A VIDEO

Walmart SCM

WALMART

Founded 1962

Founder(s) Sam Walton

Number of locations 11,088 (April 2014)

Revenue US$ 476.294 billion (2014)

Net income US$ 16.022 billion (2014)

Owner(s) Walton family

Employees 2.4 million (2014)

Subsidiaries Asda, Sam's Club, Walmex, @WalmartLabs, Walmart e-Commerce

Inbound Logistics Operations Outbound

LogisticsMarketing and

sales Service

• VMI system (Vendor managed inventory) continuous replenishment

• EDI (Electronic Data Interchange)

3 business segments:

• WalMart storeso Super centerso Discount centerso Neighborhood

markets

• SAM’S Club

• WalMart International

• Hub and spoke distribution system.

• Cross Docking Logistic technique to make the distribution process more efficient

• Word of mouth communication.

• Focuses on everyday low prices

• “Save money, live better”

• Sales are on a self-service, cash-and-carry basis.

• Accepting returned goods

• Satisfaction guarantee

• Opening hours(24/7)

PRIMARY ACTIVITIES

SUPPORT ACTIVITIES

Firms Infrastructureclose connection between headquarter and local stores.

Human Resources• Based on Interaction practices between company and employees• Low pay but other benefits (health care plans, retirement plans, or promotion opportunities)• 2.2 million associates globally. • Every time a supercenter is opened, roughly 300 jobs are been provided. • Women - 57% of U.S. workforce, 27% of corporate officers, and 20% of Board of directors.

Techonology DevelopmentIt is the key factor of the company. It constitutes a competitive advantage against competitors.• Computer-based technology

o POS (Point of sales) systemo Satellite System

Procurement• Wal-Mart deals directly with manufacturers, by passing all intermediaries. • EDI : Electronic data interchange• MANUFACTURER – WALMART – CUSTOMER

DISTRIBUTION CHANNELS

• “Saturation Strategy”

• The company owns a

fleet of more than

3,000 trucks and

12,000 trailers.

• The Wal-Mart

Way – Cross Docking.

WALMART

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STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS

SW• Diversity in products & services• Convenient prices & locations• Strong market presence• Customer loyalty• Strong financial performance• Cost and pricing advantages over

rivals• Good supply chain

• Global Expansion: new geographic areas

• Increasing online sales• Strategic alliances

- Acquiring rival firms

HarmfulHelpful

•Brand image-weak reputation•Low global presence•Behind rivals in

e-commerce

• Intense Competition• Laws and Regulations:

Trade policy• Cultural barriers• Current economy • Slow market growth• Transport of distinctive competencyTO

SUPPLY CHAIN FLOW CHART

Manufacturer

Manufacturer

Manufacturer

Retail Store

Retail Store

Retail Store

Point of sale terminal

Satellite system

Bar code, RFID

Radio, headphone

Distribution center

Company Headquarter

COMPONENTS OF SCM

• Procurement

• Distribution

• Logistics management

• Inventory management

PROCUREMENT

• Wal-Mart emphasized the need to reduce purchasing

costs and offer the best price to the customer.

• The company directly procured from manufacturers,

by avoiding all intermediaries.

• Wal-Mart finalizes a purchase deal only when it is

fully confident that the products being bought is not

available else where at a lower price.

DISTRIBUTION USING VMI

• The vendor (supplier) manages the stock levels and availability for the customer based on

safety stock levels the as per the agreed Terms & Conditions.

• Vendor Managed Inventory (VMI) is a planning and management system in which the

vendor is responsible for maintaining the customer’s inventory levels.

• Manufacturers generate orders, not distributors or retailers Stocking information is accessed

using EDI

• A first step towards supply chain collaboration

• Increased speed, reduced errors, and improved service

LOGISTICS MANAGEMENT

• An important feature of Wal-Mart’s logistics infrastructure was its fast and responsive

transportation system.

• The distribution centers were serviced by more than 7000 company owned trucks.

• Wal-Mart believed that it needed drivers who were committed and dedicated to customer

service.

• The company hired only experienced drivers who had driven more than 300,000 accident-free

miles, with no major traffic violation.

• Uses Cross-Doc and Hub & Spoke Approach

CROSS DOCKING

HUB & SPOKE MODEL

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

INVENTORY MANAGEMENT

• Wal-Mart invested heavily in IT and communication systems to effectively track sales and

merchandise inventories in stores across the country. Hence, Wal-Mart set up its own satellite

communication system in 1983.

• Wal-Mart was able to reduce unproductive inventory by allowing stores to manage their own

stocks, reducing pack sizes across many product categories, and timely price markdowns.

• Employees at the stores had the “Magic Wand,” a hand-held computer which was linked to in-

store terminals through a radio frequency network. These helped them to keep track of the

inventory in stores, deliveries, and backup merchandise in stock at the distribution centers.

TO BE NOTED…

• One of the keys to Wal-Mart's effective logistical system is the flexibility that it has when choosing suppliers.

• When Wal-Mart negotiates with suppliers and the suppliers know that Wal-Mart will only pay the most

competitive prices. This is because it is very easy for them to find another supplier of that particular material

with a lower price and very few logistical problems

• Another reason that Wal-Mart's prices are so competitive is because they buy in such large quantities that

transportation from one end of the supply chain to another is not as costly for additional units.

• This aspect of the logistical system does not come from skill or expertise it simply comes from the sheer size

of the company, but this is still a factor.

• Wal-Mart buys so many supplies from different places throughout the world, that they have the

luxury of using bigger trucks and using less fuel to go back and forth.

• Also if by chance they have to use shipping services to transport material from one location to

another, Wal-Mart will give them so much business that they will get huge discounts.

• 2010 - Walmart created new unit Global.com to establish its online presence - E-commerce. The

major advantage that Walmart has over Amazon is the strong association of the

e-commerce/website with actual Walmart stores.

TO BE NOTED…

RECENT NEWS

• Wal-Mart's online shopping sales grew 30 percent during

2013, but it is a small slice of the company's total profit.

• Wal-Mart announced a new line of organic food, to be

sold under the “Wild Oats” label, at prices comparable

with conventionally-grown products. This broad new line,

with more than 100 items, is sure to undercut existing

price points in the industry.

• The concept truck is called W.A.V.E. (Walmart Advanced

Vehicle Experience) and is said to be 20 percent more

aerodynamic than the company's current trucks

Thank You