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Walmart SCM

  1. A VIDEO Walmart SCM
  2. 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
  3. 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
  4. 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
  5. 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.
  6. 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
  7. 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
  8. COMPONENTS OF SCM • Procurement • Distribution • Logistics management • Inventory management
  9. 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.
  10. 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
  11. 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
  14. 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
  15. 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.
  16. 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.
  17. 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 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.
  18. 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