Supply Chain with a case study on Walmart

1. Supply Chain with a case
study on Walmart
Presented by
Kunal

2. About Walmart
• The world’s largest retailer Wal-Mart was founded by Sam Walton in
the year 1962.
• Presently they are operating in 28 countries with more than 11500
stores with 1.3 million employees .
• Walmart is the world's largest company by revenue, with about
US$570 billion in annual revenue, according to the Fortune Global
500 list in October 2022..

3. About the case
• Walmart has envious supply chain management that changed the way
how business is done
• This case study presents how the best practices implemented by
Walmart in IT integration that ensures efficiency and effectiveness of
supply chain.
• This shows how successfully supply chain was managed by Walmart
and how they got benefited from it.

4. How Walmart manage supply chain ?
Procurement and Distribution
Logistics Management
Inventory Management

5. Procurement and Distribution
• Wallmart emphasized the need to reduce purchase cost and provide
best price to customer .
• They spend a good amount of time with vendors to understand the
cost structure .
• They directly procured from manufacturers and bypassing all the
intermediaries.

6. Procurement and Distribution

7. Procurement and Distribution
Using EDI (electronic data interchange) for procurement
• The computer systems of walmart are connected with those of
suppliers .
• EDI enabled the suppliers to download Purchase orders along with
store to store sales information related to their products sold .
• On receiving information about products sales , the supplier ships the
required goods to Walmart distribution centres .
• EDI not only saved time and made procurement efficient but also
reduce the bullwhip effects.

8. Sharing Information :-
• P&G could monitor Walmart sales & inventory data and then use the
information to make its own production and shipping plans more
efficiently .

9. Implementing low price strategy
• To prevent the bullwhip effect, booming retailers like Walmart have
used a tactic known as “everyday-low-price” strategy.
• Customers feel the products are being sold at a discount, even though
that is not the case.

10. Vendor Managed Inventory
• A means of Optimising supply chain performance in which the
manufacturer is responsible for maintaining the distributors inventory
levels .
• The manufacturer has access to the distributors inventory data and is
responsible for generating purchase orders .
• Increased speeds , reduced errors and improved service.

11. Logistics Management
Cross
Docking
Hub and
Spoke

12. Cross Docking
• Cross-docking is a practice in logistics of unloading materials from a
manufacturer or mode of transportation directly to the customer or
another mode of transportation, with little or no storage in between.

13. Cross Docking
• At Walmart distribution centre P&G trucks are directly unloaded to
trucks that will head for Walmart stores.
• Product are put on shelf within 4 hours and are sold within 24 hours
• It helped Walmart to reduced handling costs , operating cost and
inventory storage cost
• It has also helped them to deliver product to customer faster .

14. Hub and Spoke
• In the early 1970s Walmart became on of the first retailing companies
in the world to centralize its distribution system , pioneering the retail
hub and spoke system .
• Under this system , goods were centrally ordered assembled at a
massive warehouse known as distribution centre or hub from where
they were dispatched to the individual stores (spoke).

15. Hub and Spoke
• The hub and spoke system enabled Walmart to achieve significant
cost advantages by the centralized purchasing of goods in huge
quantities and distributing them through its own logistics
infrastructure to the retail stores spread across US

16. Inventory Management
• Walmart invested highly in IT and communication systems to
effectively track sales
• With the rapid expansion it was essential to have a good
communication system Hence they set up their own satellite
communication system in 1983.

17. Inventory Management
• Walmart was able to reduce unproductive inventory by allowing
stores to manage their own stocks , reducing pack sizes across many
product categories and timely price downs.
• Instead of cutting the inventory across the board , Walmart made full
use of its IT capabilities to make more inventories available in the case
of items that customers wanted most , while reducing the overall
inventory levels .

18. Satellite Communication System

19. Use of IT in Supply chain
• The order management and store replenishment of goods were
entirely executed with the help of computers through POS system.
• Through this system it was possible to monitor and track the sales
and merchandise stock levels on the store shelves .
• Employees at the store keep the track of inventories in the store
through RF network.

20. Voice based order filling system (VOF)
• In 1998 Walmart installed a voice based order filling system (VOF) in
all its grocery distribution centers.
• Each person responsible for order picking was provided with a
microphone headset connected to the VOF system that was worn on
waist belt .
• They were guided by the voice to the item location in the distribution
centres.

21. Quick replenishment
• Since the Walmart has large storage area movement of goods within
the store was an important part of logistics operation.
• They made investments in IT to quickly locate and replenish goods at
the stores.

22. Retail link system
• In 1991 , they invested $4 billion to built a retail link system .
• More than 10000 Walmart retail suppliers used it to monitor the sales
of their goods at stores and replenish inventories.

23. Benefits of Retail link system
• Lead time was cut to 11 days from 21 days
• Growth in sales upto $8.5 million in 6 months

24. CPFR
• By the mid 1990s retail link system had emerged into an internet
enabled scm system whose function were not only limited to
inventory management alone but also covered Collaborative
Planning, Forecasting and Replenishment
• It is defined as a business practice for business partners to share
forecasts and results data through the internet in order to reduce
inventory costs while at the same time enhancing product availability
across the supply chain .

25. Radio Frequency Identification (RFID)
• Walmart planned to replace bar code technology with RFID
• Because of the implementation of RFID employees were no longer
required to scan the bar code of goods entering the stores and
distribution centres saving cost and time.

26. Benefits of Radio Frequency Identification
(RFID)
• Lesser labour requirements
• Reduction in thefts
• Decrease in stock out situations
• Realtime tracking of consumption patterns

27. “People think how we
got big by putting big
stores in small towns.
Really , we got big by
replacing inventory with
information”

28. Thank You !!