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WALMART CASE ANALYSIS
PRESENTED BY: AKANKSHA SRIVASTAVA SHIPRA AGGARWAL ABHISHEK SINGH MOHIT AGGARWAL
OVERVIEW OF WAL-MART’S SUPPLY CHAIN
Introduction of Wal-Mart Akanksha Srivastav
Inventory Management Abhishek Singh
Procurement & Distribution Shipra Agrawal
Logistics Mohit Agrawal
INTRODUCTION
US based Co. founded by Sam Walton.
Ranked 1st in global Fortune 500 list(2001-2002)
Wal-Mart operated more than 3500 discount store SAM’s club and supercentres in US .
More than 1170 stores all major countries in the world.
GLOBAL FORTUNE 500 LIST(2002)
RANK COMPANY REVENUES($million)
1 WALMART STORES 219819.0
2 EXXON MOBIL 191,581.0
3 GENERAL MOTORS 177,260.0
4 FORD MOTORS 162,142.0
5 ENRON 138,718.0
MANAGEMENT OF INVENTORY Heavy Investment in IT and communication system to
track sales and inventories.
Set up its Satellite communication system in 1983.
Networking of suppliers through computers.
Collaboration with P & G.
Accessibility of employees through a ‘magic wand’-a hand held computer.
Sophisticated Algorithm System
Centralized Inventory Data system
Use of Bar Coding and radio frequency Technology
Retail Link System Build in 1991
Upgrading the Systems with Internet enabled technologies.
Use of Massively Parallel Processor(MPP) Computer System to track the movement of goods and stocks.
PROCUREMENT
OBJECTIVE
“To reduce its purchasing costs and offer the best price to its customers.”
FEATURES
Tough negotiator
Using own transportation system for procurement
Long- term relationship with vendor
SupplierWal-Mart’s Distributi-on Centers
Own transportation system
Receiving goods
PROCUREMENT
PROCUREMENT PROCESS
DISTRIBUTION INTRODUCTION In 1998, 40 distribution centers in US. Over 80000 items were stocked.
FEATURES Division on the basis of quantity Cases and palletized goods 85% of the goods (at stores) passed through distribution centers. Cross-docking in case of automotive and drug products. Use of Barcode technology & Hand-held computer systems. Facilities for personal hygiene Used for meetings and paper work.
Wal-Mart’s Distributi-on Centers
Wal-Mart Retail
OutletsReceiving goods in cases
and pallets
85% of the goods available at stores
DISTRIBUTION
DISTRIBUTION PROCESS
INVENTORY TURNOVER
2 WEEKS
85% of inventory
50-65% of inventory
2 days Replenishment
5 days Replenishment
3% shipping cost
5% shipping cost
COMPETITIVE ANALYSIS
WA
L-M
AR
T RIV
AL
S
SupplierWal-Mart’s
Distribution Centers
Own transportatio
n system
Receiving goods
PROCUREMENT
Wal-Mart Retail
Outlets
85% of the goods
Receiving goods
DISTRIBUTION
Cross-docking
Automotive & Drug products
PROCURMENT AND DISTRIBUTION
PROCESS
LOGISTICS MANAGEMENT OF
Fast and responsive transportation system. More than 3,500 company owned trucks. Hired only experienced drivers. Truck drivers have to report to coordinator daily. Trailers would be unloaded at night.
TO BE CONTINUED.....
Gap of two hours between unloading of each
trailers
“Private Fleet Driver Handbook”.
‘cross-docking.’
Shifting the focus from Pull view to push view.
Low transportation cost.
Replenish the selves four time faster than its
competitors.
QUESTION 1
Q1.Wal-Mart has been able to achieve respectable leadership In The Retail Industry Because of his focus on supply chain management. Discuss in detail the distribution and logistics system adopted by Wal-Mart.
ABHISHEK SINGH
BENEFITS DERIVED FROM PROCUREMENT, DISTRIBUTION & LOGISTICS BY WAL-MART?
Procurement of Products at the Lowest Possible Cost
Establishes Long Term Relationship
Widespread Distribution of Centres
Fastest Inventory Replenishment
Reduction in Shipping Cost
Higher Inventory Turnover(Twice In Every Two Weeks)
Use of Bar Code Technology and Hand Held Computers
Close Supervision of The Employees
BENEFITS REAPED FROM LOGISTICS
Fast and Responsive Transportation System.
Better Coordination
Safety Issue
Record of The Activities of Drivers Through “Private Fleet Driver Handbook”.
Induction of Cross Docking method of Logistics.
Reduction In Handling and Storage Cost.
QUESTION 2
Q2.The use of Innovative Technology tools had Benefited Wal-Mart’s Supply Chain Management.In the light of plain how the above statement,briefly explain how IT benefited Wal-Mart’s Logistics and Inventory Management.
Mohit Kumar
Agrawal
BENEFITS OF USE OF IT IN WAL-MART’S LOGISTICS AND INVENTORY MANAGEMENT.
Investment on IT…
Wal-mart invested heavily in IT and
communications system to effectively
track sales and merchandise inventories
in stores across the country.
Wal-Mart setups its own satellite
communication system in 1983.
Benefits From use of IT
They can know in a minute how a
particular day is going.
They can see the total of the day’s bank
credit sales adding up as they occur.
Faster communication.
Keep on watching every time.
To be Continued.....
Automated reordering system.
Monitoring stock levels in the stores
constantly.
Identifies the items were moving fast.
Cost reduction.
Use of “Magic band”
To be Continued.....
Use of “brocading system”.
Use of “Radio frequency technology” to
manage its inventories.
To be Continued.....
QUESTION 3
Q4.What was the Nature of benefits Derived by Wall-Mart from the efficient Supply chain management practices and how far it has contributed to its sustainable Competetive advantage?Explain.
Akanksha Srivastav
BENEFITS DERIVED BY WAL-MART FROM THE SUPPLY CHAIN
Lower Transportation Cost
Price Negotiator
Generating Good Revenues In the Form of Higher Volumes.
Reduction In Lead Time
Faster Inventory Turnover
Accurate Forecasting of Inventory Levels
Increase Warehouse Space
Reduction In Safety Stocks
Better Working Capital Utilisation
Reduction In Inventory Storage Cost
Reduction in Labour and Handling Cost
COMPETITIVE ADVANTAGE
Objectives-“To reduce its purchasing costs and offer the best
price to its customers.”
Lowest Transportation Cost
Lowest Shipment Cost
Fastest Inventory Replenishment
Better Use of IT Capabilities
Use of Cross-Docking Method of logistics
QUESTION 4
Q3. What factors should WAL-MART consider for supply chain if it starts its operation in India?
Shipra Agrawal
Already exist through FDI in wholesale business.
Three year old joint venture with Indian telecomm company ‘Bharti Airtel’.
Supply goods to ‘Institutional Buyers’ & other contractors.
SUPPLY CHAIN MANAGEMENTBHARTI – WAL MART Bharti operate Front-end & Wal-Mart operate
Back-end of Supply Chain
Raj Jain (MD & CEO) says-
“ the larger issue in our country is supply chain”
As at least 40% of produce is wasted because of inadequate storage & transportation.
IF COMES IN INDIAN RETAIL BUSINESS…?FAVORABLE FACTORS
Availability of suppliers Ready to supply at extreme low prices Other main player may be farmers
Real estate
“The Wal-Mart model is very Real Estate hungry”- Marketing experts says
Availability of required space Available at lower prices
Consumer readiness Price leadership
Competition In US face problem of oversupply 7 or 8 players in India
“Wal-Mart global sales was $315.6 billion which is near to the annual revenue of entire Indian retail industry i.e. $320 billion”
Unfavorable factors• Consumer behavior Consumer perception
In US – Bigger store lower prices
Smaller store higher prices
In India- Bigger store higher prices
Smaller store lower prices
Question arise of positioning of Lower Prices
Consumer preference
Different across Global Market
Location of outlets- outskirts of urban centre Few suburbanites own cars Industry Experts says “ Indian consumers doesn’t travel more than
6Km or 7Km to shop.
Logistics and infrastructure Cold chains, warehousing,& logistics infrastructure will become
unmanageable challenge in India. Need of bullock carts & handcarts along with Volvo Trucks .
Political issues Not allowed to directly enter in the Indian retail sector. Some expetrs believe they will be allowed in future.
RECOMMENDATIONS
Augmenting the value of low prices with other differentiating values.
To know consumer preferences in India, can conduct surveys and can take help of Bharti.
Aggressive advertising for low price positioning.
Ready with all arrangements so as to explore opportunity if govt. allow FDI in retail sector.
THANK YOU
QUESTIONS