Supply Chain Management of Wal-Mart
Transcript of Supply Chain Management of Wal-Mart
Supply Chain Management of Wal-Mart
Wal-Mart Stores, Inc. Founded by Sam Walton in 1962, runs a chain of large,
discount department stores.
In Mexico as Walmex, in the United Kingdom as Asda, in
Japan as Seiyu, and in India as Best price.
It has 7,870 stores, including 890 discount stores, 2,970
supercenters which are combinated discount and grocery
stores and 600 warehouse stores (Sam's club). 14 countries,
2 million employees
Strategy - to target low-income families in rural areas by
offering significantly lower costs.
Four core principles
focus on the improvement of sales,
constantly reducing costs to be passed on the customers,
the adoption of efficient distribution and logistics
management systems for constant flow of the goods
highly-advantageous innovative information technology (IT)
tools that makes the operating processes even faster,
efficient.
Insight to World’s Best Supply Chain Management Practices by Wal-Mart: -
PROCUREMENT
It always emphasized the need to reduce its purchasing costs
procured goods directly from manufacturers, bypassing all
intermediaries.
tough negotiator on prices- the products being bought were not
available elsewhere at a lower price.
Wal-Mart was able to provide replenishments within two days
(on an average) against at least five days for competitors.
DISTRIBUTION
Walmart has around 120 distribution centers around US.
Goods meant for distribution within the country arrived in
pallets, while imported goods arrived in re-usable boxes or
cases.
Some suppliers delivered goods directly to the stores.
85% of the goods which were available at the stores passed
through the distribution centers.
Employees had an access to real-time information regarding
the inventory levels of all the products in the center.
He has to make two scans _ one to identify the pallet, and the
other to identify the location of stock
Different barcodes are used to label different products,
shelves and bins in a center.
The hand-held computer guides the employee with regard to
the location of a particular product from a particular bin or
shelf in the center.
The quantity of the product required from the center is
entered into the hand-held computer by the employee and
then the computer updates the information on the main
server.
Logistics Management:
The distribution centers are serviced by more than 3,500
company owned trucks.
These dedicated truck fleets shipped goods from DC’s to the
stores within two days and replenish the store shelves twice
a week.
Private Fleet Driver Handbook- purpose is to educate the
drivers with regard to the code of conduct.
These retail stores were considered as customers by the
distribution centers.
Coordinators give information to the driver as to what is the
expected time of arrival or delivery of the goods .
There was a gap of two hours between unloading of each
trailer.
Wal-Mart also invented unique “Cross-Docking” technique.
This reduced cost of sales and made everyday low prices
possible.
reduction in lead time, speedy inventory turnover, accurate
forecast of inventory levels, reduction in safety stock,
reduction in the dependency of the distribution center,
reduction in errors.
INVENTORY MANAGEMENT
Wal mart used in IT and communications systems to
effectively track sales and merchandise inventories in stores.
Wal-Mart has its own satellite communication system
-technicians sit in front of the computer screens talking on
the phone to any stores that might be having a problem with
the system,
-important or urgent to communicate to the stores and
distribution centers
-Wal-Mart executive can walk back to TV studio and get on
that satellite transmission and get it right out there.
Had collaboration with P&G for maintaining the inventory in
its stores
built an automated re-ordering system, which linked all
computers between P&G and its stores and other DC’s.
The computer system at Wal-Mart stores identified an item
which was low in stock and sent a signal to P&G.
The system then sent a re-supply order to the nearest P&G
factory through the satellite communication system.
Wal-Mart also made use of bar coding and radio frequency
technology to manage its inventories.
used a centralized inventory data system using which the
personnel at the stores could find out the level of inventories
It has a retail link system were in 10,000 Wal-Mart retail
suppliers used it to monitor the sales of their goods at stores
and replenish inventories.
details of daily transactions were processed through this
integrated system and were furnished to every Wal-Mart
store by 4 a.m., the next day.
It also showed whether a product was being loaded in the
distribution center or was in transit on a truck.
Once the goods were unloaded at the store, the store was
furnished with full stocks of inventories of a particular item
and the inventory data system was immediately updated.
Radio frequency identification (RFID) RFID tag is a small microchip with an antenna to enable
them to receive and respond to radio-frequency queries from
an RFID transceiver.
Reduces costs of inventory management unique ID code to
tell wherethe product came from and where it was
purchased at.
The store could then figure the purchase done most and try
to advertise such things to you as you shop in their store.
It helps to manage stock more accurately due to the
availability to track their merchandize so that the shelf in the
stores will never be found empty.
• Retail Inventory Control: product inventory, theft
detection, point-of-sale verification
• Manufacturing: track a product’s progress
through the manufacturing cycle ;track when it was
manufactured
• Logistics & Supply Chain: moving goods through
loading docks
• Container/Pallet Tracking
• ID Badges and Access Control
• Fleet Maintenance
individual objects (pallets, cases, boxes,
packages) are equipped with an inexpensive tag
that contains a digital memory chip.
This chip carries product-related data such as
quantity, price, color, purchase date and
manufacturing date.
The tag has its own electronic code that can be
read by an interrogator, which is an antenna
containing a transceiver and decoder.
This interrogator can, from anywhere in the world, send
a signal to the chip and read the information contained
in it, then pass the information on to its host computer.
The tag is also activated if it passes through an
electromagnetic zone that detects and reads the chip
and then sends the data to the computer.
“Green” logistics
Wal-Mart in 2000 adopted a new strategy of making logistical
processes more economically friendly.
“Green” logistics, means implementing a system that can
independently monitor overseas suppliers to make sure they meet
social and environmental standards.
As per customers environmental concerns, the company launched
a campaign to convince its suppliers to provide environmentally
safe products in recyclable or biodegradable packaging.