Wal-Marts the Multinational Retail corporation

Presenting To: Rachita Jaysval

Presentation by: Dhaval Patel (13) Milan Patel (15) Nirmal Patel (16)

Introduction
Walmart, is an American multinational retail corporation that runs

chains of large discount department stores and warehouse stores. The company is the world's third largest public corporation, according to the Fortune Global 500 list in 2012, the biggest private employer in the world with over two million employees, and is the largest retailer in the world. Walmart remains a family-owned business, as the company is controlled by the Walton family, who own a 48 percent stake in Walmart. It is also one of the world's most valuable companies. The company was founded by Sam Walton in 1962, incorporated on 31 October, 1969. Walmart has 8,500 stores in 15 countries, under 55 different names.

Wal-Mart is the Worlds Largest Retail Company

Type

Public Store

Traded as

500 Component

Industry Founded

Retail 1962 - Rogers, Arkansas, United States

Founder(s)
Headquarters Number of locations Area served
Products

Sam Walton
Bentonville, Arkansas, United States 10,970 (2012) Worldwide
Apparel/footwear specialty, cash & carry/warehouse club, discount store, hypermarket/supercenter/superstore, supermarket

 Walmart Discount Stores: Walmart discount stores are discount department

stores with size varying from 51,000 square feet (4,738.1 m2) to 224,000 square feet (20,810.3 m2) Products: They carry general merchandise and a selection of groceries. Many of these stores also have a garden center, a pharmacy, Tire & Lube Express, optical center, one-hour photo processing lab, portrait studio, a bank branch, a cell phone store and a fast food outlet. Some also have gasoline stations.

 Walmart Supercenter: Walmart Supercenters are hypermarkets with size varying

from 98,000 to 2,61,000 square feet (9,104.5 to 24,247.7 m2), with an average of about 197,000 square feet (18,301.9 m2). Also include a full-service supermarket, including meat and poultry, baked goods, delicatessen, frozen foods, dairy products, garden produce, and fresh seafood.
Many Wal-Mart Supercenters also have cellular phone

stores, hair and nail salons, video rental stores, local bank branches and fast food outlets. Also have McDonald's & Subway

 Walmart Market: Walmart Market is a chain of grocery stores that average

about 42,000 square feet (3,901.9 m2). They are used to fill the gap between discount store and supercenters. offering a variety of products, which include full lines of groceries, pharmaceuticals, health and beauty aids, photo developing services, and a limited selection of general merchandise.

 Walmart India
Our first Best Price Modern Wholesale opened in 2009. Best Price is a cash-and-carry wholesale warehouse that sells

bulk food and consumables along with supplies needed to operate small business operations, such as restaurants, hotels and convenience stores.

Walmart International
Walmart's

international operations currently comprise 4,263 stores and 660,000 workers in 15 countries outside the United States. There are wholly owned operations in Argentina, Brazil, Canada, and the UK. With 2.1 million employees worldwide, the company is the largest private employer in the U.S. and Mexico, and one of the largest in Canada. In the financial year 2011, Walmart's international division sales were $129 billion, or 24.7 percent of total sales.

History of LOGO

 Distribution Centers: Walmarts 158 distribution centers are hubs of activity for business.

distribution operation is one of the largest in the world. Walmart logistics has a fleet of 6,500 tractors, 55,000 trailers and more than 10,000 drivers.
A regional distribution center can have up to 12 miles of conveyor

belts, which can move hundreds of thousands of cases through the facility each day.
There are 9 disaster distribution centers, strategically located

across the country and stocked to provide rapid response to struggling communities in the event of a natural disaster.
Each distribution center is more than 1 million square feet in size,

and uses more than 5 miles of conveyor belts to keep products moving to our stores 24 hours a day.
Every distribution center supports 90 to 100 stores in a 200-mile

radius.

 Trucks and Truck Drivers

Walmart is able to move goods to and

from distribution centers because they maintain a private fleet of trucks and a skilled staff of truck drivers. They think that team of drivers is the best in the world. Theyre part of one of the largest and safest fleets, and every year they drive 700 million miles to make millions of deliveries to our stores and clubs. Each driver averages around 100,000 miles annuallythats like driving around the world 4 times!

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 hub-and-spoke system. Under the system, goods were centrally ordered, assembled at a massive warehouse, known as distribution center (hub), from where they were dispatched to the individual stores (spoke). 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.
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Wal-Marts 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 spends a significant amount of time meeting vendors and understanding their cost structure. By making the process transparent, the retailer can be certain that the manufacturers are doing their best to cut down costs.

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Using EDI for Procurement

The computer systems of WalMart 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-Marts distribution centers. Benefits Analysis by Walmart EDI provides speed EDI reduces paper work EDI improves accuracy EDI reduces costs EDI improves operational efficiency

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Logistics Management
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.
An

Cross-docking
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.

The goods were packed here according to the orders

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

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Wal-Mart Lives in a World of Supply & Command, Instead of a World of Supply & Demand

An Example: Cross-Docking
Pre-assembled orders for individual stores from a suppliers truck go seamlessly from an unloading dock at Wal-Marts Distribution Center directly into a truck bound for stores Get goods into stores without even unpacking them let alone allowing them to sit in storage !
Until we reached a billion dollars, a lot of suppliers just ignored us way out here in the Arkansas Outback. Now, of course, were too big too ignore.
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Vendor-Financed Inventory !
How Cross-Docking Works
At Wal-Marts new distribution centers, P&Gs trucks are unloaded directly to trucks that will head for Wal-Mart Stores. The toothpaste is never even put on warehouse shelves. Once a truck is full, it heads to the stores. Products are put on the shelf within 4 hours, and are usually sold within 24 hours. Despite this tight delivery schedule, Wal-Mart has 10 days to pay P&G.

Benefit of Cross-Docking: Vendor-Financed Inventory

Sell the goods before we have to pay.
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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. With the rapid expansion, it was essential to have a good communication system. 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 sizes across many product categories, and timely price markdowns. Instead of cutting the inventory across the board, 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.

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 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-of-Sales (POS) system. Through this system, it was possible to monitor and track the sales and merchandise stock levels on the store shelves.

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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. 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.
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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. The company asked its suppliers to ship goods in store-ready displays called pretty darn quick (PDQ) displays.
Goods were packed in PDQ displays that arrived at the stores

ready to be boarded on the racks.

Wal-Marts employees could directly replace the empty racks

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

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Inventory Management(Retail link System)

In 1991, Wal-Mart had invested approximately $4 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.
Details of daily transactions (~10 million per day) were

processed through this system. Retail Link connected Wal-Marts EDI network with an extranet, accessible to Wal-Marts thousands of suppliers.
The suppliers could find out how their product was performing

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

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 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.
All information related to sales and inventories was

passed on through an advanced satellite communication system.

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 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.

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Why can Wal-mart be so successful?

Supply chain plays an important role Supply chain:

a method of collaborating horizontally among suppliers, retailers, and customers to create value

Wal-mart Supply Chain Flow Chat

Radio, headphone Retail Store Manufacturer

Manufacturer

Distribution center Bar code, RFID

Retail Store

Point of sale terminal

Retail Store Manufacturer Satellite system

Company Headquarter

Distribution Center
108 centers in USA

Place that various goods are gathered, sorted

and delivered to different store About 80% of merchandises shipped from centers 24 hours operation

Manufacturer 1

Retail store 1

Manufacturer 2

Retail store 2

Manufacturer 3

Manufacturer 3

Retail store 3

Trucks outside Wal-mart

Past----written instructions

Now----radio and headphone

English ? Spanish?

Trucks outside Wal-mart

Use both hands

Keep contact with the headquarter

Behind or ahead the expectation Adjust to any sudden changes Benefit: Cost

Minilift Trucks
Inside distribution centers

equipped with headphone

Computer give direction to driver in voice What merchandises to transport Where the merchandises should be carried to Which truck the merchandises be loaded Report progress, ahead or behind schedule

Benefit: productivity and efficiency

Bar Code System

Standardized bar code system
applied by every supplier Helps facilitating large scale operation

Pallets passed through conveyor belt are

scanned automatically Product codes are transferred to centralized computer system

Bar Code System

Matching with the computer database and

generate useful information

What it is. What quantity it is. Which packing

compartment and truck to go. Which store to go

Processes take place simultaneously

Save time and labour sorting merchandises

Smooth logistic processes

RFID
Radio Frequency Identification System Use radio waves to identify objects Tags with microchip and antenna built in
Store data (type, quantity, manufacturer, expired

date) Generate HF signal to transfer data

Allow Wal-mart to keep track of pallets at various

stage of supply chain

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.
Wal-Mart planned to replace bar-code technology with RFID

technology.
The company believed that this replacement would reduce its

supply chain management costs and enhance efficiency. 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.

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RFID
Sensors in the distribution center detect and

receive information from chips Locate where the pallet is and the condition of it
temperature Humidity

Automatic senser avoid scanning codes one by

one

RFID
Further improve logistics efficiency

Save time identifying merchandises

Convenience in checking inventory Information pre-stored in the chips = convenience

of data processing

Wal-Marts Data Warehouse

Current Level of Storage Capacity : 570 Terabytes *
Second only to the U.S. Governments More than all of the Internets fixed pages

BUT ALL THAT DATA IS USELESS UNLESS IT IS USED Information is shared with its own Buyers AND Suppliers

* Wall Street Journal, Dec 3-4, 2011

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Point-of-sale terminals
Invested in 1983

Simultaneously rang up sales and tracked

inventory deductions for rapid re-supply. Electronic scanning of Uniform Product Codes (UPC) - to price-mark merchandise - to ensure accurate pricing Self-labeling system The merchandise replenishment process

Large-scale satellite system

Installed in 1987

to improve communication between stores

Link all of the stores to headquarter, giving

Wal-Marts central computer system real-time inventory data. Allow sales data to be collected and analyzed daily, and enable managers to adjust immediately. Daily information of individual store can be compared.

CPFR Program
A Collaborative Planning, Forecasting, and

Replenishment program. Just-in-time inventory program began. Advantage:

To reduce carrying costs. Less excess inventory. Cost of goods is estimated to be 5 to 10 percent

less.

Tailored-made store management

Wal-Mart merchandise is tailored to individual

markets and individual stores. Store managers choose which products to display and allocate shelf space. A store devote only 10% of its square footage to inventory. Wal-Marts culture stress the key role of associates. Information and ideas are shared at individual stores.

Suppliers = Partners
As Wal-Mart grew, its relationships with some

suppliers evolved into partnerships Sharing information electronically to improve performance. How do they share information?

Information sharing
Open its databases

Retail Link private extranet system:

- to see exactly how its products are selling and when it might need to up its production - to give more than 2000 suppliers computer access to point-of-sale data Advantages: - Gain more information about the customers. - Shelves will always be stocked with the right items at the right time.

Electronic data interchange (EDI)

Enabled an estimated 3600 suppliers (about 90%

of Wal-Marts dollar volume) to receive orders and interact with Wal-Mart electronically. Later expanded to include forecasting, planning, replenishing, and shipping applications.

Vendor-managed inventory systems

to replenish stocks

Wal-Mart transmitted sales data, orders of

products, delivery plan and reports of warehouse inventory status to them daily to plan inventory levels, generate purchase orders, and ship exactly what was needed both benefited from reduced inventory costs and increased sales

Business planning packets

Each Wal-Mart department developed

computerized, annual strategic business planning packets for its suppliers including:
departments sales, profitability, and inventory

targets, macroeconomic and market trends, and Wal-Marts overall business focus
Wal-Marts expectations on them

Suppliers recommendations

How Wal-mart affects suppliers

Domestic Suppliers: Wal-mart imported 18 billion worth of goods from

5,000 Chinese suppliers in 2004 Ranked as Chinas 8 biggest trading partner ahead of Russia, Australia and Canada Used power to squeeze domestic suppliers profit

How Wal-mart affects suppliers

Wal-mart Defense :

If all of supplier were squeezed dry

Wal-mart no suppliers Suppliers found ways to survive do better at what they did before

How Wal-mart affects suppliers

Wal-mart not only selling foreign imported goods,

also encourage the use of domestic American products Buy American Program Retained over 1.7 billion in retail purchases that produced offshore.