Wal mart stores inc supply chain management
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Transcript of Wal mart stores inc supply chain management
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Wal-Mart Stores, Inc.Supply Chain Management
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About Wal-Mart
• Based on Bentonville, Arkansas. Founded by Sam Watson
• The world’s largest retailer with more than 6,500 stores, in all 50 states, 15 countries, with US$312.4 billion in sales (in 2006)
• Had 1.3 million employee in US and 1.8 million worldwide to serve 138 million customers each week
• Provide merchandise and services at “Every Day Low Price”
• Ran Wal-Mart Super Centers, Sam’s Club, Neighborhood Markets
• Competitors:
• General merchandise category: Sears, Target• Specialty retailers category: Gap, Limited• Department stores category: Dillard, Federated, J.C. Penney• Grocery store category: Kroger, Albertsons, Safeway• Membership-only warehouse category: Costco Wholesale
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Retail Industry
Category2005
(US$ billions)
General merchandise stores 525.7
Food and beverage 519.3
Food services and drinking places 396.6
Gasoline 388.3
Building materials and gardening equipment and supplies 327
Furniture, home furnishings, electronics and appliances 211.7
Health and personal care 208.4
Clothing and clothing accessories 201.7
Sporting goods, hobby, book, music 81.9
U.S. retail sales, excluding motor vehicles and parts dealer reached US$2.8 trillion in 2005
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Wal-Mart’s Supply ChainWalton realized a new trend, discount retailing
Purchasing
Distribution
Retail Strategy
Information System
HR
The Development
of Supply Chain
• WM wielded enormous power over its suppliers
• Has 90,000 suppliers, of whom 200 are key global suppliers
• Using distribution centers to gain economic of scale
• Hub & spoke design• Stores located in low-rent,
suburban areas, close to major highway
• WM has 114 U.S. DC and 7,800 drivers
• Shipments were generally cross-docked, or directly transferred
• Standardized case and labeling
• WM trucks generated “back-haul” revenue
• WM implemented EDLP (which has impacts: smooth demand, did not need advertising
• Associates had authority to input orders
• Unique template of each store
• Invest in central database, store-level point-of-sale systems and satellite network
• Implemented UPC barcode• Developed retail link• Adopted CPRF• Developed VMI
• Had reguler “Saturday morning meetings”
• “Borrow” new ideas from competitors
• WM was non-union
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Problem Identification
• In its 2006 fiscal year ended January 31, Wal-Mart posted a sales increase of 9.5 per cent from the previous year while its inventory grew 8.2 per cent. How do Wal-Mart reach the inventory growth rate to half of its sales growth rate?
• In U.S., Wal-Mart enjoyed profit from it strong supply network strategy, but Wal-Mart had been faring less well in other markets. For example in United Kingdom and South Korea. How to solve it? Did those strategy were not appropriate for several countries?
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Supporting Theory
Supply network strategy is the strategic direction of an organization’s relationships with suppliers, customers, suppliers’ suppliers, customers’ customers, etc
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Supporting TheoryThree Types of Supply Relationships
‘Partnership’ supply
relationships
Do nothing Do everythingThe character of internal operations activity
Virtual spot
tradingResource scope
Long-term virtual
operationVertical
integration
Traditional marketsupply
Type
of i
nter
-firm
con
tact
Tran
sact
iona
l –m
any
supp
liers
C
lose
–few
su
pplie
rs
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Supporting TheoryThe Sourcing / Purchasing Design Matrix
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Supporting Theory
Attitudes
Actions
Trust
Joint problem solving
Joint co-ordination of
activities
Joint learning
Long-term expectations
Sharing success
Multiple points of contact
Few relationships
Information transparency
Dedicated assets
Closeness of relationship
Elements of process partnership relationships
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Supporting TheoryNetwork Strategies in transportation
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Analysis
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Analysis