The document examines Walmart's business model, including its strategies for supply chain management, pricing, and customer service. Walmart leverages a hub and spoke distribution network, minimizes inventory, and uses technology like bar codes and RFID for efficient operations. It focuses on low prices and a vast product range to attract customers looking for convenience and one-stop shopping.

1. The Walmart Effect

2. World’s Largest retailer.World’s Largest retailer.
Ranks 1 - Fortune 500 List-’14Ranks 1 - Fortune 500 List-’14
Mission Statement:Mission Statement:
Save Money. Live Better.Save Money. Live Better.
Targeted Demographic:Targeted Demographic:
•Modest IncomesModest Incomes
•Shoppers interested in pricesShoppers interested in prices..
The Walmart EffectThe Walmart Effect

3. Wal-Mart
Recent ventures:Recent ventures:
Wal-Mart OnlineWal-Mart Online :: e-commerce website, Online Music and moviese-commerce website, Online Music and movies..
Push/Pull System :Push/Pull System :
Push system because it is based on the downstream demand forecast.Push system because it is based on the downstream demand forecast.
Pull System because it tells its manufacturers what to produce and how much to produce.Pull System because it tells its manufacturers what to produce and how much to produce.
Focuses on:Focuses on:
•Hub and Spoke Distribution NetworkHub and Spoke Distribution Network
•Minimal inventoryMinimal inventory
•Go GreenGo Green
•Cross DockingCross Docking
•Less Lead timeLess Lead time
The Walmart EffectThe Walmart Effect

4. Wal-Mart’s - Meat
Largest Supplier of Meat and Fish in the US.Largest Supplier of Meat and Fish in the US.
First StepFirst Step ::
Identify the suppliers.Identify the suppliers.
Lowest possible price.Lowest possible price.
Win-Win situation.Win-Win situation.
Second Step:Second Step:
Transports the products directly from the manufacturers site to the distribution center whereTransports the products directly from the manufacturers site to the distribution center where
cross docking happens.cross docking happens.
Third Step:Third Step:
ReplenishmentReplenishment
The Walmart EffectThe Walmart Effect

5. First Step: Supplier Selection
• Walmart directly connects with the manufacturer bypassing intermediaries.Walmart directly connects with the manufacturer bypassing intermediaries.
• Walmart spends some considerable amount of time meeting vendors andWalmart spends some considerable amount of time meeting vendors and
understanding their cost structure.understanding their cost structure.
• WalmartWalmart seals a deal only when it is fully confident that the product being bought is notseals a deal only when it is fully confident that the product being bought is not
available else where at a lower price.available else where at a lower price.
• It also ensures that the supplier meets the US laws & standards.It also ensures that the supplier meets the US laws & standards.
GFSI –GFSI – Global food safety Initiative standards.Global food safety Initiative standards.
FDAFDA – Food and Drug Administration Standards.– Food and Drug Administration Standards.
USDA –USDA – United States department of Agriculture.United States department of Agriculture.
MSCMSC ---- Marine Stewardship Council Certified.Marine Stewardship Council Certified.
Hillshire Brands CoHillshire Brands Co
Angus BeefAngus Beef
Vita Sea productsVita Sea products
The Walmart EffectThe Walmart Effect

6. Second Step: Transportation
• Walmart directly ships its products from the manufacturer with its own fleet ofWalmart directly ships its products from the manufacturer with its own fleet of
trucks.trucks.
• Hub and Spoke System – It purchases orders in huge quantities and distributesHub and Spoke System – It purchases orders in huge quantities and distributes
them on its own.them on its own.
• The drivers have a very stringent selection process – Eg.300,000 accident freeThe drivers have a very stringent selection process – Eg.300,000 accident free
miles.miles.
• The unloading process is carried out with equally spaced intervals (2hrs).The unloading process is carried out with equally spaced intervals (2hrs).
• Lead time at Walmart is 48hrs compared to 5 days in other companies.Lead time at Walmart is 48hrs compared to 5 days in other companies.
The Walmart EffectThe Walmart Effect
 6500 Tractors6500 Tractors
 55000 trailers55000 trailers

7. Wal-Mart’s Network - CA
Distribution Centers - 9Distribution Centers - 9
Supercenters - 17Supercenters - 17
Sam’s Club – 35Sam’s Club – 35
Neighborhood Markets: 50 >Neighborhood Markets: 50 >
•Sort goods intended for different locations.Sort goods intended for different locations.
•Cross Docking : lots are unloaded from an incoming truck and directly loaded onto theCross Docking : lots are unloaded from an incoming truck and directly loaded onto the
outbound truck with no storageoutbound truck with no storage..
•Various types of distribution centers exist and are categorized by facility type and location.Various types of distribution centers exist and are categorized by facility type and location.
ExEx :: Grocery and Perishable food distribution center, Fashion Distribution centerGrocery and Perishable food distribution center, Fashion Distribution center
The Walmart EffectThe Walmart Effect
Distribution centerDistribution center ::
•1 million square feet in size, 5 miles of1 million square feet in size, 5 miles of
conveyor belts.conveyor belts.
•Larger loads are split into smallerLarger loads are split into smaller
loads and sent to the retail outlets.loads and sent to the retail outlets.

8. Walmart-Supplier Communication.
The Walmart EffectThe Walmart Effect

9. Wal-Mart’s Distribution Centers
The Walmart Effect
Distribution centers, This figure illustrates the four types of distribution centers and their locations.
Source: www.mwpvl.com
Source: www.mwpvl.com

10. ISCM-Internal Supply Chain Management
ISCM interacts with both macro components of SCM(SRM and CRM).ISCM interacts with both macro components of SCM(SRM and CRM).
The Walmart EffectThe Walmart Effect
Source: www.walmart.com

11. Strategy Planning
LocationLocation of the facility, its capacity and the warehouse location are determined.of the facility, its capacity and the warehouse location are determined.
Distribution centers - General DC deliver directly to the retail store. There are someDistribution centers - General DC deliver directly to the retail store. There are some
centers staffed by Walmart and some run by third party.centers staffed by Walmart and some run by third party.
Branding the new products in store.Branding the new products in store.
EDLPEDLP
TheThe WalmartWalmart
EffectEffect

12. Demand Planning
Walmart has the largest IT infrastructure of any private company in the world.Walmart has the largest IT infrastructure of any private company in the world.
Their technology and network design allows them to accurately forecast their demand.Their technology and network design allows them to accurately forecast their demand.
Walmart implemented the UPC bar code system to analyze the store level information.Walmart implemented the UPC bar code system to analyze the store level information.
Universal Product Code is used for tracking the trade items in stores.Universal Product Code is used for tracking the trade items in stores.
The Walmart EffectThe Walmart Effect

13. Supply Planning
ERP software is used to manage the data from demand planning and strategy planningERP software is used to manage the data from demand planning and strategy planning
to produce an optimal supply planning.to produce an optimal supply planning.
Communication and relationship network with suppliers helps to improve material flowCommunication and relationship network with suppliers helps to improve material flow
with minimal inventory.with minimal inventory.
Uses Radio Frequency Identification(RFID)to manage inventory.Uses Radio Frequency Identification(RFID)to manage inventory.
The Walmart EffectThe Walmart Effect

14. Fulfillment and Field Service
Online customer help center.Online customer help center.
Customer service center with 24/7 availability.Customer service center with 24/7 availability.
In store service desk.In store service desk.
The Walmart EffectThe Walmart Effect

15. ERP Software
The Walmart Effect

16. Marketing:
The first pitch that brought thousands into the first store of (then Ben Franklin) Walmart inThe first pitch that brought thousands into the first store of (then Ben Franklin) Walmart in
1962 were :1962 were :
1.1.Sunbeam coffee maker priced at $19.95 for just 13.47Sunbeam coffee maker priced at $19.95 for just 13.47
2.2.A lawn mover discounted from $59.95 to $37.77A lawn mover discounted from $59.95 to $37.77
These set a successful retail model for Walmart.These set a successful retail model for Walmart.
The Walmart EffectThe Walmart Effect

17. Pricing Strategy :
Walmart products are priced 20% less than its competitors.Walmart products are priced 20% less than its competitors.
A standard markup of 30% is fixed.A standard markup of 30% is fixed.
Provide statistical dataProvide statistical data
They generate large profit by selling more.They generate large profit by selling more.
Ensure strict control overhead costs spending less on facility paying minimal rent.Ensure strict control overhead costs spending less on facility paying minimal rent.
The Walmart EffectThe Walmart Effect

18. Price comparison :
Product
Aldi Kroger Trader Joe's Publix Walmart
Price Weight Price Weight Price Weight Price Weight Price Weight
Chicken
Breasts,
frozen
$5.49 3 lbs $8.99 3 lbs $6.99 2.5 lb $6.49 32 oz $6.98 3 lbs
Chicken
Nuggets,
frozen
$3.99 32 oz $3.79 13.25 oz $3.79 16 oz $5.99 29 oz $4.47 29 oz
Chicken
Tenderloi
ns,
frozen
$5.99 2.5 lbs $8.99 3 lbs $6.99 2.5 lb $6.99 32 oz $6.98 3 lbs
The Walmart EffectThe Walmart Effect

19. Customer service
Wal-Mart trains employees on problem solving and customer relatioship techniques.TheWal-Mart trains employees on problem solving and customer relatioship techniques.The
slogan of "satisfaction guaranteed" is something that Wal-Mart seriously follows.slogan of "satisfaction guaranteed" is something that Wal-Mart seriously follows.
Wal-Mart trains employees to ask customers if they need assistance and also providesWal-Mart trains employees to ask customers if they need assistance and also provides
tutorials on how a particular product functions.tutorials on how a particular product functions.
Another function of Wal-Mart customer strategy is to have greeters at the door of everyAnother function of Wal-Mart customer strategy is to have greeters at the door of every
store.store.
Wal-Mart management feels that if customers are greeted by a friendly face,it willWal-Mart management feels that if customers are greeted by a friendly face,it will
enhance their shopping experience.enhance their shopping experience.
The Walmart EffectThe Walmart Effect

20. Satisfying customer needs:
Wal-Mart caters to a variety of customers who want to enjoy and live comfortably withoutWal-Mart caters to a variety of customers who want to enjoy and live comfortably without
draining their check book.draining their check book.
Their entire inventory is priced to compete with other discount stores in their market.Their entire inventory is priced to compete with other discount stores in their market.
However, it’s not only the low prices that entice customers; it’s also the convenience ofHowever, it’s not only the low prices that entice customers; it’s also the convenience of
having almost everything in one place. For a shopper that has to buy food, householdhaving almost everything in one place. For a shopper that has to buy food, household
items, toys and clothes, and doesn’t have a lot of time to do it, Wal-Mart is there.items, toys and clothes, and doesn’t have a lot of time to do it, Wal-Mart is there.
The Walmart EffectThe Walmart Effect

21. By stocking a variety of items, Wal-Mart can attract it’s customers to buy more things byBy stocking a variety of items, Wal-Mart can attract it’s customers to buy more things by
making it easy and convenient. Customers who want the ease of one-stop-shopping canmaking it easy and convenient. Customers who want the ease of one-stop-shopping can
do so at these stores.do so at these stores.
Wal-Mart also makes the effort to go the extra mile when it comes to making people feelWal-Mart also makes the effort to go the extra mile when it comes to making people feel
comfortable and creating a friendly environment. Customers who shop at Wal-Mart arecomfortable and creating a friendly environment. Customers who shop at Wal-Mart are
given a sense of well-being and treated as individuals, not just as a faceless shopper.given a sense of well-being and treated as individuals, not just as a faceless shopper.
The Walmart EffectThe Walmart Effect

22. Order management
Voice based order fillingVoice based order filling
Each person responsible for order picking is provided with a microphone/speakerEach person responsible for order picking is provided with a microphone/speaker
headset connected with a VOF worn on belt. This guides them to the product in aheadset connected with a VOF worn on belt. This guides them to the product in a
distribution center.distribution center.
The VOF system verifies the quantity picked and also the product.The VOF system verifies the quantity picked and also the product.
This system eliminates miss picks and paper labels for the products.This system eliminates miss picks and paper labels for the products.
The Walmart EffectThe Walmart Effect

23. Order management
Order management and store replenishment of goods were entirely executed with theOrder management and store replenishment of goods were entirely executed with the
help of computers through the Point-of-Sales (POS) system.help of computers through the Point-of-Sales (POS) system.
Through this system, it was possible to monitor and track the sales and merchandiseThrough this system, it was possible to monitor and track the sales and merchandise
stock levels on the store shelves.stock levels on the store shelves.
The Walmart EffectThe Walmart Effect

24. Thank You