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Wal mart

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all about wall mart operations and suppliy chain.

all about wall mart operations and suppliy chain.

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  • 1.Where does Walmart’s supply chain start? What triggers Walmart’s Retail Link system to
    ship goods to local Walmart Stores?
    2.Why is a detailed knowledge of consumer purchases at each store important to Walmart’s success?
    3.Why can’t other large retailers easily duplicate Walmart’s Retail Link?
    4.Why does Walmart encourage its vendors to learn how to use Retail Link?
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  • 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.