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Wal-Mart-Supply-Chain.pptx
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- 2. 2 Top five GlobalRetailers in 2018 Walmart- $514 billion. Amazon- $160 billion. Schwarz Group in Germany- $102 billion. Carrefour in France- $89 billion. Ahold Delhaize in the Netherlands- $71 billion.
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- 4. 4 History 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.
- 5. 5 History of Wal-Mart… 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.
- 6. 6 History of Wal-Mart… By 1969, Walton had established 18 Wal- Mart stores. 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.
- 7. 7 History of Wal-Mart… 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.
- 8. 8 Wal-Mart- Current NetIncome from Continuing Operations- $7.3 billion. Sales-$514 billion. Number of Global associates- 2.2 million. Conducted business in 27 countries. Served 275 million customers each week through 11,300 stores and numerous e- commerce websites that operated under 58 banners. In US alone it has 1.5 million associates and 5,362 stores/warehouse clubs.
- 9. 9 Wal-Mart…Growth This phenomenal growthof Wal-Mart can be attributed to its continued focus on customer needs and reducing cost through efficient supply chain management practices. It was one of the first firms to relay on data for Operational Decisions, use barcodes, share sales data with suppliers, control its own logistics and transportation activities and install POS that provided item level data in real time.
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- 11. 11 Competitors Within US,it faced competition from Target, Home Depot, Ikea, Costco, Kroger, Aldi, Walgreens and CVS. Within Online Retail- Stiff Competition from Amazon.
- 12. 12 Competitors As there wasa stiff competition from online and offline competitors. Doug McMillon, President & CEO Define Strategies and Make Decisions related to changes that are to be made with respect to the ever- expanding Walmart Supply Chain & Capability enhancements to match with the business evolutions.
- 13. 13 “Walmart's Supply ChainStrategy is continuously evolving and currently it will focus on growing Online Business” -Greg Foran, US Chief Executive Officer, 2019.
- 14. 14 Online Programs Walmart.com(An online platform that sells an assortment of goods similar to the ones available at stores)-Launched in 2000. Walmart Market Place (Third part e- commerce platform)-Launched in 2009. Jet.com (Online stores aimed at targeting higher income Urban Shoppers)- (Purchased in 2016). Three programs together resulted in an on-line revenue growth of 40 % ($15.7 billion) by Jan 2019.
- 15. 15 Online Programs Doug McMillon,President & CEO – wanted to save both time and money for Customers. It Purchased Bonobos (An on-line designer and seller of higher-end Men's clothing). It Purchased Moosejaw (An on-line outdoor products retailer). It Purchased Hayneedle (An on-line Furniture and Home-Décor Shop). It Purchased Shoe buy (An on-line Shoe Retailer). In 2018, it Purchased 77% of India’s Flipkart an e-commerce retailer.
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- 17. 17 Wal-Mart’s Procurement Wal-Martemphasized the need to reduce purchasing costs and offer the best price to the customer. The company directly procured from manufacturers, by passing all intermediaries.
- 18. 18 Wal-Mart’s Procurement… Wal-Martfinalizes a purchase deal only when it is fully confident that the products being bought is not available else where at a lower price.
- 19. 19 Wal-Mart’s Procurement… Wal-Martspends a significant amount of time meeting vendors and understanding their cost structure. By making the process transparent, the retailer can be certain that the manufacturers are doing their best to cut down costs.
- 20. 20 Using EDI forProcurement The computer systems of Wal-Mart were connected to those of its suppliers. EDI enabled the suppliers to download purchase orders along with store-to-store sales information relating to their products sold. On receiving information about the sales of various products, the suppliers shipped the required goods to Wal-Mart’s distribution centers.
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- 22. 22 Wal-Mart’s Procurement… Wal-Martexpanded its global sourcing in the mid 1980’s by establishing International Purchasing Offices in China & other countries. Walmart's strategy was to procure branded items in volumes and sell them at lower prices.
- 23. 23 Wal-Mart’s Procurement… GloballyWal-Mart had 60,000 suppliers of which around 200 (Nestle, P&G, Unilever Kraft- were key global suppliers as their sales to Walmart represented a major % of their annual revenues). Initially, it did not allow suppliers to advertise at it stores or within on- line portals but later in 2019-it allowed its key suppliers to advertise to boost sales.
- 24. 24 Wal-Mart’s Procurement… Walmartrealized that incomplete deliveries resulted in stock outs – so it increased the requirements from suppliers for on-time delivery performance and also included penalties on suppliers up to 3% of invoice value. It has also requested some food suppliers to use Block Chain Technologies to enhance traceability.
- 25. 25 Wal-Mart’s Distribution Inthe 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).
- 26. 26 Hub and SpokeSystem… 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.
- 27. 27 Cross-docking To makeits distribution process more efficient, Wal-Mart also made use of a logistics technique called “cross-docking.” In this system, the finished goods were directly picked up from the manufacturing plant, sorted out and then directly supplied to the customers.
- 28. 28 Cross-docking The systemreduced the handling and storage of finished goods, virtually eliminating the role of the distribution centers and stores. The manufacturer directly forwarded the goods to a place called the “staging area.” The goods were packed here according to the orders received from different stores and then directly sent to the respective customers.
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- 30. 30 Wal-Mart’s Distribution-2019 173DC’s in US with 125.8 million square feet of space. 77% of store merchandize was shipped through DC’s and the reminder was shipped Direct to Store (DSD) by Suppliers. It added a Consolidation Center (340,000 square foot high-tech distribution center- to receive products from suppliers) and was planning to add 10 more to enhance the Supply Chain Efficiency.
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- 32. 32 Logistics Management Animportant feature of Wal-Mart’s logistics infrastructure was its fast and responsive transportation system. The company employed around 8000 Truck Drivers in US, who logged nearly 740 million miles per year. Walmart’s truck fleet included 6,000 tractors, 53,500 trailers and 5,600 refrigerated trailers.
- 33. 33 Logistics Management… Wal-Martbelieved 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.
- 34. 34 Inventory Management Wal-Mart categorizedits Inventory into 4 types- FG Inventory-Received from Suppliers- that was directly received into stores. Transit Inventory- Goods that are being transported using the Walmart’s global supply chain to warehouses. Buffer Inventory- Extra stock held in stores to meet unexpected changes in demand. Anticipatory Inventory- Extra Stock held to meet specific periods of high demand.
- 35. 35 Information Systems Wal-Martinvested heavily in IT and communication systems to effectively track sales and merchandise inventories in stores across the country. Wal-Mart set up its own satellite communication system in 1983. 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. 36 Information Systems Theorder management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system. Through this system, it was possible to monitor and track the sales and merchandise stock levels on the store shelves.
- 37. 37 Information Systems (Retail linksystem- 1991) Retail Link connected Wal-Mart’s EDI network with an extranet, accessible to Wal-Mart’s thousands of suppliers. The suppliers could find out how their product was performing vis-a- vis competitors’ products in a particular product category.
- 38. 38 RFID Technology (Radio FrequencyIdentification) It uses RFID tags for its products to enhance the movement of its goods through its supply chain. It is estimated that it also saves around $500 million a year as it reduces stock outs.
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