The document outlines Wal-Mart's supply chain management practices, highlighting its competitive advantages such as economies of scale, supplier relationships, and efficient distribution systems. It emphasizes the use of technology, including real-time inventory systems and automated distribution centers, to enhance operational efficiency and customer service. Key learnings include Wal-Mart's ability to maintain low prices and reduce stockouts through effective inventory management and logistics strategies.

1. Supply Chain Management
Wal-Mart’s Supply
Chain Management
Practices
SCM
Case Presentation
© Jatin Mendiratta
(MDI Gurgaon)

2. 2
485.87
118.72
115.34
99.26
97.06
94.67
0 100 200 300 400 500 600
Walmart Stores (USA)
Costco Wholesale
Corporation (USA)
The Kroger Co. (USA)
Schwarz Group (Germany)
Wallgreens Boots Alliance
(USA)
Amazon.com (USA)
Retail Revenue (USD
Billion) – 2016
7288
8099
9766
10942
11528 11718
0
2000
4000
6000
8000
10000
12000
14000
2008 2010 2012 2014 2016 2018
No. of Walmart Stores
60% increase in the number of
stores (2008 – 18)
Walmart’s revenue is more than 4
times of its nearest competitor
Source: Statista Source: Statista
Introducing the Giant - Wal-Mart

3. 3
2,300,000
1,900,000
1,512,048
941,211
926,067
726,772
713,288
660,000
626,715
574,349
541,900
Walmart
McDonald's
China National Petroleum
China National Petroleum
State Grid of China
Hon Hai Precision Industry
Sinopec Group
Tata Group
Volkswagen
US Postal Service
Amazon
Largest Employers in the
World
Walmart has 4 lac more employees than
next biggest company
0
50
100
150
200
250
Popular Retail Websites
in USA - 2017
Source: StatistaSource: Statista
Walmart is ranked No. 2 in online
presence
Introducing the Giant - Wal-Mart

4. Central to Wal Mart’s entry +
location strategy
a) Areas that support group of new stores
b) Builds a DC in central location and a new
store at same time, new additional stores
get opened at low cost
Dual benefits from
Supplier end
a) Reduced transaction costs
associated with ordering of
products and paying of
invoices
b) High degree of control in
scheduling and receiving
product deliveries
Competes on Low Prices
a) Attract the price conscious
customers and gives them
assurance to not look elsewhere
or wait for special sales
b) Smoothens out demand swings
making demand more
predictable and steady
Greater operational
efficiency
a) Big-box large enough to hold huge
inventory like warehouse
b) Design provides space for huge
billboards to attract customers
while holding huge volumes
Four Cornerstones of Wal-Mart’s Supply Chain
4

5. Strategically opened stores in small towns
competing with old variety stores that had
45% markup, limited selection and limited
hours
Invested in developing long
term relationship with the
vendor
Procured goods directly from
manufacturers bypassing
all intermediaries
Could dictate terms to
suppliers due to economies
of scale
Tough negotiator on prices, finalized
a deal only when it knew that no one
else was selling the product cheaper
Put in significant time
and effort in
understanding the cost
structure of suppliers
Parameters Wal-Mart Competitors
Supply from company
owned warehouses
85% 50-65%
Replenishment days 2 5
Shipping costs 3% 5%
Stockout of goods and
associated loss
Eliminated Existed
Safety stock Reduced Sustained
Warehouse Space More Less
Training cost & errors Reduced Existed
Procurement and Distribution Management in Wal-Mart’s Supply Chain
Comparison with Competitors
5

6. Hand-held
computer
system
Real-time
inventory
information
Location of
product
w.r.t
shelves
and bins
Computer
verification
of products
Employee
confirmatio
n
Employee
monitoring
and
guidance
Storage
and
Packaging
information
Pillars of Procurement and Distribution Management
The two pillars of Wal-Mart’s Procurement and Distribution management strategy include –
1. Automated Distribution Centres – reduced shipping cost and time
2. Computerized Inventory System – speeded up checking-out time and recording of transactions
Distribution Centres
❖ Had over 40 distribution centers (DCs) in the US
85% goods available at stores passed through DCs
❖ Used sophisticated bar code technology and hand-
held computer systems
❖ DCs had provisions for maintaining personal
hygiene and were used by truck drivers
Hand Held Computer
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7. Targets
Coordinator
Operation
Vigilance
Trucks
Drivers
Text
Text
Text
Text
Text
Text
❖ 3500 company owned trucks –
visible link between stores and
distribution center
❖ Committed and dedicated to
customer service
❖ Took personal charge of the
trailers at night and responsible
for safe exchange in transit to
prevent loss of property and life
❖ Only experienced drivers
chosen (Criteria - greater than
3,00,000 accident free miles with
no major truck violation)
❖ Delivery within 2 days
❖ Replenishment twice a week
❖ Kept track of hours reporting by driver
❖ Scheduled dispatches based on
‘Available Driving time’ and ‘Estimated
Travel time’
❖ Driver to bring truck at dock only at
scheduled unloading time
❖ 2 hours of gap between unloading
of each trailer
.
❖ ‘Private fleet driver handbook’
consisted of code of behavior and
terms and conditions
❖ ‘Avoidable accidents’, ‘Inability to
secure truck trailers’ - considered
serious offence
❖ Employee Termination – warning
-> training -> firing
Logistics Management in Wal-Mart’s Supply Chain
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8. Requisition
received for
different goods
from store
Converted to
purchase order
Forward the
purchase order to
manufacturer
If agreed to
supply, goods
directly supplied
to “staging area”
Packed goods
directly sent to
customer
Cross-Docking – A Logistics Technique
ADVANTAGES
❖ Less risk of inventory handling
❖ Faster reach of products
❖ Reduces warehousing costs
DISADVANATAGES
❖ Requires adequate storage capacities and transport fleet for operation
❖ Computerized logistics system is needed
❖ Product damage and increased labor cost due to additional freight handling
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9. Flow-Through
There exists a constant inflow and outflow of goods
from the distribution center. Most suitable for
perishable goods and followed in supermarkets and
retail discounters.
Distributor
Manufacturer delivered the goods directly to the
retailer. No intermediaries involved. Major storage cost
savings. Requires faster transportation and highly
responsive supply chain.
Manufacturing
Cross docking facilities served as factories and acted
as temporary “mini warehouses”. Delivery in small lots
in very short span of time just when needed.
Pre-Allocated
Goods are already packed and labeled by the
manufacturer and ready for shipment to the
distribution center from where it’s sent to store. Close
coordination and cooperation.
Opportunistic
Exact information where the required goods was
to be shipped and from where it has to be
procured and the exact quantity to be shipped
was needed.
Delving deep into Types of Cross-Docking
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10. Vendor Managed Inventory Model: Suppliers access data from Walmart’s information system, such as data on current inventory levels and
the rate at which certain goods are sold. Suppliers decide when to send additional goods, while Walmart monitors and control the actual
transit of goods from warehouses to the stores.
Minimises the delays Reduces the cost Minimises the Bullwhip EffectIMPACTIMPACT
Inventory Management in Wal-Mart’s Supply Chain
Finished Goods
Inventory
Transit Inventory
Buffer Inventory
Anticipation
inventory
Types of Inventory Management at
Wal-Mart ❖ Invested heavily in IT systems to track sales and
merchandise inventory in stores
❖ Stores allowed to manage their own stocks, reducing pack
sizes and timely price markdowns
❖ Installed a centralized inventory data system using which
real time information about inventory levels
❖ Multiple delivery plans that could be chosen by individual
stores
❖ Suppliers networked through internet
Features
10

11. Retail
Link
System
Satellite
Comm.
MPP
Computer
System
Algorithm
❖ More than 10,000 retail stores are linked
❖ It monitors the sales of their goods at stores
and replenishes the inventories
❖ Processes 10 million transactions per day
❖ Enabled forecast of the exact quantities of
each item to be delivered
❖ Even bulk items could be broken and
supplied to the stores
Command
Centre
Wal-Mart
Store
Distribution
Centre
❖ Massively Parallel Processor computer system
❖ Tracks the movement of all goods & stock levels
❖ All information is passed through advanced satellite
communication system
Finer aspects of Inventory Management
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12. RFID
Features -
❖ Read without line of sight
❖ Sense items even when the tagged items are hidden
❖ Minimum human intervention thus enables automation
❖ RFID uses a serialized numbering scheme EPC
❖ Provides detailed behavior like place and time
Used to label
different
products,
shelves and
bins
2 scans – one
to identify pallet
other & other to
identify location
of the stock
Easy order
packing and
physical
counting of
inventory
Enabled
efficient picking
receiving and
proper
inventory
control
Barcode
Role of Technology in Inventory Management at Wal-Mart12

13. Walmart has partnered with Google Express to enhance
the shopping experience through voice based shopping
Walmart has launched a messaging app solution for its customers to
provide recommendations and place order in a convenient manner
Wal-Mart of Today – Latest technological innovations
Walmart – Google Express Walmart – JETBLACK
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14. Walmart is using Virtual reality to train its employees so
as to enhance the customer service quality
These kiosks help in reducing the time in processing bills as
your online order is already ready to be taken in a sealed box
Wal-Mart of Today – Latest technological innovations
Pickup Kiosks (Giant Vending Machines) Virtual Reality for employee training
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15. Key Learnings – Wal-Mart’s Secret of Success
Economies
of Sales:
“Best Deals”
Strong Supplier
Relationships
Effective
IT Systems
Effective Distribution
Systems
Empowered
Employees
Reduced
Cost of Sale
In-Depth
Knowledge
of Customer/
Market
Stable
Lower
Prices
Predictable
Sale
Patterns
Decreased
Chance of
Out-of-Stock
Increased sales
and profits
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16. ❖ https://en.wikipedia.org/wiki/List_of_largest_employers
❖ https://digital.library.unt.edu/ark:/67531/metadc68027/m2/1/high_res_d/thesis.pdf
❖ https://www.minneapolisfed.org/publications/fedgazette/thomas-j-holmes-on-walmarts-location-strategy
❖ http://panmore.com/walmart-inventory-management
❖ http://panmore.com/walmart-operations-management-10-decisions-areas-productivity-case-study-analysis
❖ https://www.statista.com/statistics/271450/monthly-unique-visitors-to-us-retail-websites/
❖ https://www.digitaltrends.com/home/walmart-pickup-towers/
❖ https://risnews.com/five-ways-walmart-investing-technology
❖ https://blog.walmart.com/innovation/20180405/hundreds-more-high-tech-pickup-towers-are-headed-your-way
References
Thank You!
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