Walmart has developed an efficient supply chain management system that has allowed it to become the largest retailer in the world. It uses a hub and spoke distribution model with cross-docking to reduce inventory costs. Walmart invests heavily in technology like RFID and voice-order filling to streamline operations and inventory tracking. Strong communication networks allow it to collaborate closely with suppliers on forecasting and replenishment. These integrated systems and large purchasing volumes provide Walmart with competitive advantages in price and availability.

1. –
Submitted To
Prof. Dhanya Joseph |
Prepared By
Dharmik Bhatt 148320592002
Sanyam Bhanwara 148320592046
Mit Patel 148320592034
Yogesh Kalal 148320592097
Umang Tapodhan 148320592093
SUPPLY CHAIN
MANAGEMENT
PROJECT
SUPPLY CHAIN OF WALMART*
College – Oakbrook Business School
Plot No. 225, OppMaharaj Hotel lane, Jamiyatpura Road, S.G Highway, Gandhinagar

2. 1
Supply Chain Management of Walmart*
Supply Chain Management
Supply Chain: The sequence of organizations - their
facilities, functions, and activities - that are involved in
producing and delivering a product or service.
Sometimes referred to as value chains
"People think we got big by putting big stores in small towns.
Really, we got big by replacing inventory with information."
Sam Walton, Founder of Wal-Mart

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Content of Report
Sr. No Content Pg. No
1 Introduction of Walmart * 3
2 Value Chain of Walmart* 6
3 Introduction of Walmart* 6
4 Supply Chain of Walmart * 8
4.1 Walmart* gets benefited through Supply Chain 8
4.2 Walmart* Strategy 9
4.3 Walmart* Distribution System 10
4.4 Walmart*s Procurement 10
4.5 Logistics Management 13
4.6 Hub and Spoke system in Walmart* 14
4.7 Cross-docking 15
4.8 Walmart* Communication Network 15
4.9 Inventory Management 17
4.10 Voice-based Order Filling (VOF) 19
4.11 CPFR 20
4.12 RFID Technology 21
Conclusion 23

4. 3
1. Introduction of Walmart
Walton started small, with a single discount store and the simple idea of selling
more for less, has grown over the last fifty years into the largest retailer in the
world.
Today, nearly 260 million customers visit our more than 11,500 stores under 65
banners in 28 countries and e-commerce sites in 11 countries each week
CEO: C. Douglas Mcmillon
Founder: Sam Walton
Founded: July 2, 1962, Rogers, Arkansas, United States
Revenue: 485.7 billion USD (2015)
Headquarters: Bentonville, Arkansas, United States
Net income: 16.36 billion USD (2015)
Walmart is the world's largest company by revenue, according to the Fortune
Global 500 list in 2014, as well as the biggest private employer in the world with
2.2 million employees.
The company was listed on the New York Stock Exchange in 1972.
Walmart operates over 11,500 stores in 28 countries around the world. They
operate stores under 65 different banners globally.
Walmart became an international company in 1991
 Africa
 Argentina
 Brazil
 Canada
 Central America
 Chile
 China
 India
 Japan
 Mexico
 United Kingdom

5. 4
Global Presence
Mode of entry of International Expansion
Year Country Mode of Entry
1991 Mexico 50% Joint Venture Cifra
1994 Brazil 60% Joint Venture Lojas Americana
1994 Canada Acquisition Woolco (weak player)
1995 Argentina Wholly owned Susbidiary
1996 China New opening, JV, Acquisition
1998 South Korea Adquisition
1999 U.K. Acquisition of ASDA
2002 Japan Acquisition Seiyu
2002 Germany Acquisition of Wertkauf and Spar
2007 India Joint Venture
2011 Southern African Countries Acquisition of Massmart Holding Limited

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If Walmart were a country, its sales would rank it 28th in the world in GDP. That’s
right behind Norway and ahead of Austria.
Walmart ’s sells 1 billion pounds of bananas each year.
The company is mentioned over 60,000 times each day on social media.
History Overview of Walmart
• 1962: Walten Brothers opened fist Walmart in Arkansas
• 1970: Walmart became public
• 1990: 1st
National retailer
• 1991: International Expansion
• 1993: Creation of “Great Value”
• 2003: Largest corporation in the world
• 2012: 50th
Anniversary
Mission Statement, Vision, Goals, & Purpose
Mission Statement:
To help people save money so they can live better
Goal:
Becoming in an international brand
Vision:
“If we work together, we’ll lower the cost of living for everyone…we’ll give the
world an opportunity to see what it’s like to save and have a better
Advertising slogans:
• Save Money. Live better

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2.Value Chain of Walmart
3.Key Success Factors
• A supply chain with integrated technology
• An ability to generate large sales volume (economies of scale)
• Every Day Low Prices
• Superior logistics systems
• Decentralized operations
• A strong and unique culture (in U.S.)

8. 7
WAL*MART'S BUSINESS LOGIC

9. 8
4.Supply Chain of Walmart *
Walmart is world largest retail company just because of the supply chain
management.
4.1 Wal-Mart gets benefited through Supply Chain
• Lower inventories
• Higher productivity
• Greater agility
• Shorter lead times
• Higher profits
• Greater customer loyalty

10. 9
4.2 Walmart Strategy
• “Everyday low price”
• Effective use of logistics management
• Effective inventory control
• Bargaining power over suppliers
• Global Expansion for new market opportunity

11. 10
4.3 Walmart Distribution System
How Wal-Mart Manage the Supply Chain ?
• Procurement and Distribution
• Logistics management
• Inventory management
4.4 Walmart’s Procurement
Walmart 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.
Walmart finalizes a purchase deal only when it is fully confident
that the products being bought is not available elsewhere at a lower
price.

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Walmart 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.
Procurement and Distribution Management of Wal-Mart
• Bull whip effect
• Vendor managed inventory
Bull Whip Effect
Occurs when slight demand variability is magnified as information
moves back upstream.

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Vendor Managed Inventory
• A means of optimizing Supply Chain performance in which the
manufacturer is responsible for maintaining the distributors
inventory levels. The manufacturer has access to the distributors
inventory data and is responsible for generating purchase orders.
• Manufacturers generate orders, not distributors or retailers
Stocking information is accessed using EDI
• A first step towards supply chain collaboration
• Increased speed, reduced errors, and improved service
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 Walmart’s distribution
centers.

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4.5 Logistics Management
Flow-Time Analysis
An important feature of Walmart’s logistics infrastructure was its
fast and responsive transportation system.
The distribution centers were serviced by more than 3500 company
owned trucks.
Walmart 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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4.6 Hub and Spoke system in Walmart
"Hub and spoke" arrangements, where materials are brought in to one central
location and then sorted for delivery to a variety of destinations
 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 Walmart 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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4.7 Cross-docking
Cross-docking means to take a finished good from the Manufacturing
plant and deliver it directly to the customer with little or no handling
in the process.
In purest form this is done directly, with minimal or no warehousing.
To make its distribution process more efficient, Walmart 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.
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.
4.8 Walmart Communication Network
• Cross Docking relies on continuous communication between
Walmart’s suppliers, distribution centers, and every point of sale
system in each store.
• This enables orders to flow in, get packaged and then shipped.

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How does Wal-Mart do this?
• Walmart operates their own satellite network.
• Walmart’s satellite network sends the point of sale (POS) data
directly to 4000 vendors

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4.9 Inventory Management
Walmart 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, Walmart set up its own satellite communication system in
1983.
Walmart 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.
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.

19. 18
Inventory Management…
(quick replenishment)
Since the floor area of any Walmart store varied between 40,000 to
200,000 square feet, movement of goods within the store was an
important part of logistics operations.
Walmart made significant investments in IT to quickly locate and
replenish goods at the stores.
Inventory Management…
(pretty darn quick displays)
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.
Walmart’s employees could directly replace the empty racks at the
stores with fully packed racks, instead of refilling each and every
item at the racks.
Inventory Management…
(retail link system)
In 1991, Walmart had invested approximately $4 billion to build a
retail link system.
More than 10,000 Walmart retail suppliers used the retail link
system to monitor the sales of their goods at stores and replenish
inventories.
Retail Link connected Walmart’s EDI network with an extranet,
accessible to Walmart’s thousands of suppliers.

20. 19
The suppliers could find out how their product was performing vis-
a-vis competitors’ products in a particular product category.
Walmart 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.
Information Technology: A Supply Chain Enabler
• Information links all aspects of supply chain
• E-business
– replacement of physical business processes with electronic
ones
• Electronic data interchange (EDI)
– a computer-to-computer exchange of business documents
4.10 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.

21. 20
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, Walmart eliminated mispicks and
product labeling costs since the system did not require paper lists
and labels to be affixed on the goods.
4.11 CPFR
By the mid 1990s, Retail Link had emerged into an Internet-
enabled SCM system whose functions were not confined to
inventory management alone, but also covered collaborative
planning, forecasting and replenishment (CPFR).
In CPFR, Walmart worked together with its key suppliers on a
real-time basis by using the Internet to jointly determine product-
wise demand forecast.
CPFR is defined as a business practice for business partners to
share forecasts and results data through the Internet, in order to
reduce inventory costs while at the same time, enhancing product
availability across the supply chain.
Though CPFR was a promising supply chain initiative aimed at a
mutually beneficial collaboration between Walmart and its
suppliers, its actual implementation required huge investments in
time and money.
A few suppliers with whom Walmart tried to implement CPFR
complained that a significant amount of time had to be spent on
developing forecasts and analyzing sales data.

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VAN EDI vs Web-EDI
In October 2002, Wal-Mart asked its 14,000 suppliers to switch
over from the existing Value Added Networks (VAN) EDI to web
enabled EDI.
VANs route and manage EDI messages for their customers.
By implementing web-EDI, Walmart can save millions of dollars
in the form of license fees to the private VANs.
4.12 RFID Technology
(Radio Frequency Identification)
In efforts to implement new technologies to reduce costs and
increase the efficiency, in July 2003, Walmart asked its top 100
suppliers to be RFID compliant by January, 2005.
Walmart 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.

23. 22
Walmart expected that RFID would reduce the instances of stock-
outs at the stores.
Although Walmart 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.
How does RFID works

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Conclusion
Walmart* have done tremendous work on supply chain management. One of the
keys to Walmart’s effective logistical system is the flexibility that it has when
choosing suppliers.
When Walmart negotiates with suppliers and the suppliers know that Wal-Mart
will only pay the most competitive prices. This is because it is very easy for them
to find another supplier of that particular material with a lower price and very few
logistical problems
Another reason that Walmart's prices are so competitive is because they buy in
such large quantities that transportation from one end of the supply chain to
another is not as costly for additional units. Here they focus on bulk and get profit
out of it
This aspect of the logistical system does not come from skill or expertise it simply
comes from the sheer size of the company, but this is still a factor.
Walmart buys so many supplies from different places throughout the world, that
they have the luxury of using bigger trucks and using less fuel to go back and forth.
Also if by chance they have to use shipping services to transport material from one
location to another, Walmart will give them so much business that they will get
huge discounts.
So path of success of Walmart is given bellow