WALMART CASE ANALYSIS

PRESENTED BY:
AKANKSHA SRIVASTAVA
SHIPRA AGGARWAL
ABHISHEK SINGH
MOHIT AGGARWAL
 OVERVIEW OF WAL-MART’S SUPPLY
CHAIN

Introduction of Wal-Mart Akanksha Srivastav


Inventory Management Abhishek Singh

Procurement & Distribution Shipra Agrawal

Logistics Mohit Agrawal


INTRODUCTION
vUS based Co. founded by Sam Walton.
v
vRanked 1st in global Fortune 500 list(2001-
2002)
v
vWal-Mart operated more than 3500 discount
store SAM’s club and supercentres in US .
v
vMore than 1170 stores all major countries in
the world.
GLOBAL FORTUNE 500 LIST(2002)
RANK COMPANY REVENUES($milli
1 WALMART on)
219819.0
2 STORES
EXXON MOBIL 191,581.0
3 GENERAL 177,260.0
4 MOTORS
FORD MOTORS 162,142.0
5 ENRON 138,718.0
MANAGEMENT OF INVENTORY
vHeavy Investment in IT and communication system to
track sales and inventories.


vSet up its Satellite communication system in 1983.

v
vNetworking of suppliers through computers.
v
vCollaboration with P & G.
v
vAccessibility of employees through a ‘magic wand’-a hand
held computer.
v
v
v
vSophisticated Algorithm System


vCentralized Inventory Data system



vUse of Bar Coding and radio frequency Technology

v
vRetail Link System Build in 1991
v
vUpgrading the Systems with Internet enabled technologies.
v
vUse of Massively Parallel Processor(MPP) Computer
System to track the movement of goods and stocks.
v
v
 PROCUREMENT
 OBJECTIVE


 “To reduce its purchasing costs and offer the best price
to its customers.”


 FEATURES


 Tough negotiator

 Using own transportation system for procurement

 Long- term relationship with vendor
 PROCUREMENT PROCESS
Own transportation system

PROCUREMENT
Supplier Wal-Mart’s Distributi-on Centers

Receiving goods
 DISTRIBUTION
INTRODUCTION


 In 1998, 40 distribution centers in US.

 Over 80000 items were stocked.


FEATURES


 Division on the basis of quantity

 Cases and palletized goods
 85% of the goods (at stores) passed through distribution centers.
 Cross-docking in case of automotive and drug products.
 Use of Barcode technology & Hand-held computer systems.
 Facilities for personal hygiene
 Used for meetings and paper work.



 PROCESS
DISTRIBUTION

85% of the goods available

at stores

al-Mart’s Distributi-on Centers Wal-Mart Retail Outlets

DISTRIBUTION
Receiving goods in cases
and pallets
INVENTORY TURNOVER
WAL-MART

RIVALS
COMPETITIVE
ANALYSIS
 PROCESS
DISTRIBUTION
PROCURMENT AND

Own
transportati 85% of
on system the goods

Supplier Wal-Mart’s Distribution Centers

PROCUREMENT
Wal-Mart Retail Outlets
DISTRIBUTION

Receiving
Receiving goods
goods

Cross-docking

Automotive & Drug products

 LOGISTICS MANAGEMENT OF

qFast and responsive

transportation system.
qMore than 3,500
company owned trucks.
qHired only experienced
drivers.
qTruck drivers have to
report to coordinator
daily.
qTrailers would be
unloaded at night.
To be Continued.....
q Gap of two hours between unloading of each

trailers

q “Private Fleet Driver Handbook”.

q ‘cross-docking.’

q Shifting the focus from Pull view to push view.

q Low transportation cost.

q Replenish the selves four time faster than its

competitors.
 Question 1
 Q1.Wal-Mart has been able to achieve
respectable leadership In The Retail Industry
Because of his focus on supply chain
management. Discuss in detail the distribution
and logistics system adopted by Wal-Mart.



ABHISHEK SINGH

 Benefits derived from procurement,
distribution & logistics by wal-mart?
Ø Procurement of Products at the Lowest Possible Cost
Ø
Ø Establishes Long Term Relationship
Ø
Ø Widespread Distribution of Centres
Ø
Ø Fastest Inventory Replenishment
Ø
Ø Reduction in Shipping Cost
Ø
Ø Higher Inventory Turnover(Twice In Every Two Weeks)
Ø
Ø
Ø Use of Bar Code Technology and Hand Held Computers
Ø
Ø Close Supervision of The Employees
Ø
Ø
 Benefits Reaped from Logistics
Ø Fast and Responsive Transportation System.
Ø
Ø Better Coordination
Ø
Ø Safety Issue
Ø
Ø Record of The Activities of Drivers Through “Private Fleet
Driver Handbook”.
Ø
Ø Induction of Cross Docking method of Logistics.
Ø
Ø Reduction In Handling and Storage Cost.
 Question 2


 Q2.The use of Innovative Technology tools had

Benefited Wal-Mart’s Supply Chain
Management.In the light of plain how the above
statement,briefly explain how IT benefited Wal-
Mart’s Logistics and Inventory Management.



Mohit Kumar Agrawal



Benefits of use of IT in Wal-Mart’s logistics
and inventory management.
Investment on IT…


 Wal-mart invested heavily in IT and

communications system to effectively
track sales and merchandise inventories
in stores across the country.
 Wal-Mart setups its own satellite
communication system in 1983.
 To be Continued.....

 Benefits From use of IT

 They can know in a minute how a
particular day is going.
 They can see the total of the day’s bank
credit sales adding up as they occur.
 Faster communication.
 Keep on watching every time.
 To be Continued.....

 Automated reordering system.

 Monitoring stock levels in the stores constantly.
 Identifies the items were moving fast.
 Cost reduction.
 Use of “Magic band”

 To be Continued.....

 Use of “brocading system”.

 Use of “Radio frequency technology” to
manage its inventories.

 Question 3

 Q4.What was the Nature of benefits Derived by

Wall-Mart from the efficient Supply chain
management practices and how far it has
contributed to its sustainable Competetive
advantage?Explain.



Akanksha Srivastav
benefits derived by WAL-MART from
the supply chain
Ø Lower Transportation Cost
Ø
Ø Price Negotiator
Ø
Ø Generating Good Revenues In the Form of Higher
Volumes.
Ø
Ø Reduction In Lead Time
Ø
Ø Faster Inventory Turnover
1.
Ø Accurate Forecasting of Inventory Levels


Ø Increase Warehouse Space

Ø
Ø Reduction In Safety Stocks
Ø
Ø Better Working Capital Utilisation
Ø
Ø Reduction In Inventory Storage Cost
Ø
Ø Reduction in Labour and Handling Cost
Competitive Advantage


Objectives-“To reduce its purchasing costs and offer the best

price to its customers.”

vLowest Transportation Cost

v
vLowest Shipment Cost


vFastest Inventory Replenishment

v
vBetter Use of IT Capabilities
v
vUse of Cross-Docking Method of logistics
v
v
 Question 4

 Q3. What factors should WAL-MART consider

for supply chain if it starts its operation in
India?



Shipra Agrawal


 Already exist through FDI in wholesale business.




 Threeyear old joint venture with Indian telecomm

company ‘Bharti Airtel’.


 Supply goods to ‘Institutional Buyers’ & other
contractors.
Supply Chain Management
bharti – wal mart
 Bhartioperate Front-end & Wal-Mart operate
Back-end of Supply Chain

 Raj Jain (MD & CEO) says-
 “ the larger issue in our country is supply chain”

 As at least 40% of produce is wasted because of
inadequate storage & transportation.
If comes in Indian retail business…?
Favorable factors
 Availability of suppliers
Ø Ready to supply at extreme low prices
Ø Other main player may be farmers


 Real estate
 “The Wal-Mart model is very Real Estate hungry”- Marketing

experts says
Ø Availability of required space
Ø Available at lower prices


 Consumer readiness
Ø Price leadership


Ø
 Competition
Ø In US face problem of oversupply
Ø 7 or 8 players in India


 “Wal-Mart global sales was $315.6 billion which is near to the annual
revenue of entire Indian retail industry i.e. $320 billion”


 Unfavorable factors
 Consumer behavior
Ø Consumer perception
 In US – Bigger store lower prices
 Smaller store higher prices
 In India- Bigger store higher prices
 Smaller store lower prices
 Question arise of positioning of Lower Prices
Ø Consumer preference
 Different across Global Market


 Location of outlets- outskirts of urban centre

Ø Few suburbanites own cars
Ø Industry Experts says “ Indian consumers doesn’t travel more than
6Km or 7Km to shop.


 Logistics and infrastructure

Ø Cold chains, warehousing,& logistics infrastructure will become
unmanageable challenge in India.
Ø Need of bullock carts & handcarts along with Volvo Trucks .
Ø
 Political issues

Ø Not allowed to directly enter in the Indian retail sector.

Ø Some expetrs believe they will be allowed in future.
Ø

Recommendations

 Augmenting the value of low prices with other

differentiating values.

 To know consumer preferences in India, can
conduct surveys and can take help of Bharti.

 Aggressive advertising for low price positioning.

 Ready with all arrangements so as to explore
opportunity if govt. allow FDI in retail sector.


Thank you
QUESTIONS