate-partners to sustain our success.

With the balance growth, Walmart is a $466 billion company. In addition, Walmarts net sale achieve
$274.5 billion, with the international contributed $132.5 billion by 2013 (Walmart 2013 Annual report,
2013).

1 | Page

Due to the expansion around the world, Walmart is also facing a lot of competitors in different countries
with different kinds of competition. Primary competition includes department stores like Kmart, Target,
ShopKo, etc. Moreover, some smaller retailers focus on a small niche market, which can also compete
successfully against Walmart.
General Environment
Social --- The social cultural segment is concerned with a societys attitudes and cultural values. A
major social cultural trend is the continued growth of suburban communities. The increasing number
of people living in the suburbs has a number of effects. Walmart continues expanding its current store
capacity to include new products and services for customers. Walmart will build new supercenters in
previously unexplored regions in Canada, which includes plans for 37 new stores in the next fiscal year
(Canadian Press, 2013). In America alone, Walmart established 4,017 stores in central and
convenient locations to serve communities (Global Responsibility, 2013).

Political/legal --- Walmart must carefully analyze the business-related polices. Competition laws,
taxation laws, and labor training laws are areas in which policies can affect Walmarts operation and
profitability a lot. Walmart is facing an issue regarding discrimination of employees based on their
gender. Women are discriminated by not allowing them to sit in supervisory and managerial levels
(Walmart: An Analysis, 2008). There are said to be pending lawsuits waiting for Walmart's notions as
the company has allegedly went against the labor laws. This negative reputation could result in a loss
of competitive advantages, sales, and possibly Walmarts reputation as the worlds leading retail
company. Therefore, engaging in gender equality practices will help contribute to Walmarts success.
Demographic --- For Walmart, demographic segments are analyzed on a global basis, because it
operates internationally. Demographic segments is concerned with many areas such as population size,
age structure and geographic distribution. Walmart is using its wealth of sales and inventory data to

2 | Page

segment based on demographics, allowing it to market to specific age, ethnicity and income brackets
(Brian, 2006). By analyzing the demographic segment, Walmart will know their customers better, so
better services could be provide.
Economic --- Walmart is always sensitive towards economy growth, their sales model which depends
on low margins of profit and a high volume of sales, could alter relatively fast. When economy doing
well, Walmarts low price strategy would be of less importance to customers, in the other hand, during
a time of recession Walmart goal of high volume of sales would be threatened. As a result of the
previously mentioned points, Walmart should conduct a thorough study before entering an unbalanced
economy (Walmart, 2013).
Technological --- Walmart embraced technology to become an innovator in the way stores track
inventory and restock their shelves (Traub, 2012). Walmart has invested heavily in its unique crossdocking inventory system, which can help Walmart to achieve economies of scale to reduce the costs.
With its successful system, Walmart is able to responds quickly at demand changing, maintain low
costs and satisfy its customers. The effort that Walmart put into the supply chain management makes
the company become the leader of this area
Global --- Walmart focus on the global market, the company expands into many different countries.
However, there are different cultures and laws apply to in different countries, which may increase the
risk and expenditure of the company to enter into a new market.

Industry environment
The retailing industry is comprised of the sale of products and merchandise from a static location, such as
a store, or by mail, or online. Retailers purchase products from manufacturers, importers, or wholesalers,
and then separate the products via their channels before proceeding to sell the goods directly to consumers.
3 | Page

Walmart is the industry leader in retail industry. Its product differentiated in many ranges. Other retails
focus on specific market. For example, sears focus on furniture, best-buy focus on electronic device. In
recent years, on-Line retail industry grows so fast. Amazon is the leader in online retail industry. Amazon
also goes international and does well.
Competitors
Walmart faces increasing competition from local, regional, national and international retailers.
Competitors can benefit from the same low offshore manufacturing costs that Walmart has. For the scope of
this assignment, we will focus on Walmarts North America market and briefly touch on the
competition in some foreign markets. In North America, Walmarts primary competition includes
department stores like Targets, Kmart, Canadas The Real Canadian Superstore, and Mexicos
Commercial Mexicana. Competitor of Walmarts Sams Club division are Costco. Meanwhile, several
smaller retailers, primarily dollar stores, have been able to find a small niche market and compete
successfully against Walmart for home consumer sales.
Target would be Walmarts direct competitor. Target is the second largest retail stores after Walmart. A
strategy for Target is that they are able to deliver discount goods at a higher quality as well as offer more
product variety to its customers compared to Walmart. This strategy attracts high-income customers and
generates higher revenue. Their main customer base has an average income of $50,000 per year compared to
Walmarts $35,000 per year (Thomas, 2010). Target also aims to expand globally with its acquisition
of 200 Canadian Zellers stores.
Target isnt the only one slowly eating away at Walmarts retail lead. Costco is also outperforming Sams
club by most measures. Costco grew 26.1% from 2008 to 2012, more than double the rate of Sams Club.
Costco is also larger than Sam's Club, with $97.06 billion of revenue last year versus $53.8 billion, so it's
growing more quickly from a bigger base (Hoium, 2013).

4 | Page

Walmart also faces fierce competition within their foreign markets in German and South Korea. Walmart
entered into German market in 1997 and remained a second player behind Aldi with a 19 percent share. In
2006, Walmart announced its withdrawal from Germany. Its stores were sold to German company Metro.
After entered into the South Korean Market in 1998, Walmart withdrew and sold all 16 of its South Korea
outlets to Shinsegae, a legal retailer, for $882 million (Patrick Hayden, 2002). Shinsegae re-branded the
Walmart as the E-Mart stores.
Strategy

Business-level Strategy
Walmart uses a combination strategy of cost leadership and differentiation. They provide a wider
variety of products and services with the same or better quality at a price that is cheaper than their
competitors can provide. Walmart concentrates on finding ways to lower their costs by constantly
rethinking how to complete their primary and support activities to reduce costs still further while
maintaining competitive levels of differentiation. Their successful supply chain management is an
important way helping them to implement the cost leadership strategy. They has effective inbound
logistics by using just-in-time inventory. And they have cut costs from outbound logistics by creating
better fuel efficiency in their trucks, getting more pallets on a load, and decreasing empty miles driven
by their trucks (Dess, 2012). Walmart also reduces costs by buying in large blocks. Technology plays
a key role in Walmarts supply chain too, it allows Walmart to accurately forecast demand, track and
predict inventory levels, create highly efficient transportation routes, and manage customer
relationships and service response logistics (Walmart's Keys to Successful Supply Chain Management,
2013). In conclusion, Walmart's successful overall cost leadership/differentiation strategy leads to high
entry barriers for competitors.

Corporate-level Strategy
The major reason behind the success of Walmart lies in the fact that the company believes and
concentrates on the strategy of single business, which means more than 95% of its revenue comes
5 | Page

from their grocery business. Over 30 years, the strategy of single business has been contributing
greatly to the success of Walmart, they have never believed in the concept of diversification for the
sustenance of its growth and also its advantages at the competitive level (Market entry strategies of
Walmart in the international arena, 2013).
International-level strategy
Walmart has been able to successfully enter into the global market because of the use of multinational
business strategy. This strategy involves that customers of different countries are treated differently and
hence productivity and profitability are high. It is imperative for Walmart to cater every region's
differences in product preferences; thus, they work under the "Different Stores for Different Folks"
philosophy (Walmart: An Analysis, 2008).

Strategic Challenge
Globalization
Whether you are a local mom and pop shop or a multinational Fortune 500 company, neither can
ignore the realities of globalization and the affect it has had on company processes, from supply chain
to target consumers (Physioc, 2013). As a multinational Fortune 500 company, Walmart is also facing
the challenges by globalization. Firstly, there is a challenge from the suppliers of Walmart. When the
company expand to other countries, they should have different suppliers, because of the different
market they targeting. In this situation, supplier relationship management is an important issue for
Walmart. In addition, understanding the culture where Walmart operates is crucial. Culture can
influence Walmarts operation in different ways, especially in the beginning, such as there are
language problems, pricing difficulties and culture collisions (Hasim Dear, 2013). Walmart must be
able to handle these difficulties in a way that is satisfying also for the other part.

6 | Page

Technology
In the Information age, the development of network technology has a significant effect on the retail
industry. This effect be reflected in the following aspects:
1. Network technology break space and time barriers. Stores location is no longer important.
Traditionally, the location for retail store is critical, because it affects customer flow and sales
directly. In the information age, network technology break through the geographical limitation,
retailers nowadays can expand their market globally. Therefore, Walmart cannot purely rely on the
location anymore, but to focus on market-based management of innovation.
2. Selling methods change. Technology changes customers behavior from store shopping to home
shopping. They can save a lot time by easily shop online. This change lead to operational changes
for retailer. Online store will become the mainstream of global business model. Apply to Walmart
situation, it is way behind Amazon in the area of online shopping. To catch up, Walmarts huge
organization inertia will be a barrier for them to respond quickly (Banjo, 2013).
3. Development of information technology also affects Walmarts human resources. Technology
could replace some man power, and for those remaining employees, constant training will be
needed for them to be competent. Changes in human resources will be a challenge for Walmart,
because laying off could lead to some social issues such as unemployment, and training would
mean money and time have to be sacrificed.
4. Technology could lower Walmarts profit margin. Network has enabled people to find all the
product information online, which means searching for the best price become relatively easy. In
addition, technology could also lower the competitors cost which include communication costs,
labor force costs, purchase costs, infrastructure cost and searching cost, so they could also provide
the products with lower price. Therefore, the price war between retailers are fiercer, resulting in
profits in retail industry be further reduced. Apply to Walmart situation, because Walmarts core
competitive advantage is low price, it will face more challenges in the future.

7 | Page

Case study for Wal-Marts supply chain management

Wal-Mart Store, Inc., as the largest retailer in the world, kept holding its top position in
fiscal 2012 (Walmart, 2012). With $446,950 million revenues, it ranked the third in the
Global Fortune 500 List (CNNMoney, 2012). From 1962, when the first Wal-Mart store
was opened by Sam Walton in Rogers, Ark to 2012, Wal-Mart runs over 10,000 retail
outlets in 27 countries, the company has experienced a dramatic growth (Walmart,
2012). This growth can, more often than not, be attributed to its efficient supply chain
management initiatives

[L2](Traub,

2012). It was estimated that Wal-Marts distribution

costs constituted about 1.7% of its cost of sales, which was far less than the figure for its
certain competitors, say, Kmart (3.5%) and Sears (5%)(Johnson, 2006). This study will
attempt to demonstrate that information system/technology does of importance in the
success of supply chain management at Wal-Mart through analysing Wal-Marts
competencies, problems, information technologies used to facilitate its supply chain
management and certain metrics of the happy results.

Background of Wal-Mart Stores, Inc.:

Wal-Mart, like most of top retailers, has both online and offline businesses. According
to the annual report, its revenues are mainly generated by physical stores that can be
generally divided into five different types, including discount store, Sams club
(membership-only stores), supercentres (the combination of discount and grocery
stores) and some smaller outlets such as Neighbourhood Market and Walmart Express.
Also, the fact that Wal-Mart owns over 10,000 retail outlets determines that the
company is characterised by its huge number of associates, exceeding 2 million
(Walmart, 2012; Johnson, 2006).

Moreover, the EDLP (Everyday Low Prices) pricing philosophy is of crucial

importance in the operation of the company. Almost every business process serves and
reinforces this clear principle, including supply chain management. To guarantee a
wide range of quality products and services provided at a relatively low price than most
8

Name: Li Yunyun

Student number: 120229121

of retailers, Wal-Mart always follows EDLC (Everyday Low Costs) philosophy, which
means reducing costs while enhance productivity and efficiency throughout its supply
chain (Walmart, 2012).

Competencies possessed by Wal-Mart Stores, Inc.:

Wal-Mart is, doubtless, the largest retailer worldwide due to its huge revenue, which is
far more than other strong competitors. In terms of gross profit, Wal-Mart is as large as
more than four times compared with Target, its closest competitor (Figure 1)
(Abbaterusso, 2010).

Figure 1: Gross Profit Return on Investment of Competitors

Few can deny the reality that Wal-Marts efficient supply chain does gain competitive
edge for the company.

[L3]The

percentage of inventory directly supplied by its own

warehouse constitutes 85%; while for its competitors, this figure ranges from 50% to
65%. Also, the replenishment process only takes 2 days on average, compares with at least
5 days for others. Additionally, both of Wal-Marts shipping costs and transport costs
stand at approximately 3%, of the total costs, while for its competitors, these two
percentages are about 5% (Chandran, 2003).

* Abbaterusso, 2010, p. 14.

9

Name: Li Yunyun

Student number: 120229121

Another competitive advantage is that there are a great many powerful suppliers who
are willing to sell their merchandise to Wal-Mart regardless of the lower prices
provided by the company. The reason for this may be the strong purchasing power
possessed by Wal-Mart. It was estimated that sales to Wal-Mart comprised 17% of
P&Gs revenues and 13% of Gillettes revenues (Johnson, 2006).

Supply chain problems faced by Wal-Mart:

To ensure the right products reach the shelves at the right time and at a lower cost and
thus boost sales and profits is always the major challenge for almost all retailers;
Wal-Mart is no exception (Cottrill, 1997). According to Bill Simon, Wal-Mart US CEO,
the problem of keeping stores shelves stocked has lasted for two years and it is getting
worse, even can pose a threat to Wal-Mart. This issue stems from a decision made in
early 2011, which was to declutter stores and reduce the level of inventories in store.
Due to this change, Wal-Mart chose to discontinue carrying about 8,500 products.
However, the decision seemed to backfire. And many of Wal-Marts customers were
pushed to its competitors to buy merchandise that is not in-stock at Wal-Mart. Besides,
when attempting to reintroduce those 8,500 products, Wal-Mart has problems with
inventories currently - i.e., vendors fail to get new items into outlets quickly while
existing products are out-of-stock, which has led to bare shelves at Wal-Mart (Supply
Chain Digest, 2013; Lundgren, 2013).

To enhance efficiency throughout supply chain, cooperation between Wal-Mart and its
suppliers is required. Thus, another challenge for this retail giant arises for two
reasons[L4]. Firstly, Wal-Mart owes 100.000 suppliers differing from company size and
product sales volume, to make all the vendors provide products needed at the lowest
price, a collaborative is necessary. But striking a balance of profit margin between
different parties is very difficult (Walmart, 2012; Chiles & Dau, 2005). Secondly,
because of the EDLP promise to customers, Wal-Mart is a tough negotiator when
purchasing items from manufactures. And the buyers of the company complete procure
process only when they feel customers cannot easily find lower prices for certain items
10

Name: Li Yunyun

Student number: 120229121

from their competitors (Chandran, 2003). According to an article called Should you
just say no to Wal-Mart? written by Bowman (1997 cited in Bloom & Perry, 2001),
there are many suppliers feeling being squeezed and pressured by Wal-Mart by means
of lowering prices, shortening delivery time, offering special allowances and carrying
extra inventories.

Information system/technology works in Wal-Marts supply chain management:

This part will be introduced from three segments within supply chain, including
procurement and distribution, logistics and inventory management.
Procurement and distribution:
In order to comply with EDLC philosophy, Wal-Marts decided to go directly to
suppliers to procure items needed, eliminating all the intermediaries; moreover, the
buyers generally spend much time negotiating with manufactures, learning about their
cost structure and making purchasing forecasts

before placing orders (Procurement

Insights, 2010; Chandran, 2003).

The retail giant has actually experimented central database, store-level point-of-sale
systems and satellite network since mid-1980s. When combining with the utilisation of
barcodes, it would be possible for staff acquiring and analysing real-time information in
stores. And the combination of sales information and certain external data, say, weather
forecast, enables Wal-Mart to help buyers making purchasing forecasts more accurate
(Johnson, 2006).

In terms of distribution, Wal-Marts distribution centres are geographically different

and each distribution centre could be divided into different sections according to the
quantity of goods and be managed in the same way for both cases and pallets. The
inventory turnover is frequent, roughly once two weeks for majority items. And the
percentage of goods sitting in distribution centres before being directly delivered to
stores by manufactures hit 85%. Thus, efficient management of distribution centres is
of crucial importance in ensuring steady and consistently flow of merchandise
11

Name: Li Yunyun

Student number: 120229121

(Chandran, 2003).

The adoption of information technologies such as barcodes or currently RFID (Radio

Frequency Identification) might facilitate this process. Both of these two make it
possible for staff to acquire real-time information about all products stored in
distribution centres. However, RFID, as the next generation of traditional barcodes, can
better satisfy retailers needs and demands for three reasons. Firstly, boxes do not have
to be manually staged to obtain the line of sight necessary for bar coding reading,
which can help in saving handling costs (Tirchwell, 2004). Then, RF tags are able to
store more data than traditional bar codes -i.e., it can identify an individual object
instead of an SKU only (Mitchell & Chappell, 2003; Booth-Thomas, 2003 cited in
Jones, et al., 2005). RF tags enables staff involved to get access to information such as
when and where the items was produced and its expiry date ( Prater, 2005). Last but not
least, RFID technology aids in identifying and tracking inventory as it flows from
factories to warehouses to stores (Landy, 2004 cited in Jones, et al., 2005).

Logistics:
Wal-Marts logistics infrastructure is best characterised with its

powerful transport

system. The number of trucks serving for distribution centres exceeds 3,500. These
truck fleets are capable of finishing goods shipment from distribution centres to stores
within two days and replenishing inventory every week (Chandran, 2003).

In order to boost efficiency of distribution, Wal-Mart adopted cross docking technique. This
system can sort and route products from manufacturers to Wal-Marts warehouses, and then
shipped to stores without sitting for long periods of time in inventory. And this, can not only
contribute to reduction in inventory, handling costs, distribution costs, operating costs, but
also can help in saving space (Ryder, 2013).

Nevertheless, the integration of REMIX technology, the global satellite system that has
benefited Wal-Mart greatly in recent years, seems to change the way used currently to
12

Name: Li Yunyun

Student number: 120229121

distribute high velocity products (bread, lettuce, etc.) that are cross docked in smaller
warehouses and have lower level of automation throughout the supply chain. Instead,
this technology enables one distribution centre to serve a cluster of retail outlets so that
to add food distribution centres handling high velocity products (Abbaterusso, 2010).

Inventory management:
The effective inventory management at Wal-Mart relies heavily on the adoption of
information system/technology.

By the use of IT capacities possessed, Wal-Mart can better control the level of inventory
i.e., storing more items that are popular among customers while reducing overall
inventory. Furthermore, computers can link Wal-Mart with the vendors. For instance,
Wal-Mart is cooperating with P&G to maintain inventories in retail outlets and build
reordering system linking all computers of P&G to the companys stores and
warehouses, the computer system would send message to P&G when identifying
certain product needs to be replenish, and then the system will send a replenishment
order to the nearest P&G before P&G delivers items demanded to distribution centre or
to stores (Chandran, 2003).

Another IT application installed for enhancing communication and cooperation

between players within supply chain is Retail Link. Wal-Mart developed Retail Link in
the early 1990s for three purposes: (1) to store data; (2) to share data with vendors; (3) to
help in shipment routing assignment (Chiles & Dau, 2005).

In 1990, Wal-Mart adopted collaborative planning, forecasting and replenishment

(CPRF) to plan and forecast more accurately through supply chain data sharing with its
vendors (Johnson, 2006).

Besides, Inforem and RFID can also facilitate inventory management. Inforem is a
system contributing to the automation of Wal-Marts replenishment process. This
13

Name: Li Yunyun

Student number: 120229121

system can decide when to order and how many inventories to order, which renders
replenishment more accurate (Chiles & Dau, 2005). And the installation of RF
technology enables retailers to know the location and quantity of inventory accurately
without counting manually, which can be very time-consuming and prone to errors
(Dunne&Lusch, 2005). But a critical problem limiting the widespread experimentation
of RFID system is costs involved. In 2000, the cost of a single tag was roughly $1. In
2003, the average price of RF tags varied from 15 to 20 cents. But it is predicted that the
use of RFID would be widespread provided that only when the cost of each tag can
reach 5 cents or lower (Donovan, 2003 cited in Prater, et al., 2005).

Overall, Wal-Mart seems always adopts information technology for supply chain
management from mid-1980s to now, and the installation of these systems/technologies
does help in each link within a supply chain; also, these technologies aiding enhancing
core competencies have been kept changing and innovating.

Metrics:
Some claim that successful supply chain management (SCM) generally contributes to
lower product costs and highly competitive pricing for the buyer (University of San
Francisco, 2013). Thus, the happy end would be measured from these two aspects.

Price of goods can be used as a reliable indicator of the improvement of supply chain at
Wal-Mart. Over recent years, it does not guarantee the lowest price in the market, but it
can guarantee a relatively low overall price - i.e., it is possible for other retailer to price
certain products lower than Wal-Mart at certain time, say, promotional activity (Chiles
& Dau, 2005).

Moreover, information technologies help Wal-Mart to

reduce handling costs, labour

costs and warehouse and distribution costs. Take the installation of RFID technology as
an example. It is estimated that Wal-Mart could save $8.35 billion annually by using
RFID - mostly in labour costs from not having to manually scan the bar codes of
14

Name: Li Yunyun

Student number: 120229121

incoming goods (Boyle, 2003, n.p. cited in Jones, et al., 2005). Besides, warehouse and
distribution costs can be reduced by 3 to 5 percent through adopting RF technology
(Wrolstad, 2004 cited in Jones, et al., 2005).

In conclusion, Wal-Mart, the largest retailer over the world, has held its top position within
retail sector for many years. It shows in the case that Wal-Marts competitive advantages can
be mostly attributed to its efficient supply chain (lower distribution costs, less delivery time,
etc.). And IT and communication systems have fully been used and kept innovating for
enhancing the productivity while reducing costs of Wal-Marts supply chain since last
century. Moreover, these systems/technologies can, to some extent, help the retail giant
solve problems faced through ensuring the accuracy and efficiency of the whole supply chain
and promoting communication and collaboration between Wal-Mart and its partners within
supply chain.

15

Wal-Mart Supply Chain Management Case Study Questions(With Solutions)

Q1.Wal-mart has been able to achieve respectable leadership in retail industry because of its focus on supply chain management.
Discuss in detail the distribution and logistics system adopted by Wal-mart.
ANS. Major strategy of Wal-mart is to buy goods from direct manufactures and they dont give any room to suppliers
because they will pick up goods from suppliers by own trucks. Wal-Mart preferred local and regional vendors and suppliers
for better and fast SCM. Wal-mart had over 40 distribution centers located at different geographical locations in US.
Over 80,000 items were stocked in these centers. And its own warehouse directly supplied 85 percent of the inventory,
as compare to 50-65 percents of competitors Shipping cost for Wal-mart worked out to be roughly 3%
as against 5% for competitors.
Q2. The use of innovative information technology tools had benefited Wal-marts supply chain management.
In the light of the above statement, briefly explain how IT benefited Wal-Marts logistics and inventory management.
ANS. Wal-mart invested heavily in IT and communication systems to effectively track sales and merchandise inventories
in stores across the country. They have set up own satellite communication in 1983. Employees at the stores had the
Magic Wand , a hand held computer which was linked to in-store terminals through a RFID network.
These helped them to keep track of the inventory in stores, delivers and backup merchandise in stock at the distribution
centers.
And Point of-Sales is done by Computer system. They have also developed algorithm system which enabled it
to forecast the exact quantities of each items to be delivered, based on the inventories in each store.
They have also made use of bar code and radio frequency technology to manage its inventories.
This has enabled easy order packing and physical counting of the inventories.
They have invested $4 bn to build retail link system to monitor the sales of their goods at stores and
replenish inventories.
And they owned the largest and most sophisticated computer system in private sector by making it effective in
all companies operation; Wal-mart provides uninterrupted service to its customers, supplier, stockholders and
trading partner.
Because of technology they have reduced in lead time, faster inventory turnover, accurate forecasting
of inventory levels, increased warehouse space, reduction in safety stock and better working capital utilization.
Q3. What were the supply chain management process adopted by Wal-mart and how far were the effective? Discuss.
ANS. They have developed fastest logistics infrastructure by giving service with 3,500 company owned trucks.
And for that they have hired only experienced drivers who are truly professional. And they have to deliver loaded
trucks from the distribution center to retail store each and every information and tracking of driver and truck is recorded by
computerized systems. Driver is allowed to bring trailer in specific time only, they unload trucks in nights and in
the gaps of two our so that they can track record of every items. And they have also taken record of every
driver by Private Fleet Driver Handbook. In which they keeps every detail of drivers activities. And to make its
distribution process more efficient, Wal-mart uses logistic technique known as Cross Docking. By that they have
reduced the handling and store of finished goods, virtually eliminating the role of the distribution centers and stores.

16

Q 4. What was the nature of benefit derived by Wal-mart from the efficient supply chain management practice
and how far it has contributed to its sustainable competitive advantage? Explain.
ANS. Wal-mart was one of the largest private sector employers in the world, with employee strength of
approximate 1.28milion.
They have focused on improving sales, constantly reducing cost, adopting efficient distribution and logistics management
systems and using innovative IT tools. They have 40 distribution centers located at different geographical locations in
the US. And over 80,000 items in this centers. Their core competency are vast range of products at lowest cost in shortest
possible time. They have managed very good relations with suppliers and also vendors.
They have always tried to deliver a product at minimum price to the customer. And by analyzing market demand
and customer needs they succeeded every task. Wal-marts consistent flow of products to support the
supply function is also its core competency. By enabling barcode technology and hand-held computer systems they
operates smoother and faster.
Another technique they have adopted is cross docking by which they changed their practice and focused
demand chain from supply chain which meant that instead of the retailer pushing products in to the system,
customer could pull products, when they needed and where they need.

17

References
Brian. (2006, June 14). Wal-Mart to Customize Stores via Demographics .
Retrieved
from
Supply
Chain
Optimization:
http://futurewire.blogspot.ca/2006/06/wal-mart-to-customize-
stores-via.html
Canadian Press. (2013, January 22). Walmart Canada taking on Target with plans for 37
new
Supercentres.
Retrieved
from
Canada:
http://o.canada.com/business/walmart-canada-taking- on-target-with-
plans-for-37-new-supercentres/#.USlRbWeg4X0
Dess, L. E. (2012, March 8). Corporate-Level Strategy . Retrieved from International
Strategic
Management
:
http://brianhenderschiedtbsad428.blogspot.ca/2012/03/walmart-
corporate- level-strategy.html
Global Responsibility. (2013). Retrieved from Walmart:save
money,
live
better:
http://corporate.walmart.com/global-responsibility/
Hasim Dear, V. K. (2013). Effects of cultural differences in international business.
Vaxjo University.
History Timeline. (2013). Retrieved from Walmart:save
money,
live
better:
http://corporate.walmart.com/our-story/heritage/history-
timeline
Hoium, T. (2013, October 10). Is Wal-Mart Heading for Disaster? Retrieved
from
The
Motley
Fool:
http://www.fool.com/investing/general/2013/10/10/is-wal-mart-heading-for-
disaster.aspx
Market entry strategies of Walmart in the international arena. (2013). Retrieved from
UK Essays:
http://www.ukessays.com/essays/management/market-entry-strategies-of-
wal-mart-in-the- international-arena-management-essay.php
Patrick Hayden, S. L. (2002). Wal-Mart: Staying on Top of the Fortune
500.
Washington
DC:
George
Washington University.

Physioc, F. (2013, Aprial 12). The Top 5 Strategic Challenges of

2013.
Retrieved
from
WOBI:
http://www.wobi.com/blog/challenge/top-5-strategic-challenges-2013
Thomas, K. (2010). Walmart SWOT Analysis. Retrieved from Scribd:
http://zh.scribd.com/doc/58504843/Walmart-SWOT-Analysis
Traub, T. (2012, July 02). Wal-Mart Used Technology to Become Supply
Chain Leader. Retrieved from
Arkansas Business:
http://www.arkansasbusiness.com/article/85508/wal-mart-used-
technology-to-become-supply-chain-leader?page=all
Walmart.

(2013).
Retrieved
from
Essay
http://www.essay.uk.com/free-business-essays/wal-
mart.php

UK:

(2013). Walmart 2013 Annual report. Walmart. Retrieved from

http://c46b2bcc0db5865f5a76-
e1c2ff8eba65e83a1c33d367b8503d02.r78.cf2.rackcdn.com/8
8/2d/4fdf67184a35efdef07b1c3f4
732/2013-annual-report-
for-walmart-stores-incf13022102470857e502.pdf
An Analysis. (2008, August 28). Retrieved from
gahoo:
http://voices.yahoo.com/walmart-
analysis-1743207.html

Walmart:

18 | P a g e

Walmart:

An

Analysis.

(2008,
August
08).
Retrieved
http://voices.yahoo.com/walmart-
analysis-1743207.html

from

gahoo:

Walmart's Keys to Successful Supply Chain Management. (2013). Retrieved from University of
San
Francisco: http://www.usanfranonline.com/wal-mart-successful-supply-chain-management/
Walmart Canada taking on Target with plans for 37 new Supercentres. (2012,
November 12).Retrieved
from o.canada: http://o.canada.com/business/walmart-canada-taking-on-target-with-plans-for-37new-supercentres/#.USlRbWeg4X0
Walmarts Live Better initiatives are making a difference. (2013). Retrieved from
Walmart:
http://corporate.walmart.com/global-responsibility/
Walmart:
An
Analysis.
(2008,
http://voices.yahoo.com/walmartanalysis-1743207.html

August

28).

Retrieved

from

Yahoo:

Banjo, S. (2013, June 19). Walmart's E-Stumble with Amazon. Retrieved from THE WALL STREET
JOURNAL:
http://online.wsj.com/news/articles/SB10001424127887323566804578553301017702818

19 | P a g e