VALUE CHAIN ANALYSIS OF

VALUE CHAIN ANALYSIS OF

PRESENTED BY:

ARPAN, BISHNU

MONICASUBHASHRE

KALYAN

PRESENTED BY:

ARPAN, BISHNU

MONICASUBHASHRE

KALYAN

• "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

The value chain as the internal processes or activities a company performs “to design, produce, market, deliver and support its product.”

PRIMARY ACTIVITIES

• Inbound logistics• Operations• Outbound logistics• Marketing and sales • Service

PORTER’S VALUE CHAIN ANALYSIS

PORTER’S VALUE CHAIN ANALYSIS

SUPPORT ACTIVITIES:-• Procurement• Technology development • Human resource management

• Firm infrastructure

VALUE CHAIN ANALYSIS OF WAL-MART

VALUE CHAIN ANALYSIS OF WAL-MART

• 2485 Wal-Mart stores

• 682 Supercentres, 457 Sam’s Clubs, 5 Wal-Mart Neighbourhood Markets and 1007 units of Wal-Mart International.

• It serves over 100 million customers weekly worldwide.

• There are 1035000 associates, and the company is America’s largest private employer.

FIRM INFRASTRUCTURE FIRM INFRASTRUCTURE

• Almost 60% of all managers in Wal-Mart stores started as hourly associates.

• The employees are encouraged to communicate openly, offer new ideas, take risks, strive for excellence and have fun. Employees are getting competitive wages and comprehensive benefits.

• In recruiting new associates the company begins a comprehensive recruitment program in the community where the store is to identify candidates.

HUMAN RESOURCES MANAGEMENT

HUMAN RESOURCES MANAGEMENT

• Recruitment programs are well publicised and convenient, providing an opportunity for job applicants and the company to start getting acquainted

• When new employees start at Wal-Mart they are presented to the two basic rules of Wal-Mart. These are:

• Rule 1: The customer is always right• Rule 2: If the customer happens to be

wrong, refer rule 1.

• Wal-Mart set up its own satellite communication system in 1983

• Wal-mart uses Bar-coding & RFID technologies, different processes like efficient picking, receiving & proper inventory control of the products along with easy packing and counting of the inventories was ensured.

• Electronic data interchange (EDI)– a computer-to-computer exchange of business

documents

TECHNOLOGY DEVELOPMENTTECHNOLOGY DEVELOPMENT

PROCUREMENT PROCUREMENT

Wal-Mart’s process of procurement involves reducing its purchasing costs as far as possible so that it can offer best price to its customers. The company procures goods directly from the manufacturers, bypassing all intermediaries.

FLOW-TIME ANALYSIS

Point-of-sale system

captures data in real-time

Data is transmitted to warehouses

for Inv. Mgmt.

Retail Link transmits data to supplier

Orders are generated from previous-day

sales

Merchandise is loaded onto trucks using

cross-docking

Merchandise is delivered to

the store

Merchandise is manufactured

based on historical and real-time data

Merchandise is shipped to warehouses

Customer made a

purchase

The store will re-stock the shelves with merchandise

• The drivers are tracked regularly through “Private Fleet Driver handbook” Mart uses a logistics technique called “Cross Docking”

• Wal-Mart today about 60% inbound freight (closer to 80% for their grocery segment) is managed by suppliers.

• The important of Wal-Mart's logistics infrastructure was its fast and responsive transportation system.

• The distribution centres were serviced by more than 3,500 company owned trucks.

LOGISTICSLOGISTICS

-

Everyday low prices

Lower prices from suppliers

More goods sold

More customers

Lower operatingCosts

WAL*MART'S BUSINESS LOGICWAL*MART'S BUSINESS LOGIC

:Wal-Mart operations are comprised of three business segments•WAL-MART STORES Super- centres Discount Stores Neighbourhood Markets•SAM’S CLUB-SAM’S CLUB

•WAL-MART INTERNATIONAL

OPERATIONS OPERATIONS

•Employees wore blue vests to identify themselves•Aisles were wide•Apparel departments were carpeted in warm colours• A store employee followed customers to their cars to pick up their shopping carts•Customer was welcomed at the door by a “people greeter,” who gave directions and struck up conversations

MARKETING AND SALES

MARKETING AND SALES

• Opening hours at Wal-Mart generally range from 7.00 a.m. to 11.00 p.m. six days a week, and from 10.00 a.m. to 8.00 p.m. on Sunday.

• All Wal-Mart stores maintain uniform prices, except where lower prices are necessary to meet local competition. Sales are primarily on a self-service, cash-and-carry basis with the objective of maximizing sales volume and inventory turnover while minimizing expenses.

SERVICESERVICE

• Bank credit card programs, operates without recourse to the Company, is available in all stores.

• The replenishment system also helps the store adjust to customers demands. The stores are organised the same way all over the world, so the customers will recognise the stores wherever they go.

WAL*MART’S VALUE CHAINWAL*MART’S VALUE CHAIN

Suppliers Wal-MartDistribution

Center

Suppliers Wal-MartStore

Wal-MartShopper

Vendors are Wal-Mart's suppliers. They deliver products to Wal-Mart's distribution center or directly to one of the stores. Wal-Mart is able to bargain for the lowest possible price because of the high volume of sales. Therefore, Wal-Mart passes this savings to its customers.

Once the products are delivered to the distribution center, they are sorted and placed on trucks to be delivered to stores. This allows for less than 48 hour deliveries to stores and increased efficiency on trucks with backhauls.

After products are delivered to the stores, they are placed on the appropriate shelf location for customers to view. Store locations are located throughout the U.S. in rural and urban towns.

Customers can purchase products at very low prices and have the ability to return any item.

Source: Adapted from Garrison Wieland for “Wal-Mart’s Supply Chain,” Harvard Business Review 70(2; March–April 1992), pp. 60–71.

Wal-Mart Supply Chain

Walmart Value Chain

The World of Walmart Map Growth of Walmart