Wal-Mart is a Supply Chain Driven Company Obsessed With Lowering Costs... Is Yours? Michael...
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Wal-Mart is a Supply Chain Driven Company Obsessed With Lowering Costs . . . Is Yours? Michael Bergdahl, September 2011
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Wal-Mart is a Supply Chain Driven Company Obsessed With Lowering Costs... Is Yours? Automated Replenishment Inventory Turnover Vendor Partnership Cost Control Strategy Culture of Cost Controllers
Transcript of Wal-Mart is a Supply Chain Driven Company Obsessed With Lowering Costs... Is Yours? Michael...
Wal-Mart is a Supply Chain Driven
Company Obsessed With Lowering Costs
. . . Is Yours?
Michael Bergdahl, September 2011
Wal-Mart is a Supply Chain Driven Company Obsessed With Lowering
Costs . . . Is Yours?
Low Profit Business Model
In-Stock
Spoke and Hub Strategy
IT Infrastructure
Cross Docking Distribution Centers
Private Fleet Ownership
Wal-Mart is a Supply Chain Driven Company Obsessed With Lowering
Costs . . . Is Yours?
Automated Replenishment
Inventory Turnover
Vendor Partnership
Cost Control Strategy
Culture of Cost Controllers
2010 Sales = US418 billion
2010 Net Profit = 3.2%
Total Profit = US$13.4 billion
Supply Chain drives Walmart’s Low Margin Profitability Model
120,000 products
60,000 Suppliers
8900 Stores
120 Distribution Centers
Supply Chain drives Walmart’s Low Margin Profitability Model
Out of stock is out of business
Supply Chain Goal = In-Stock
Walmart’s expansion strategy was controlled by its distribution strategy.
Spoke and Hub Strategy
Largest privately owned IT systems in the world
Cross-docking distribution centers
No Warehouses
7000 privately owned truck fleet – largest in the USA
Automated Replenishment Automated Replenishment “Just in Time Inventory”“Just in Time Inventory”
Wal-Mart’s inventory turnover goal for suppliers is 100% every 60 days
High velocity inventory turnover allows Walmart to
make money on money!
Walmart is Like a Bank . . .
Vendor Partnership
Wal-Mart cuts out the middleman . . .
Buys from the source!
Power of low priced products
Many small retailers purchase inventory for their stores from
Walmart’s shelves!
Wal-Mart’s relentless pursuit of low prices is:
one part controlling expenses and one part buying at the lowest prices.
Walmart passes expense savings along to its customers.
Cost Control Strategy
The Wal-Mart Effect
Wal-Mart’s low grocery prices save USA families
of four US$3100 / yr
You Can Save Your Way to Prosperity
Sam Walton was absolutely fanatical about controlling
expenses
Culture of Cost ControllersCulture of Cost ControllersOffice SuppliesOffice Supplies
Paper usagePaper usage
Overtime BudgetOvertime Budget
No Headcount Increases No Headcount Increases
Executive TravelExecutive Travel
Technology – Temperature of StoresTechnology – Temperature of Stores
The Sam Walton Way Expense Control
Standards
Walmart gets its employees to manage expenses like they are
writing the check from their personal checking accounts.
Every time Wal-Mart spends a dollar foolishly,
it comes out of our customers' pockets.
Sam Walton
The Bottom Line:
Wal-Mart is a Supply Chain Driven
Company that also has retail stores!
Questions
?????????
Join My Walmart’s Best Practices LinkedIn Group @
www.michaelbergdahl.net
