Supply Chain Management of Wal-Mart

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Supply Chain Management of Wal-Mart

Transcript of Supply Chain Management of Wal-Mart

Page 1: Supply Chain Management of Wal-Mart

Supply Chain Management of Wal-Mart

Page 2: 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.

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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.

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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.

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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

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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.

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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 .

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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. 

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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.

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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

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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.

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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.

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• 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

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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.

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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.

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“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.