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