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"People think we got big by putting big
stores in small towns. Really, we got big
by replacing inventory with
Sam Walton, Founder of
Founder: Sam Walton
Year of establishment: 1962
First store: Arkansas
•Sam Walton opens first discount store in Rogers, AK
•24 stores in Arkansas with $24 million in sales
•Two stores open outside of Arkansas in Missouri and Oklahoma
•Wal-Mart is incorporated
•Home office and Distribution Center opens
•Company is listed on the Hew York Stock Exchange
•Acquires 16 Mohr-Value stores and Hutcheson Shoe Company
•276 stores, 21,000 employees, and $1.248 billion in sales.
•Sam Club opens and Largest distribution center opens to-date
•Acquires Kuhn’s Big K, Grand Central Shoes, and Woolco stores
•Forbes magazine ranks Wal-Mart #1 retailer for eight years straight
•882 stores, 104,000 employees, and $8.4 billion in sales
•Wal-Mart Satellite Network (largest private satellite communication
in U.S. linking all facets of company operations)
•Celebrates 25th anniversary
Wal-Mart suffered a setback in 1992, when Walton died.
But it continued its growth in the 1990s, focusing on overseas stores.
1992, Mexico (joint venture with Cifra)
1994, Canada (acquired 122 Woolco stores from Woolworth)
1997, Germany (acquired 21 store of Wertkauf)
Korea, Brazil, and so on
Owns 95.1% share in Seiyu stores, Japan
•Joint-venture with Bharti Enterprises, India –
est. Bharti Wal-Mart Private Limited
•Opens stores in Costa Rica, El Salvador,
Guatemala, Honduras, Nicaragua, and South
•3,000th international stores opens in Sao
Ranked first in the Global Fortune 500 list in
2001-2002 financial year
In fiscal year 2012, Wal-Mart registered approximately $444 billion
in sales, which is $20 billion more than Austria's GDP. If Wal-Mart
were a country, it would be the 26th largest economy in the world.
If Wal-Mart was an army, it would have the second largest military
in the world, behind China.
Wal-Mart is bigger than Home Depot, Kroger, Target, Sears, Costco,
and K-Mart combined.
One of every four dollars Americans spend on groceries is spent at
WAL-MART STRATEGY & OPERATIONS STRUCTURE
Enable everyday low prices and above average profitability
by procuring, distributing, and selling products, when and
where needed, at lower costs than any competitor.
Short Response Times
Low Inventory Level
Fast Transportation System
Wal-mart imported 18 billion worth of goods from 5,000
Chinese suppliers in 2004
Ranked as China’s 8 biggest trading partner ahead of
Russia, Australia and Canada
Used power to squeeze domestic suppliers’ profit
Tough negotiator on prices
Demand for bottom price from suppliers.
Long term relationship with suppliers.
Compliance of standard manual for suppliers
One day Sam Walton’s close friend, George Billingslay, asked him to join
him on a canoe trip down the Spring River. He said he was bringing along
an old friend named Lou Pritchett, who was a V.P. with P&G at the time,
and who wanted to meet Walton and talk about some things relating to
our two companies. So Walton went along, and it turned out to be the
most productive float trip he ever took with George.
During that time on the river, both decided that the entire relationship
between vendor and retailer was at issue. Both focused on the end-user –
the customer – but each did it independently of the other. No sharing of
information, no planning together, no systems coordination.
Two giant entities going our separate ways, oblivious to the excess costs
created by this obsolete system.
Within three months, both had created a P&G / Wal-Mart team to build a
whole new kind of vendor relationship.
P&G could monitor Wal-Mart’s sales and inventory data, and then use
that information to make its own production and shipping plans more
It is the responsibility of each supplier to ensure that it is at all
times compliant with all relevant laws and regulations with respect
to merchandise produced for or sold to Walmart. A supplier with
production identified as non-compliant will be notified in writing
of the violation(s) and will be assessed the following sanctions:
FIRST STRIKE: All current and future orders with the supplier’ s
factory will be cancelled. Non-
compliant products in production or unshipped from the violating
factory will be rejected. Violations will
be recorded on a supplier’ s matrix for two years from the audit date.
SECOND STRIKE: A second instance of non-compliant
production by the supplier within two (2)
years of the initial violation will result in the cancellation of all
current and future orders, and all non-
compliant products in production or unshipped will be rejected for
the violating factory. The supplier, at
its own expense, will be required to undergo an unannounced
Ethical Sourcing audit conducted by a
Walmart approved third party audit firm.
THIRD STRIKE: If at any time Walmart, at its sole
discretion, determines that a pattern and practice of
non-compliance exists, Walmart will terminate its
business relationship with a supplier. All current and
future orders for the supplier in violation of this policy will
Walmart’s 158 distribution centers are hubs of activity for our
business. Our distribution operation is one of the largest in the
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-
Able replenish stores within 48 hrs against 5 days for
Shipping cost of walmart3% against 5% for competitors
Shorter lead time
Each Distribution center divided into different
section basis of quantity of goods received.
Managed in both cases and palletized goods.
High inventory turnover rate ,once in every two
Goods meant for US in pallets and imported goods in
reusable boxes and cases.
Some cases vendors supplied directly to stores.
85% of goods passed distribution centers.
The distribution centers ensured steady flow & consistent flow of
Large-scale use of sophisticated technology such as Bar code, hand held
computer systems (Magic Wand) and now, RFID.
Every employee had information regarding products at distribution
They make 2 scans- one for identifying the pallet, and other to identify
the location from where the stock had to be picked up.
The hand held computers guide employee to the location of the specific
The quantity of the product required from the center is
entered in the hand held computer, which updates the
information on the main central server.
The computers also enabled the packaging department to get
accurate information such as storage, packaging & shipping
Standardized bar code system
Applied by every supplier
Helps facilitating large scale operation
Pallets passed through conveyor belt are
Product codes are transferred to
centralized computer 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 labor sorting merchandises
Smooth logistic processes
Radio Frequency Identification System
Introduced in 2003
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
Sensors in the distribution center detect and receive
information from chips
Locate where the pallet is and the condition of it
Automatic sensor – avoid scanning codes one by one
Walmart is able to move goods to and from
distribution centers because we maintain a private
fleet of trucks and a skilled staff of truck drivers.
Company hired experienced drivers having more
than 300,000 accident free miles with no major
Every year they drive 700 million miles to make
millions of deliveries to our stores and clubs.
Each driver averages around 100,000 miles
annually—that’s like driving around the world 4
Drivers follow the most efficient routes to their
destinations, and work to minimize the number of
“empty miles” they drive.
Fleet driver Philip
Walmart Private Fleet
driver Philip Null is one of
only 66 drivers to reach 3
million safe driving miles.
As a reward for his service,
he received a new tractor to
drive throughout his career
Wal-Mart truck drivers move merchandise
loaded trailers from distribution Center to
retail store serviced by each distribution
Driver report to Coordinator who updates
them about their schedule and other details.
Driver arrives to store with loaded trailer.
Brings trailer at the dock of store at a
Trailers get unloaded at a gap of two hours.
Driver spends the night at store and returns
back to distribution center.
Trailers are never left unattended.
Wal-Mart's Private Fleet Driver Handbook
contained terms and conditions with regard to
termination of the truck drivers. According to
the Wal-Mart's Private Fleet Driver Handbook:
Driver could be terminated from his job if he
refused to deliver an assignment given to him.
the drivers should exchange the truck trailers
in a totally 'safe and responsible' manner,
without damaging trailer or consignment.
When a driver leaves an unloaded trailer in
front of the Wal-Mart store he must ensure
that no other person would gain access to the
However these rules are subject to situation.
Other tan using its own fleet Wal-mart also
used logistic technique called “Cross-docking”.
In this system, finished goods are directly
picked up from the manufacturing site of
supplier, sorted out and directly supplied to the
customers. This reduces handling and storage
of finished products.
Because of “cross-docking” the system shifted
from “supply chain” to “demand chain” which
meant, instead of retailers ‘pushing’ the
products into the system, the customers could
‘pull’ the products, when & where they
Manufacturing Cross Docking – This procedure involves the receiving of purchased and inbound
products that are required by manufacturing. The warehouse may receive the products and prepare
sub-assemblies for the production orders.
Distributor Cross Docking – This process consolidates inbound products from different vendors into
a mixed product pallet, which is delivered to the customer when the final item is received. For
example, computer parts distributors can source their components from various vendors and
combine them into one shipment for the customer.
Transportation Cross Docking – This operation combines shipments from a number of different
carriers in the less-than-truckload (LTL) and small package industries to gain economies of scale.
Retail Cross Docking – This process involves the receipt of products from multiple vendors and
sorting onto outbound trucks for a number of retail stores. This method was used by Wal-Mart in the
1980's. They would procure two types of products, items they sell each day of the year, called staple
stock, and large quantities products which is purchased once and sold by the stores and not usually
stocked again. This second type of procurement is called direct freight and Wal-Mart minimize any
warehouse costs with direct freight by using cross docking and keeping it in the warehouse for as little
time as possible.
Opportunistic Cross Docking – This can be used in any warehouse, transferring a product directly
from the goods receiving dock to the outbound shipping dock to meet a known demand, i.e. a
customer sales order.
Requisitions received for different goods from a store were
converted into purchase or procurement orders.
Purchase orders were then forwarded to the
who conveyed their ability or inability to supply the goods
within a particular period of time.
If manufacturer agrees goods were directly forwarded 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
Wal-mart shifted the focus from “supply chain” to the
“demand chain,” which meant that instead of the retailer
‘ pushing’ products into the system; customers could ‘ pull’
products, when and where they needed.