VALUE CHAIN ANALYSIS VALUE CHAIN ANALYSIS OF OF PRESENTED PRESENTED BY: BY: ARPAN, ARPAN, BISHNU BISHNU MONICA MONICASUBHASHRESUBHASHRE KALYAN KALYAN
• "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
PORTER’S VALUE CHAIN PORTER’S VALUE CHAIN ANALYSIS ANALYSISThe value chain as the internal processes or activities a company performs “to design, produce, market, deliver and support its product.”PRIMARY ACTIVITIES• Inbound logistics• Operations• Outbound logistics• Marketing and sales
SUPPORT ACTIVITIES:-• Procurement• Technology development• Human resource management• Firm infrastructure
VALUE CHAIN ANALYSIS OFVALUE CHAIN ANALYSIS OF WAL-MART WAL-MART
FIRM INFRASTRUCTURE FIRM INFRASTRUCTURE• 2485 Wal-Mart stores• 682 Supercentres, 457 Sam’s Clubs, 5 Wal- Mart Neighbourhood Markets and 1007 units of Wal-Mart International.• It serves over 100 million customers weekly worldwide.• There are 1035000 associates, and the company is America’s largest private employer.
HUMAN RESOURCES HUMAN RESOURCES MANAGEMENT MANAGEMENT• Almost 60% of all managers in Wal-Mart stores started as hourly associates.• The employees are encouraged to communicate openly, offer new ideas, take risks, strive for excellence and have fun. Employees are getting competitive wages and comprehensive benefits.• In recruiting new associates the company begins a comprehensive recruitment program in the community where the store is to identify candidates.
• Recruitment programs are well publicised and convenient, providing an opportunity for job applicants and the company to start getting acquainted• When new employees start at Wal-Mart they are presented to the two basic rules of Wal-Mart. These are:• Rule 1: The customer is always right• Rule 2: If the customer happens to be wrong, refer rule 1.
TECHNOLOGY DEVELOPMENT TECHNOLOGY DEVELOPMENT• Wal-Mart set up its own satellite communication system in 1983• Wal-mart uses Bar-coding & RFID technologies, different processes like efficient picking, receiving & proper inventory control of the products along with easy packing and counting of the inventories was ensured.• Electronic data interchange (EDI) – a computer-to-computer exchange of business documents
PROCUREMENT PROCUREMENTWal-Mart’s process of procurementinvolvesreducing its purchasing costs as far aspossible so that it can offer best price toits customers. The company procuresgoods directly from the manufacturers,bypassing all intermediaries.
FLOW-TIME ANALYSIS Point-of-sale Data is Orders are Merchandise isCustomer Merchandise The store will re- system transmitted to generated from loaded onto made a is delivered to stock the shelves captures data warehouses previous-day trucks usingpurchase the store with merchandise in real-time for Inv. Mgmt. sales cross-docking Retail Link Merchandise is Merchandise transmits manufactured is shipped to data to based on historical warehouses supplier and real-time data
LOGISTICS LOGISTICS• The drivers are tracked regularly through “Private Fleet Driver handbook” Mart uses a logistics technique called “Cross Docking”• Wal-Mart today about 60% inbound freight (closer to -80% for their grocery segment) is managed by suppliers.• The important of Wal-Marts logistics infrastructure was its fast and responsive transportation system.• The distribution centres were serviced by more than 3,500 company owned trucks.
WAL*MARTS BUSINESS LOGIC WAL*MARTS BUSINESS LOGIC Everyday low pricesower prices More customersom suppliers More goods sold Lower operating Costs
OPERATIONS OPERATIONS:Wal-Mart operations are comprised of threebusiness segments•WAL-MART STORES Super- centres Discount Stores Neighbourhood Markets•SAM’S CLUB-SAM’S CLUB•WAL-MART INTERNATIONAL
MARKETING AND SALES MARKETING AND SALES•Employees wore blue vests to identify themselves•Aisles were wide•Apparel departments were carpeted in warmcolours• A store employee followed customers to their carsto pick up their shopping carts•Customer was welcomed at the door by a “peoplegreeter,” who gave directions and struck upconversations
SERVICE SERVICE• Opening hours at Wal-Mart generally range from 7.00 a.m. to 11.00 p.m. six days a week, and from 10.00 a.m. to 8.00 p.m. on Sunday.• All Wal-Mart stores maintain uniform prices, except where lower prices are necessary to meet local competition. Sales are primarily on a self-service, cash- and-carry basis with the objective of maximizing sales volume and inventory turnover while minimizing expenses.
• Bank credit card programs, operates without recourse to the Company, is available in all stores.• The replenishment system also helps the store adjust to customers demands. The stores are organised the same way all over the world, so the customers will recognise the stores wherever they go.
WAL**MART’S VALUE CHAIN Wal-Mart Wal-Mart Wal-Mart Suppliers Suppliers Distribution Store Shopper CenterVendors are Wal-Marts suppliers. Once the products After products are Customers canThey deliver are delivered to the delivered to the purchase productsproducts to Wal- distribution center, stores, they are at very low pricesMarts distribution they are sorted and placed on the and have the abilitycenter or directly to placed on trucks to appropriate shelf to return any item.one of the stores. be delivered to location forWal-Mart is able to stores. This allows customers to view.bargain for the for less than 48 Store locations arelowest possible hour deliveries to located throughoutprice because of stores and the U.S. in rural andthe high volume of increased efficiency urban towns.sales. Therefore, on trucks withWal-Mart passes backhauls.this savings to itscustomers.
Wal-Mart Supply Chain Source: Adapted from Garrison Wieland for “Wal-Mart’s Supply Chain,” Harvard Business Review 70(2; March–April 1992), pp. 60–71.
Walmart Value ChainThe World of Walmart Map Growth of Walmart