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8/3/2012

Wal-Mart: Background
The company was founded by Sam Walton in 1962.
First publicly traded on the New York Stock Exchange in 1972. It is headquartered in Bentonville, Arkansas(US). Walmart is the largest grocery retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the U.S. from grocery business. Walmart has 8,500 stores in 15 countries, under 55 different names. It operates in Mexico as Walmex, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best Price.

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Operating divisions
Walmart Stores U.S. Walmart Express Walmart Discount Stores

Marketside

Walmart Supercenter

Supermercado de Walmart

Walmart Neighborhood Market

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CNN Global 500 Rank Company

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Revenues ($ millions) Profits ($ millions)

16,389 20,127 30,460 7,629 240,192 4,766 4,891

Wal-Mart Stores 421,849 Royal Dutch Shell 378,152 Exxon Mobil 354,674 BP 308,928 -3,719 Sinopec Group 273,422 China National Petroleum State Grid 226,294 4,556 Toyota Motor 221,760 Japan Post Holdings 203,958 Chevron 196,337 19,024 Total 186,055 14,001 ConocoPhillips 184,966 Volkswagen 168,041 AXA 162,236 3,641 Fannie Mae 153,825 General Electric 151,628 ING Group 147,052 Glencore International Berkshire Hathaway 136,185 General Motors 135,592 Bank of America Corp. Samsung Electronics

11,358 9,053
-14,014 11,644 3,678 144,978 12,967 6,172 134,194 133,781

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How this

BIG ?

The company's founder, Sam Walton (Walton) had always focused on improving sales, constantly reducing costs, adopting efficient distribution and logistics management systems and using innovative information technology (IT) tools. Walmart always emphasised the need to reduce its cost of purchasing and offering the lowest price to its customers . Wal-Mart offers low prices, customer satisfaction guaranteed, and hours that were realistic for the way people wanted to shop. Open all night, for university students

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Captain Vernon L. Beatty commander, Defense Supply Center, Columbus, Ohio said, "Supply chain management is moving the right items to the right customer at the right time by the most efficient means. No one does that better than Wal-Mart."

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SWOT Analysis:
chief competitors are Kmart, Target, ShopKo and Meijer

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WAL-MART: BUSINESS PROCESS Satisfying Customer Demands Depends on Five Critical Success Factors
Critical Success Factors (CSF) Customer Demands The right products In stock
Quick responsiveness to market changes Low inventory

Best value
Service and quality

Quick replenishment of inventory

Effective human resource system Efficient distribution system

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Wal-Mart Fulfills the Customer-Satisfaction Critical Success Factors

CSF
Quick Responsiveness to Market Changes

Customer demand pulls product through the supply chain Tracking product movement at individual stores by market traits (e.g., size, color) Investment in IT ensures timely analysis of sales/customer/market information and trends Formal and informal cooperation among stores, distribution centers, and suppliers

Low Inventory Quick Replenishment

Effective HR System Efficient Distribution System

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Wal-Mart Fulfills the Customer-Satisfaction Critical Success Factors (cont.)

CSF
Quick Responsiveness to Market Changes

Low Inventory Quick Replenishment Effective HR System

Direct high-level and long-term relationship with suppliers enabled by high information sharing: Some vendors directly manage distribution warehouse inventory of their products Efficient transportation system Investment in IT (e.g., EDI, Quick Response, Radio frequency terminals)

Efficient Distribution System

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Wal-Mart Fulfills the Customer-Satisfaction Critical Success Factors (cont.)

CSF
Quick Responsiveness to Market Changes

Highly

Low Inventory Quick Replenishment Effective HR System

Efficient Distribution System

automated distribution centers (e.g., laser-guided conveyor belts) A fleet of 2,000 companyowned trucks High leverage of supplier relationships: Some suppliers ship goods sales floor ready

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The Traditional Supply Chain Includes Inefficient and Unnecessary Steps

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Wal-Mart Simplified Its Supply Chain

Cross-docking in distribution centers results in product flow from inbound to outbound shipping docks within 48 hours.

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The Key Features of its Supply Chain Management.

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Wal-Mart Invests Heavily in Information Technology

Inventory Tracking and Management System at distribution centers: Identifies every product and its location in the warehouse Integrated with some 8.5 miles of laser-guided conveyor belts Lasers read the bar code on every product box and route them to appropriate loading dock Electronic Data Interchange (EDI): For electronic transmission of POS data, purchase orders, invoices, advance shipment notice, etc. between Wal-Mart headquarters, suppliers, distribution centers, and individual stores Merchandising Artificial Intelligence System: To adjust vendor merchandise assortments based on the need of each particular store State-of-the-art satellite communication network which supports data, voice, and video

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Various Quick-Response (QR) systems (retail-link) to allow direct store-to-supplier ordering: continuous replenishment
Vendor-managed QR Wal-Mart-managed QR
Distribution Center Order
Wal-Mart
Wal-Mart

Supplier

POS Data

Store

Warehouse Just-in-Time System

Distribution Center Supplier

Store

POS Data Supplier Store

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Logistics Management

An important feature of Wal-Marts logistics infrastructure was its fast and responsive transportation system. The distribution centers were serviced by more than 3500 company owned trucks. 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.

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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. The manufacturer directly forwarded the goods to a place called the staging area.

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Inventory Management

Wal-Mart invested heavily in IT and communication systems to effectively track sales and merchandise inventories in stores across the country. Hence, Wal-Mart set up its own satellite communication system in 1983. Wal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks, reducing pack Used it to find what customers wanted most, while reducing the overall inventory levels. Employees at the stores had the Magic Wand, a hand-held computer which was linked to in-store 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. The order management and store replenishment of goods were entirely executed with the help of computers through the Point-ofSales (POS) system.

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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. They were guided by the voice to item locations in the distribution centers.

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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 stockouts at the stores. Although Wal-Mart was optimistic about the benefits of RFID, analysts felt that it would impose a heavy burden on its suppliers. To make themselves RFID compliant, the suppliers needed to incur an estimated $20 Million. Of this, an estimated %50 would be spent on integrating the system and making modifications in the supply chain software. To make themselves RFID compliant, the suppliers needed to incur an estimated $20 Million. Of this, an estimated %50 would be spent on integrating the system and making modifications in the supply chain software.

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Thank you