all about wall mart operations and suppliy chain.

1. WAL-MART: SUPPLY CHAIN
MANAGEMENT
K.VARUN
123511

2. BACKGROUND
 Types of industry: one stop shopping center
 Founder: Sam Walton
 Year of establishment: 1962
 First store: Rogers in Arkansas

3.  The US-based Wal-Mart ranked first in the global
Fortune 500 list in the financial year 2001-02
earning revenues of 219.81 billion.
 Wal-Mart is the largest retailing company in the world.
 The company is much bigger than its competitors in
the US - Sears Roebuck, K-Mart, JC Penney and
Nordstrom combined.

4. THE TRADITIONAL SUPPLY CHAIN INCLUDES
INEFFICIENT AND UNNECESSARY STEPS
Select
Tag/
Label
Ship
Pack
Ship
Select PackReceive
Ship
Manufacturer
(Supplier)
Retailer
Shipper
Wholesaler
Receive PackSelect Storage
Storage
Sell
Order
Individual StoreDistribution Warehouse
Order
Order
Order
Make

5. WAL-MART SIMPLIFIED ITS SUPPLY CHAIN
Ship Receive
Select
Ship
Manufacturer
(Supplier)
Retailer
Shipper
Wholesaler
Receive PackSelect Storage Sell
Individual StoreDistribution Center
Tag/
Label
PackMake
WAL-MART: BUSINESS PROCESS
Cross-docking in distribution centers results in product flow
from inbound to outbound shipping docks within 48 hours.
Deliver within
72 hours of
order
POS
Order
<48 hours<48 hours

6. 6
CROSS-DOCKING
 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.

7. 7
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.

8. 8
INVENTORY MANAGEMENT…
 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.

9. 9
INVENTORY MANAGEMENT…
 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.

10. 10
INVENTORY MANAGEMENT…
 The order management and store
replenishment of goods are 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.

11. 11
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.

12. 12
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.

13. 13
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 could find out how their product was
performing vis-a-vis competitors’ products in a
particular product category.

14. WAL-MART INVESTS HEAVILY IN INFORMATION TECHNOLOGY
(CONT.)
 Various Quick-Response (QR) systems (retail-link) to allow direct store-to-
supplier ordering: “continuous replenishment”
Wal-Mart
Supplier
POS Data
Store
Vendor-managed QR
Supplier Store
Wal-Mart-managed
QR
Order
Wal-Mart
Supplier Store
Warehouse Just-in-Time
System
Distribution
Center
Distribution
Center
WAL-MART: BUSINESS PROCESS
POS Data

15. 15
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.

16. 16
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.

17. 17
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 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.

18. THE BENEFITS REAPED
 Better Stakeholder Relationships
 Strengthening relationships with customers, suppliers and employees
by passing on the savings on cost to them and thereby adding value.
 Benefits of own transportation system
 Low transportation costs (3% against competitors’ 5%)
 Faster delivery to stores (with in 48 hours) and faster replenishment
than competitors (4 times)
 Benefits of pricing strategy
 Low pricing with day-to-day variations coupled with higher discounts
than competitors
 Good bargaining power because of purchasing huge quantities
 Good revenues in terms of higher and consistent sales volumes

19. THE BENEFITS REAPED (CONTD.)
 Benefits of efficient supply chain
 Reduction in lead time
 Faster inventory turnover
 Accurate forecasting of inventory levels
 Increased warehouse space
 Reduction in safety stock
 Better working capital utilization

20. SAVING PEOPLE MONEY SO THEY CAN LIVE BETTER
 Each week, more than 200 million customers and
members visit 10,700 stores under 69 banners in
27 countries and e-commerce websites in 10
countries.
 With fiscal year 2013 sales of approximately $466
billion was made, Walmart employs 2.2 million
associates worldwide.