SCM Case 3- Wal-Mart
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Transcript of SCM Case 3- Wal-Mart
8/8/2019 SCM Case 3- Wal-Mart
http://slidepdf.com/reader/full/scm-case-3-wal-mart 1/14
SCM Case Study
8/8/2019 SCM Case 3- Wal-Mart
http://slidepdf.com/reader/full/scm-case-3-wal-mart 2/14
Background
Started by Sam Walton in 1962
To serve the mass market
Compete on price To build a strong Supply Chain
In 1970s Wal-Mart moved to hub and
spoke model, the first in retail industry Ordered centrally and distributed globally
8/8/2019 SCM Case 3- Wal-Mart
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Wal-Mart position
2007 Fortune 500
1. Wal-Mart Stores2. Exxon Mobil3. GeneralMotors4. Chevron5. ConocoPhillips6. General
Electric7. Ford Motor 8. Citigroup 9. Bank of America10. American Intl. Group 11. J.P.Morgan Chase & Co. 12. BerkshireHathaway13. Verizon communications14. Hewlett-Packard15. Intl. Business Machines16. Valero Energy17. HomeDepot18. McKesson19. CardinalHealth20. Morgan Stanley
8/8/2019 SCM Case 3- Wal-Mart
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IT works
"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.
8/8/2019 SCM Case 3- Wal-Mart
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Methodology to compete
The structure and operation of this
company have been defined by the need
to lower its costs and increase itsproductivity so that it could be pass these
savings on to its customers in the form of
lower prices
8/8/2019 SCM Case 3- Wal-Mart
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Major four
The Strategy of expanding around
distribution centers (DCs)
Using electronic data interchange( EdI)with suppliers
The ³big box´ store format
³Everyday Low Prices´
8/8/2019 SCM Case 3- Wal-Mart
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Expanding around DCs
New geographies
A group of new stores
New DC and first store starts at the sametime
DC is the Supply Chain bridgehead into
the new territory It supports opening of more new stores at
low additional cost
8/8/2019 SCM Case 3- Wal-Mart
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EDIs
First cuts transactional cost associated
with ordering and paying
Second it allows Wal-Mart a high degreeof control and co-ordination in scheduling
and receiving
This ensures a steady flow of the right
products at right time, delivered to the right
DCs by wal-mart suppliers
8/8/2019 SCM Case 3- Wal-Mart
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The Big Box Store
It allows a Wal-Mart to combine a store
and a ware house in a single facility and
get great operating efficiencies
Big box is large enough to hold large
amounts of inventory
No cost of moving goods from ware house
to store
Cost savings passed on to customer
8/8/2019 SCM Case 3- Wal-Mart
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Everyday Low Prices
To tell its price conscious customers that
they will always get the best price
They need not look elsewhere or wait for special sales
By eliminating campaigns Wal-Mart is able
to make accurate forecast product sales
Stores are more likely to have what
customers want when they want it
8/8/2019 SCM Case 3- Wal-Mart
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Business model
Individually these four concepts are useful
They combine to form a supply chain thatdrives self-reinforcing business process
Each concept builds on the strength of theothers to create a powerful businessmodel
Wal-Mart has become a dominant player in the market as a result of the strongsupply chain
8/8/2019 SCM Case 3- Wal-Mart
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Supplier development
collaborative planning, forecasting andreplenishment (CPFR)
RFID
IT and internet Over the decades, Wal-Mart had always beenthe first mover in the retailing industry toembrace new technologies for managing thesupply chain processes
At the same time, Wal-Mart helped its suppliersadapt to the new SCM technologies, so that boththe parties derived benefits.
8/8/2019 SCM Case 3- Wal-Mart
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IT Development
Demand forecasting
Procurement
Logistics Distribution
Inventory management
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Global sourcing
From the year 2000 Wal-Mart have started
procuring globally
They have also started he establish retailoutlets globally
Sales and inventory data is exchanged
between Wal-Mart and suppliers in matter
of seconds through the internet