scm case 3- wal-mart

8/8/2019 SCM Case 3- Wal-Mart

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SCM Case Study



Background

Started by Sam Walton in 1962

To serve the mass market

Compete on price To build a strong Supply Chain

In 1970s Wal-Mart moved to hub and

spoke model, the first in retail industry Ordered centrally and distributed globally



Wal-Mart position

2007 Fortune 500

1. Wal-Mart Stores2. Exxon Mobil3. GeneralMotors4. Chevron5. ConocoPhillips6. General

Electric7. Ford Motor 8. Citigroup 9. Bank of America10. American Intl. Group 11. J.P.Morgan Chase & Co. 12. BerkshireHathaway13. Verizon communications14. Hewlett-Packard15. Intl. Business Machines16. Valero Energy17. HomeDepot18. McKesson19. CardinalHealth20. Morgan Stanley



IT works

"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.



Methodology to compete

The structure and operation of this

company have been defined by the need

to lower its costs and increase itsproductivity so that it could be pass these

savings on to its customers in the form of

lower prices



Major four

The Strategy of expanding around

distribution centers (DCs)

Using electronic data interchange( EdI)with suppliers

The ³big box´ store format

³Everyday Low Prices´



Expanding around DCs

New geographies

A group of new stores

New DC and first store starts at the sametime

DC is the Supply Chain bridgehead into

the new territory It supports opening of more new stores at

low additional cost



EDIs

First cuts transactional cost associated

with ordering and paying

Second it allows Wal-Mart a high degreeof control and co-ordination in scheduling

and receiving

This ensures a steady flow of the right

products at right time, delivered to the right

DCs by wal-mart suppliers



The Big Box Store

It allows a Wal-Mart to combine a store

and a ware house in a single facility and

get great operating efficiencies

Big box is large enough to hold large

amounts of inventory

No cost of moving goods from ware house

to store

Cost savings passed on to customer



Everyday Low Prices

To tell its price conscious customers that

they will always get the best price

They need not look elsewhere or wait for special sales

By eliminating campaigns Wal-Mart is able

to make accurate forecast product sales

Stores are more likely to have what

customers want when they want it



Business model

Individually these four concepts are useful

They combine to form a supply chain thatdrives self-reinforcing business process

Each concept builds on the strength of theothers to create a powerful businessmodel

Wal-Mart has become a dominant player in the market as a result of the strongsupply chain



Supplier development

collaborative planning, forecasting andreplenishment (CPFR)

RFID

IT and internet Over the decades, Wal-Mart had always beenthe first mover in the retailing industry toembrace new technologies for managing thesupply chain processes

At the same time, Wal-Mart helped its suppliersadapt to the new SCM technologies, so that boththe parties derived benefits.



IT Development

Demand forecasting

Procurement

Logistics Distribution

Inventory management



Global sourcing

From the year 2000 Wal-Mart have started

procuring globally

They have also started he establish retailoutlets globally

Sales and inventory data is exchanged

between Wal-Mart and suppliers in matter

of seconds through the internet

scm case 3- wal-mart

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