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Jiaming Rao
Executive Summary
Wal-Mart is considered a success story without precedent. Founded by Sam
procured
goods
directly
from
manufacturers,
bypassing
all
intermediaries. It was a tough price negotiator which will only purchased when it was
fully assure that the products bought were not available elsewhere at a lower price.
Logistic management
Distribution system
Barcode Technology.
Vision/mission
Wal-Mart's advertised mission statement and its advertising slogan are the same:
"We save people money so they can live better (Walmart.com)" In addition to this
mission statement, the company looks to its founder, Sam Walton for a company
purpose: If we work together, well lower the cost of living for everyonewell give the
world an opportunity to see what its like to save and have a better life.
In order to fulfill its mission, Wal-Mart has developed some unique, policies,
principles, rules, processes and procedures, the sum total of which form the Wal-Mart
stores corporate culture:
Open Door Policy - Managers' doors are open to employees at all levels
Sundown Rule - Answering employee, customer, and supplier questions on the
front lines
3 Basic Beliefs & Values - Respect for the Individual, Service to our Customers,
Company Structure
From its humble beginnings as a small discount retailer in Rogers, Ark., Wal-Mart
has opened thousands of stores in the United States and expanded internationally.
Through this model of expansion, which brings the right store formats to the
communities that need them, Wal-Mart is creating opportunities and bringing value to
customers and communities around the globe. Today, Wal-Mart operates more than
11,000 retail units under 69 banners in 27 countries. Wal-Mart employs 2.2 million
associates around the world 1.4 million in the U.S. alone.
Locations at a glance
11,096
4,156
630
6,310
Wal-Mart currently operate four primary store formats in the U.S., each custom tailored
to its neighborhood.
Walmart SupercenterWal-Mart Supercenters offer a one-stop shopping experience for electronics,
apparel, toys and home furnishings with the added convenience of a grocery store with
fresh produce, bakery, deli and meat and dairy products. Most Supercenters are open
24 hours, and may also include specialty shops such as pharmacies, banks, hair and
nail salons, name-brand restaurants, vision centers or health clinics.
Walmart Discount StoreSince Sam Walton opened his first discount store in Rogers, Ark., in 1962, WalMart have built hundreds across the U.S. Smaller than a Supercenter, discount stores
employ about 200 associates and offer electronics, apparel, toys, home furnishings,
health and beauty aids, hardware and more in about 106,000 square feet of open,
brightly lit space.
http://mi021.wordpress.com/2013/03/24/walmart-master-of-the-supply-chain/
Order processing
The order management and store replenishment of goods were entirely executed
with the help of computers through the Point-of-Sales (POS) system
Through this system, it was possible to monitor and track the sales and merchandise
distribution centers
Each person responsible for order picking was provided with a microphone/speaker
headset, connected to the portable (VOF) system that could be worn on waist belt
They were guided by the voice to item locations in the distribution centers
Wal-Mart provides the product, as well as pricing and availability information, to
the customer. The customer transfers funds to Wal-Mart. Wal-Mart convey point-of-sales
data as well as replenishment order via trucks back to the store. Wal-Mart transfers
funds to the distributor after the replenishment. The distributor also provides pricing
information and sends delivery schedules to Wal-Mart. Similar information, material, and
fund flows take place across the entire supply chain. Wal-Mart trains employees on how
to problem solve and develops each employee to focus on pleasing the customer. The
slogan of "satisfaction guaranteed" is something that Wal-Mart says it takes seriously.
Wal-Mart says it trains employees to ask customers if they need assistance or tutorials
on how a particular product functions.
Wal-Marts Delivery system procedures1. Create walmart.com account
2. Check your address
3. Shop online
4. Reserve your delivery time
Procurement
Wal-Marts process of procurement consists of reducing its purchasing costs as
much as possible so that it can offer best price to its consumers. The company procures
goods directly from the manufacturers, bypassing all intermediaries.
Inventory
Considering the quick expansion of Wal-Mart stores, it was vital to have an
incredibly good communication system. For this to happen, Wal-Mart set up its own
satellite communication system in 1983. This allowed the management to monitor each
and every activity going on in a particular store at any point of time and analyze the
course of action to be taken depending on how the things panned out.
Wal-Mart ensures that unproductive inventory is reduced to the fullest extent
possible, by allowing the stores to manage their own stocks, thereby decreasing pack
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sizes across many categories and timely price markdowns. Wal-Mart makes full use of
its IT infrastructure to make more inventories available in case of items that customers
wanted most, while decreasing overall inventory. By making use of Bar-coding & RFID
technologies, different processes like efficient picking, receiving and proper inventory
control of the products along with easy packing and counting of the inventories was
ensured.
Wal-Mart owns the Massively Parallel Processor (MPP), the largest and most
complex computer system in private sector, which allows it to easily track movement of
goods and stock levels across all distribution centers and stores. As an emergency
backup, it has an extensive contingency plan in place as well. Employees use Magic
Wand, which is linked to in-store terminals through a Radio frequency network, to keep
track of the inventory in stores, deliveries and backup merchandise in stock at the
distribution centers. The order management and store replenishment of goods is fully
executed with the help of computers through Point of Sale (POS) system. Wal-Mart also
makes use of high-tech algorithm to forecast the quantities of each item to be delivered,
based on inventories in the store. A Centralized inventory database lets the personnel at
the store to discover the level of inventories and location of each product at a given
time. Additionally, it shows the location of the product like distribution center or transit on
the truck. When the goods are unloaded at the store, the inventory system is
immediately updated.
Manufacturing
Its supply chain strategy has four key components: vendor partnerships, cross
docking and distribution management, technology, and integration. Walmarts supply
chain begins with strategic sourcing to find products at the best price from suppliers who
are in a position to ensure they can meet demand. Walmart establishes strategic
partnerships with most of their vendors, offering them the potential for long-term and
high volume purchases in exchange for the lowest possible prices. Suppliers then ship
product to Walmarts distribution centers where the product is cross docked and then
delivered to Walmart stores. Cross docking, distribution management, and
transportation management keep inventory and transportation costs down, reducing
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served by Wal-Marts truck fleet, are the foundation of its growth strategy and supply
network.
The companys hub-and-spoke distribution network utilizes a system of manufacturer
storage with customer pickup. No inventory is stored at Wal-Marts distribution centers.
Wal-Marts fleet of 6,500 dedicated trucks and over 50,000 trailers. (SC Digests
editorial staff, 2011). They are used to pick up goods directly from manufacturers
warehouses, thus eliminating intermediaries and increasing responsiveness.
A regional distribution center can have up to 12 miles of conveyor belts, which can
natural disaster.
Each distribution center is more than 1 million square feet in size, and uses more
than 5 miles of conveyor belts to keep products moving to our stores 24 hours a
day.
Every distribution center supports 90 to 100 stores in a 200-mile radius.
http:/
/www.transportationfortomorrow.com
Transportation methods
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Walmarts distribution operation is one of the largest in the world. The main
method they are using to transport is by trucks. Walmart logistics has a fleet of 6,500
tractors, 55,000 trailers and more than 7,000 drivers (SC Digests editorial staff, 2011). It
ensures Walmart to move goods to and from distribution centers because of its private
fleet of trucks and skilled truck drivers. Walmarts truck drivers fleet is one of the largest
and safest fleets, and every year they drive 700 million miles to make millions of
deliveries to its stores and clubs. Each driver averages around 100,000 miles annually,
thats like driving around the world 4 times!
Together with the truck drivers, Walmart constantly working to ensure that it is
moving merchandise in responsible, sustainable ways. Drivers follow the most efficient
routes to their destinations, and work to minimize the number of empty miles they drive
(SC Digests editorial staff, 2011). This way, Walmart uses less fuel, drive fewer miles,
and maximizes the merchandise it delivers while minimizing its environmental impact.
Just last year, Walmart drivers logged 28 million fewer miles while transporting 65
million more cases. Those improvements avoided nearly 41,000 metric tons of carbon
emissions, which is the equivalent of taking 7,900 cars off the road.
Information systems
The Information Systems Department has around 3000 societies that work in the
David Glass Technology Center located in Bentonville, Arkansas. Wal-Marts IS
Department is very hierarchal. It includes a Business Analyst, Senior Business Analyst,
Manager, Senior Manager and levels below them. The department of the information
system is very structured and formal (Wilgum 2009). It is so structured that they track
the time spent on projects down to fifteen minute increments. Doing this keeps them on
track for budget and productivity metrics.
Jane data center is the data center of Wal-Mart which has a capacity of 460
terabytes of data. Which is a huge capacity of data available in the internet. And it has
helped Wal-Mart become the biggest retailer in the world, and to the corporation's
growing secrecy since founder Sam Walton's death in 1992 (Walmart 2012). To the
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power of data, Jane data center is considered a mysterious icon. It helped Wal-Mart to
become the biggest retailer in the world. When Wal-Mart constructed its primary data
center at corporate headquarters in 1989, it wasn't a secret, it was the largest poured
concrete structure in Arkansas at the time, and Walton himself ordered a third story.
According to the econometric society, Wal-Mart deals with the following data: Store
openings data which included the opening dates of Wal-Mart stores and Supercenters.
Also the data that Wal-Mart dealt with included distribution center opening which show
Opening dates of General Distribution Centers and Food Distribution Center. Moreover,
Wal-Mart dealt with Model Calculations data which include Gauss Programs and Gauss
Data sets that calculate sales, operating profits, and distribution miles for any given
configuration of Wal-Mart stores in any given year.
Universal bar code and RFIDThe universal bar code was established after Wal-Mart pushed the retail industry
, which made manufacturers adopt common labeling. The bar allowed retailers to
generate all kinds of information, creating a shift of power from manufacturers to
retailers. Also Wal-Mart became very good at using the information behind the bar code
and is considered a pioneer in developing sophisticated technology to track its inventory
and cut the fat out of its supply chain. No one has used the technology as efficiently as
Wal-Mart. The famous retail store Wal-Mart recently showed that it is investing more in
technology , dealing more with sales and production tracking. Wal-Mart now requires
its suppliers to provide microchips which will service radio frequency identification, or
RFID, which will greatly enhance the systems created by bar codes .
Transaction process system (TPS)This information system ordinarily automates routine and repetitive tasks that are
very important to the operation of Walmart. The input of TPS is raw data; the processing
involves with the summarizing, recording, and merging the data and the output is in the
form of report (Wilgum 2009).One example of TPS is Point-of-Sale when you check-out
the product at Walmart, the cashier has to scan the product with the bar code that the
input of system; it has many benefits to Wal-Mart, they are:
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Uniqueness
Fewer LinksWal-Marts supply chain innovation began with the company removing a few of
the chains links. In the 1980s Wal-Mart began working directly with manufacturers to
cut costs and more efficiently manage the supply chain. From 1993 to 2001, Wal-Mart
grew from doing $1 billion in business a week to $1 billion every 36 hours
(Johnbagamery 2012), growth that was attributed as much to supply chain management
as to customer service.
VMIUnder a Wal-Marts supply chain initiative called VMI - vendor managed inventory
manufacturers became responsible for managing their products in Wal-Marts
warehouses. As a result, Wal-Mart could expect close to 100 percent order fulfillment on
merchandise.
CollaborationWal-Mart implemented the first companywide use of Universal Product Code bar
codes, in which store level information was immediately collected and analyzed, and the
company devised Retail Link, a mammoth Bentonville database. Through a global
satellite system, Retail Link is connected to analysts who forecast supplier demands to
the supplier network, which displays real-time sales data from cash registers and to
Wal-Marts distribution centers (Uni of San Francisco Online 2011). In recent years Wal-
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Mart has used radio frequency identification tags (RFID), which use numerical codes
that can be scanned from a distance to track pallets of merchandise moving along the
supply chain. Even more recently the company has begun using smart tags, read by a
handheld scanner, that allow employees to quickly learn which items need to be
replaced so that shelves are consistently stocked and inventory is closely watched.
Competition
In North America, Wal-Mart's primary competition includes department stores like
Kmart, Target, ShopKo and Meijer, Competitors of Wal-Mart's Sam's Club division are
Costco, and the smaller BJ's Wholesale Club chain operating mainly in the eastern US.
Wal-Mart's move into the grocery business in the late 1990s also set it against
major supermarket chains in both the United States and Canada. Some retail analysts
see regional grocery store chain WinCo Foods as serious competition for Walmart.
Several smaller retailers, primarily dollar stores, such as Family Dollar and Dollar
General, have been able to find a small niche market and compete successfully against
Wal-Mart for home consumer sales.In 2004, Wal-Mart responded by testing its own
dollar store concept, a subsection of some stores called "Pennies-n-Cents."
Current/Future Challenges
Online salesWalmart facing a new challenge is how to goose Wal-Marts online sales, which
account for about $5.15 billion, or 2 percent, of total annual sales, according to Kantar
Retail, a London-based consulting firm. More and more Wal-Mart customers are
shopping at Amazon (Carson 2010). The future of shopping is e-commerce market, as
the e-commerce market is getting crowded to enter. How to get market share from ecommerce giants such as Amazon and Ebay is their biggest challenge.
Going aboard-
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Wal-Mart will continue to grow overseas. Sales outside the U.S. are about 25% of
the company's $408 billion in sales. But It was difficult for Walmart to expand their
territory. Wal-Mart pulled out of Germany in 2006 with a $1 billion loss. Germany has the
world's fifth-largest GDP. The same year, the world's largest retailer sold its South
Korean stores and left that market. Wal-Mart has also struggled in Japan for years(
Mclntyre 2010). In sum, the company's efforts to break into several of the world's largest
retail markets have been a failure. Still, the success in Canada, Mexico and Britain
shows there are significant business opportunities outside the U.S .How to expand
overseas is the ultimate challenge that Walmart have to face.
Summary
Supply chain management is a complex process involving the intricacies of top of
the end management practices. Every successful company has its own ways to improve
their Supply chain process, Wal-Mart is no different. It has been working hard on
improving their supply chain process and done some remarkable works, and that is why
Walmart being the world 2nd largest retailer in term of sales.
Walmart is doing well domestically. But they still need to make more efforts to
approach towards enhancing their associates and building relationship, so that it helps
the company to further expand globally. Improvement of their supply chain process
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