'03walmart synopsis


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'03walmart synopsis

  1. 1. Study ofMIS Being Employed by Wal Mart
  2. 2. WAL-MARTS SUPPLY CHAIN MANAGEMENT TECHNIQUEWal-Marts success is solely due to their efficiency in supply chain management andlogistics. Wal-Mart turns over their inventory on a weekly basis.K-Mart turns over their inventory on an average of three to four times a year. Both companieshave the same set-up and conceptRFID SYSTEM104 Wal-Mart stores and 36 Sams Clubs, the company has installed RIFD. RFID readers atthe receiving docks at the back of the building, near the trash compactors and between theback room and the retail floor.For the cases of goods that are shipped to the stores with RIFD tags, Wal-Mart records theirarrival by reading the tag on each case and then reads the tags again before the cases arebrought out to the sales floor.By using sales data from its existing point-of-sales system, which is not using RFID, Wal-Mart subtracts the number of cases of a particular item that are sold to customers from thenumber of cases brought out to the sales floor.When a case is brought out to the sales floor, the system records that its being put out on theshelves.When the case is read at the trash compactor, the status within the system is changed to "onshelf."Suppliers can get updates on the location of their goods within 30 minutes of the goods·movement from one part of the store to another with a98%read rate.WAL-MARTS SUPPLY CHAIN MANAGEMENT TECHNIQUE- RETAIL LINKWal-Mart uses Retail Link to provide vendors with the information needed to forecastdemand for their products.Product is the Roll-on Insulator Kit, to accurately forecast, Use Retail Link to view thehistorical sales of your product.Insufficient work without the information provided from Retail Link, Wal -Marts Retail Linkextranet, it has begun to integrate RFID process, radio frequency identification data, to theoriginal 7 Wal-Mart stores in Texas.This technology gives an accurate reading on what items have been replenished, therefore notrelying on people to record the information.By using this technology it will reduce out-of-stocks by providing the location of goods withRFID tags.It helps the retailer by sharing its data with the suppliers automatically notifying when itemsare on the shelves.
  3. 3. WAL-MART SUPPLY CHAINUsing the RFID tags, shipments are automatically entered into their system, and eachdepartment has a handheld "Telxon”.Every tag on the shelves is scanned to get on-hands and when an item is purchased at theregister, it is automatically taken out of their system.STAGES OF SUPPLY CHAIN MANAGEMENT´ Timber company´ Paper manufacture´ Packaging´ P & G or other manufacture´ Third party DC´ Wal-mart store´ CustomerCOMPETITIVE ADVANTAGE FROM INFORMATIONTECHNOLOGYPoint-of-sale system: A computerized system that identifies each item sold, finds its pricein a computerized database, creates an accurate sales receipt for the customer, and stores thisitem-by-item sales information for use in analyzing sales and reordering inventory. Aside fromhandling information efficiently, effective use of this information helps Wal-Mart avoidoverstocking by learning what merchandise is sellingslowly.Over one 5 year period, Wal-Mart invested over $600 million in information systems.TelecommunicationsWal-Mart use telecommunications to link directly from its stores to its central computersystem and from that system to its suppliers computers. This allows automatic reordering andbetter coordination. Knowing exactly what is selling well and coordinating closely withsuppliers permits Wal-Mart to tie up less money in inventory than many of their competitors.At its computerized warehouses, many goods arrive and leave without ever sitting on a shelf.
  4. 4. Only10% of the floor space in Wal-Mart stores is used as an inventory area, compared to the25% average for the industry.BAR CODE SCANNNGThe idea of bar code scanning required that industry develop a universal product code (UPC)system, a standard method for identifying products with numbers and coding those numbersas the type of bar code shown in the photo.The use of bar code scanners made it unnecessary to stamp the price on every item (except instates that still require this for consumer protection).This reduced costs but also eliminatedjobs of some of the clerks who formerly did the stampingCROSS DOCKINGWal-Mart has invested heavily in its unique cross-docking inventory system. Cross dockinghas enabled Wal-Mart to achieve economies of scale, which reduces its costs of sales.With this system, goods are continuously delivered to stores within 48 hours and oftenwithout having to inventory them.The system reduced the handling and storage of finished goods, virtually eliminating the roleof the distribution centers and stores.The manufacturer directly forwarded the goods to a place called the staging area. The goodsare packed here according to the orders received from different stores and then directly sentto the respective customers.Lower prices also eliminate the expense of frequent sales promotions and sales are morepredictable.Cross docking gives the individual managers more control at the store levelTRANSPORTATION SYSTEMA company owned transportation system also assists Wal-Mart in shipping goods fromwarehouse to store in less than 48 hours. This allows Wal-Mart to replenish the shelves 4times faster than its competition.Wal-Mart owns the largest and most sophisticated computer system in the private sector. Ituses a MPP (massively parallel processor) computer system to track stock and movementwhich keeps it abreast of fast changes in the market. Information related to sales andinventory is disseminated via its advanced satellite communications system.HUB & SPOKE SYSTEMIn the early1970s, Wal-Mart became one of the first retailing companies in the world tocentralize its distribution system, pioneering the retail hub-and- spoke system. Under thesystem, goods were centrally ordered, assembled at a massive warehouse, known asdistribution center· (hub), from where they were dispatched to the individual stores (spoke).The hub and spoke system enabled Wal-Mart to achieve significant cost advantages by the
  5. 5. centralized purchasing of goods in huge quantities and distributing them through its ownlogistics infrastructure to the retail stores spread across the U.S.MAGIC WANDSEmployees 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 backupmerchandise in stock at the distribution centers.VOICE-BASED ORDER FILLING (VOF)In1998, Wal-Mart installed a voice-based order filling (VOF) system in all its grocerydistribution centers.Each person responsible for order picking was provided with a microphone/speaker headset,connected to the portable (VOF) system that could be worn on waist belt.They were guided by the voice to item locations in the distribution centers. The VOF systemalso verified quantities picked, and could respond to a variety of requests such as providingproduct detail (type, price, barcode number, etc.)By installing the VOF system, Wal-Mart eliminated mispicks and product labeling costssince the system did not require paper lists and labels to be affixed on the goods.INVENTORY MANAGEMENT(PRETTY DARN QUICK DISPLAYS)The company asked its suppliers to ship goods in store-ready displays called pretty darnquick (PDQ) displays.Goods were packed in PDQ displays that arrived at the stores ready to be boarded on theracks.Wal-Mart’s employees could directly replace the empty racks at the stores with fully packedracks, instead of refilling each and every item at the racksINVENTORY MANAGEMENTWith the rapid expansion, it was essential to have a good communication system. Hence, Wal-Mart set up its own satellite communication system in19 83.Wal-Mart was able to reduce unproductive inventory by allowing stores to manage their ownstocks, 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 ITcapabilities to make more inventories available in the case of items that customers wantedmost, while reducing the overall inventory levels.REORDERING SYSTEM
  6. 6. Wal-Mart built an automated reordering system linking computers between Procter &Gamble ("P&G") and its stores and distribution centers. The computer system sends a signalfrom a store to P&G identifying an item low in stock. It then sends a resupply order, viasatellite, to the nearest P&G factory, which then ships the item to a Wal-Mart distributioncenter or directly to the store. This interaction between Wal-Mart and P&G is a win-winproposition because with better coordination, P&G can lower its costs and pass some of thesavings on to Wal-Mart.EDIRetail Link connected Wal-Mart’s EDI (Electronic Data Interchange) network with anextranet, accessible to Wal-Mart’s thousands of suppliers. The suppliers could find out howtheir product was performing vis-à-vis competitors· products in a particular product category.MPPThe company used Massively Parallel Processor (MPP) computer system to track themovement of goods and stock levels. All information related to sales and inventories waspassed on through an advanced satellite communication systemCPFRBy the mid19 90s, Retail Link had emerged into an Internet-enabled SCM system whosefunctions were not confined to inventory management alone, but also covered collaborativeplanning, forecasting and replenishment (CPFR).In CPFR, Wal-Mart worked together with its key suppliers on a real-time basis by usingthe Internet to jointly determine product-wise demand forecast.CPFR is defined as a business practice for business partners to share forecasts and resultsdata through the Internet, in order to reduce inventory costs while at the same time,enhancing product availability across the supply chainCPFR: HARD TO IMPLEMENTThough CPFR was a promising supply chain initiative aimed at a mutually beneficialcollaboration between Wal-Mart and its suppliers, its actual implementation required hugeinvestments in time and money.A few suppliers with whom Wal-Mart tried to implement CPFR complained that asignificant amount of time had to be spent on developing forecasts and analyzing sales data.