A VIDEO
Walmart SCM

WALMART
Founded 1962
Founder(s) Sam Walton
Number of locations 11,088 (April 2014)
Revenue US$ 476.294 billion (2014)
Net income US$ 16.022 billion (2014)
Owner(s) Walton family
Employees 2.4 million (2014)
Subsidiaries
Asda, Sam's Club,Walmex, @WalmartLabs,
Walmart e-Commerce

Inbound
Logistics
Operations
Outbound
Logistics
Marketing and
sales
Service
• VMI system
(Vendor
managed
inventory)
continuous
replenishment
• EDI
(Electronic Data
Interchange)
3 business segments:
• WalMart stores
o Super centers
o Discount centers
o Neighborhood
markets
• SAM’S Club
• WalMart
International
• Hub and spoke
distribution
system.
• Cross Docking
Logistic technique to
make the distribution
process more
efficient
• Word of mouth
communication.
• Focuses on everyday
low prices
• “Save money, live
better”
• Sales are on a self-service,
cash-and-carry
basis.
• Accepting
returned
goods
• Satisfaction
guarantee
• Opening hours
(24/7)
PRIMARY ACTIVITIES

SUPPORT ACTIVITIES
Firms Infrastructure
close connection between headquarter and local stores.
Human Resources
• Based on Interaction practices between company and employees
• Low pay but other benefits (health care plans, retirement plans, or promotion opportunities)
• 2.2 million associates globally.
• Every time a supercenter is opened, roughly 300 jobs are been provided.
• Women - 57% of U.S. workforce, 27% of corporate officers, and 20% of Board of directors.
Techonology Development
It is the key factor of the company. It constitutes a competitive advantage against competitors.
• Computer-based technology
o POS (Point of sales) system
o Satellite System
Procurement
• Wal-Mart deals directly with manufacturers, by passing all intermediaries.
• EDI : Electronic data interchange
• MANUFACTURER – WALMART – CUSTOMER

DISTRIBUTION CHANNELS
• “Saturation Strategy”
• The company owns a
fleet of more than 3,000
trucks and 12,000
trailers.
• The Wal-Mart
Way – Cross Docking.

WALMART
EXTERNAL FACTORS INTERNAL FACTORS
Helpful Harmful
SW • Diversity in products & services
• Convenient prices & locations
• Strong market presence
• Customer loyalty
• Strong financial performance
• Cost and pricing advantages over
STRENGTHS WEAKNESSES
rivals
• Good supply chain
• Global Expansion: new
geographic areas
• Increasing online sales
• Strategic alliances
- Acquiring rival firms
• Brand image-weak
reputation
• Low global presence
• Behind rivals in
e-commerce
• Intense Competition
• Laws and Regulations:
Trade policy
• Cultural barriers
• Current economy
• Slow market growth
• Transport of distinctive
competency
OPPORTUNITIES THREATS

SUPPLY CHAIN FLOW CHART
Manufacturer
Manufacturer
Manufacturer
Retail Store
Retail Store
Radio, headphone
Point of sale terminal
Retail Store
Distribution center
Bar code, RFID
Satellite system
Company Headquarter

COMPONENTS OF SCM
• Procurement
• Distribution
• Logistics management
• Inventory management

PROCUREMENT
• Wal-Mart emphasized the need to reduce purchasing
costs and offer the best price to the customer.
• The company directly procured from manufacturers,
by avoiding all intermediaries.
• Wal-Mart finalizes a purchase deal only when it is
fully confident that the products being bought is not
available else where at a lower price.

DISTRIBUTION USING VMI
• The vendor (supplier) manages the stock levels and availability for the customer based on
safety stock levels the as per the agreed Terms & Conditions.
• Vendor Managed Inventory (VMI) is a planning and management system in which the
vendor is responsible for maintaining the customer’s inventory levels.
• 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

LOGISTICS MANAGEMENT
• An important feature of Wal-Mart’s logistics infrastructure was its fast and responsive
transportation system.
• The distribution centers were serviced by more than 7000 company owned trucks.
• Wal-Mart 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.
• Uses Cross-Doc and Hub & Spoke Approach

CROSS DOCKING

HUB & SPOKE MODEL

FLOW TIME ANALYSIS
Point-of-sale
system
captures data
in real-time
Data is
transmitted to
warehouses
for Inv. Mgmt.
Retail Link
transmits
data to
supplier
Orders are
generated from
previous-day
sales
Merchandise is
loaded onto
trucks using
cross-docking
Merchandise
is delivered to
the store
Merchandise is
manufactured
based on historical
and real-time data
Merchandise
is shipped to
warehouses
Customer
made a
purchase
The store will re-stock
the shelves
with merchandise

INVENTORY MANAGEMENT
• Wal-Mart invested heavily in IT and communication systems to effectively track sales and
merchandise inventories in stores across the country. Hence, Wal-Mart set up its own satellite
communication system in 1983.
• 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.
• 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.

TO BE NOTED…
• One of the keys to Wal-Mart's effective logistical system is the flexibility that it has when choosing suppliers.
• When Wal-Mart 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 Wal-Mart'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.
• 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.

TO BE NOTED…
• Wal-Mart 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, Wal-Mart will give them so much business that they will get huge discounts.
• 2010 -Walmart created new unit Global.com to establish its online presence - E-commerce. The
major advantage that Walmart has over Amazon is the strong association of the e-commerce/
website with actual Walmart stores.

RECENT NEWS
• Wal-Mart's online shopping sales grew 30 percent during
2013, but it is a small slice of the company's total profit.
• Wal-Mart announced a new line of organic food, to be sold
under the “Wild Oats” label, at prices comparable with
conventionally-grown products. This broad new line, with
more than 100 items, is sure to undercut existing price
points in the industry.
• The concept truck is called W.A.V.E. (Walmart Advanced
Vehicle Experience) and is said to be 20 percent more
aerodynamic than the company's current trucks