Sam Walton founded Walmart in 1962 and grew it into the largest retailer in the world through supply chain innovations. Walmart implemented a hub-and-spoke distribution model with centralized warehouses. This model allowed for bulk purchasing and efficient shipping to stores. Walmart also pioneered inventory management technologies like electronic data interchange and radio frequency identification to track inventory and replenish stores based on up-to-date sales data. These supply chain strategies enabled Walmart to offer consistently low prices, drive out inefficiencies, and undercut competitors.
Walmart* have done tremendous work on supply chain management. One of the
keys to Walmart’s effective logistical system is the flexibility that it has when
choosing suppliers.
When Walmart 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 Walmart'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. Here they focus on bulk and get profit
out of it
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.
Walmart 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, Walmart will give them so much business that they will get
huge discounts.
Prepared By Dharmik
Walmart* have done tremendous work on supply chain management. One of the
keys to Walmart’s effective logistical system is the flexibility that it has when
choosing suppliers.
When Walmart 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 Walmart'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. Here they focus on bulk and get profit
out of it
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.
Walmart 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, Walmart will give them so much business that they will get
huge discounts.
Prepared By Dharmik
This Presentation Explains about the Various Segments of the Retail Giant Walmart's Supply Chain. The CRM, SCM, SRM sections are discussed. We have also done a bit of additional research on the meat Supply at Walmart.
This presentation was prepared in United world School of Business by our group of PGDM (1st year). This presentation is about the MIS-Management Information System in Walmart.
From the available source following PPT explains about the strategy applied by walmart and its opreation management. It deals with its operation of obtaining of materials & its mangement.
This Presentation Explains about the Various Segments of the Retail Giant Walmart's Supply Chain. The CRM, SCM, SRM sections are discussed. We have also done a bit of additional research on the meat Supply at Walmart.
This presentation was prepared in United world School of Business by our group of PGDM (1st year). This presentation is about the MIS-Management Information System in Walmart.
From the available source following PPT explains about the strategy applied by walmart and its opreation management. It deals with its operation of obtaining of materials & its mangement.
D
o
N
ot
C
op
y
2003, ICFAI Center for Management Research. All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic or mechanical, without
permission.
To order copies, call 0091-40-2343-0462/63/64 or write to ICFAI Center for Management Research, Plot # 49, Nagarjuna
Hills, Hyderabad 500 082, India or email [email protected] Website: www.icmrindia.org
This case was written by P. Mohan Chandran, under the direction of Vivek Gupta, ICFAI Center for Management
Research (ICMR). It is intended to be used as a basis for class discussion rather than to illustrate either effective or
ineffective handling of a management situation.
The case was compiled from published sources.
WAL-MART'S SUPPLY CHAIN
MANAGEMENT PRACTICES
OPER - 020
D
o
N
ot
C
op
y
This case was written by P. Mohan Chandran, under the direction of Vivek Gupta, ICFAI Center for Management
Research (ICMR).
2003, ICFAI Center for Management Research. All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic or mechanical, without
permission.
To order copies, call 0091-40-2343-0462/63/64 or write to ICFAI Center for Management Research, Plot # 49, Nagarjuna
Hills, Hyderabad 500 082, India or email [email protected] Website: www.icmrindia.org
OPER/020
WAL-MART'S SUPPLY CHAIN MANAGEMENT PRACTICES
“When you start to collapse the supply chain, accuracy in execution becomes critical. Any lack of
accurate information and processes creates costly bottlenecks in the flow of goods and materials.”
-- Bruce Richmond, Global head, Andersen Consulting.
INTRODUCTION
The US-based Wal-Mart ranked first in the global Fortune 500 list in the financial year 2001-02
earning revenues of $219.81 billion (Refer Table I). Wal-Mart was the largest retailing company in
the world. The company was much bigger than its competitors in the US – Sears Roebuck, K-
Mart, JC Penney and Nordstrom combined (Refer Exhibit I). In 2002, Wal-Mart operated more
than 3,500 discount stores, Sam’s Clubs and Supercenters in the US and more than 1,170 stores in
all major countries across the world. The company also sold products on the Internet through its
website, walmart.com.
TABLE I
GLOBAL FORTUNE 500 LIST (2002)
Rank Company Revenues (in $ millions)
1 Wal-Mart Stores 219,812.0
2 Exxon Mobil 191,581.0
3 General Motors 177,260.0
4 Ford Motor 162,412.0
5 Enron 138,718.0
Source: www.fortune.com
Wal-Mart was one of the largest private sector employers in the world, with employee strength of
approximately 1.28 million. The company’s founder, Sam Walton (Walton) ha.
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Implicitly or explicitly all competing businesses employ a strategy to select a mix
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Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
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1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
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2. "People think we got big by putting big stores in
small towns. Really, we got big by replacing
inventory with information."
Sam Walton, Founder of Wal-Mart
3. History of Wal-MartHistory of Wal-Mart
• The company’s founder is Sam Walton.
• He was born in 1918 at Oklahoma.
• In 1940, he worked for the famous retailer, J C Penney.
• Walton gave up the job and decided to set up his own retail
store.
• He purchased a store franchise in Arkansas.
• Offering significant discounts on prices, he became
successful and acquired a second store in 3 years
• By 1969, Walton had established 18 Wal-Mart stores.
4. • By late 1970s, the retail chain had established a pharmacy
and an auto service center.
• In 1980s, Wal-Mart continued to grow due to huge
customer demands in small towns.
• Wal-Mart was offering low prices, customer satisfaction
guaranteed, and hours that were realistic for the way people
wanted to shop.
– Open all night, for university students
• By 1984, there were 640 Wal-Mart stores in U.S.
• Wal-Mart suffered a setback in 1992, when Walton died
5. • But it continued its growth in the 1990s, focusing on
overseas stores.
– 1992, Mexico (joint venture with Cifra)
– 1994, Canada (acquired 122 Woolco stores from Woolworth)
– 1997, Germany (acquired 21 store of Wertkauf)
– Korea, Brazil, and so on.
7. Wal-Mart has expanded its business to 10 countries:
U.S., Mexico, Brazil, Argentina, Germany, Puerto Rico,U.K. ,
South Korea, Canada and China.
8.
9. Ranked First in the Global Fortune 500 list in
2013 financial year
Company Revenues ($b) Profits ($mm)
Wal-Mart Stores 469.2 16,999
Exxon Mobil 449.9 44,880
Chevron 233.9 26,179
Phillips 66 169.6 4,124
Berkshire Hathaway 162.5 14,824
Apple 156.5 41,733
General Motors 152.3 6,188
Source:www.fortune.com
11. Supply Chain: The sequence of organizations -
their facilities, functions, and activities - that
are involved in producing and delivering a
product or service.
Sometimes referred to asSometimes referred to as value chains
13. Wal-mart Supply Chain Flow Chat
Manufacturer
Manufacturer
Manufacturer
Retail Store
Retail Store
Retail Store
Point of sale terminal
Satellite system
Bar code, RFID
Radio, headphone
Distribution center
Company Headquarter
14. • Lower inventories
• Higher productivity
• Shorter lead times
• Higher profits
• Greater customer loyalty
Wal-Mart gets benefited through Supply Chain
15. Wal-Mart Strategy
• “Everyday low price”
• Effective use of logistics management
• Effective inventory control
• Bargaining power over suppliers
• Global Expansion for new market opportunity
16. Supply Chain Management of Wal-Mart
• Procurement and Distribution
• Logistics management
• Inventory management
17. Wal-Mart’s 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.
18. Electronic Data Interchange
• Increased productivity
• Reduction of paperwork
• Lead time and inventory reduction
• Facilitation of just-in-time systems
• Electronic transfer of funds
• Improved control of operations
• Reduction in clerical labor
• Increased accuracy
20. Bull Whip Effect
The bullwhip effect (or whiplash effect) is an observed
phenomenon in forecast-driven distribution channels.
- Customer demand is rarely perfectly stable.
- Businesses must forecast demand in order to properly
position inventory and other resources.
The concept first appeared in Jay Forrester's Industrial
Dynamics (1961) and thus it is also known as the Forrester
effect
21. Forecasts are based on statistics, and they are rarely
perfectly accurate.
Companies often carry an inventory buffer called "safety
stock".
Moving up the supply chain from end-consumer to raw
materials supplier, each supply chain participant has greater
observed variation in demand and thus greater need for
safety stock
In periods of rising demand, down-stream participants will
increase their orders.
In periods of falling demand, orders will fall or stop in
order to reduce inventory.
23. Vendor Managed Inventory
• 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
24. 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.
26. 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
27. Cross docking
• Cross-docking means to take a finished good from
the Manufacturing plant and deliver it directly to the
customer with little or no handling in the process.
• In purest form this is done directly, with minimal or
no warehousing.
28.
29. Hub and Spoke
In the early 1970s, Wal-Mart became one of the first
retailing companies in the world to centralize its
distribution system, pioneering the retail hub-and-spoke
system.
Under the system, goods were centrally ordered,
assembled at a massive warehouse, known as ‘distribution
center’ (hub), from where they were dispatched to the
individual stores (spoke).
30. The hub and spoke system enabled Wal-Mart 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 the U.S.
32. Wal -Marts Communication
Network
• Cross Docking relies on continuous communication
between Wal Mart’s suppliers, distribution centers,
and every point of sale system in each store.
• This enables orders to flow in, get packaged and then
shipped.
• Wal Mart operates their own satellite network.
• Wal Mart’s satellite network sends the Point Of Sale
(POS) data directly to 4000 vendors
33. Inventory Management
Wal-Mart invested heavily in IT and communication
systems to effectively track sales and merchandise
inventories in stores across the country.
With the rapid expansion, it was essential to have a good
communication system.
Hence, Wal-Mart set up its own satellite communication
system in 1983.
34. Inventory Management(cont……)
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.
Instead of cutting the inventory across the board, Wal-
Mart 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.
35. Inventory Management(cont……)
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.
36. CPFR
• By the mid 1990s, Retail Link had emerged into an
Internet-enabled SCM system whose functions were
not confined to inventory management alone, but also
covered collaborative planning, forecasting and
replenishment (CPFR).
• CPFR 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
37. Though CPFR was a promising supply chain initiative
aimed at a mutually beneficial collaboration between
Wal-Mart and its suppliers, its actual implementation
required huge investments in time and money.
A few suppliers with whom Wal-Mart tried to
implement CPFR complained that a significant amount of
time had to be spent on developing forecasts and
analyzing sales data.
38. Radio Frequency Identification
• In efforts to implement new technologies to reduce
costs and increase the efficiency, in July 2003, Wal-
Mart asked its top 100 suppliers to be RFID
compliant by January, 2005.
• Wal-Mart planned to replace bar-code technology
with RFID technology.
• The company believed that this replacement would
reduce its supply chain management costs and
enhance efficiency.
39. • Because of the implementation of RFID, employees
were no longer required to physically scan the bar
codes of goods entering the stores and distribution
centers, saving labor cost and time.
• Wal-Mart expected that RFID would reduce the
instances of stock-outs at the stores.
• Although Wal-Mart was optimistic about the benefits
of RFID, analysts felt that it would impose a heavy
burden on its suppliers.
• To make themselves RFID compliant, the suppliers
needed to incur an estimated $20 Million.
• Of this, an estimated %50 would be spent on
integrating the system and making modifications in
the supply chain software
40. Information Technology: A Supply Chain
Enabler
• Information links all aspects of supply chain
• E-business
– replacement of physical business processes with
electronic ones
• Electronic data interchange (EDI)
– a computer-to-computer exchange of business
documents
42. 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
43. 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.
44. 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