Walmart's Supply Chain

The Walmart Effect

World’s Largest retailer.World’s Largest retailer.

Ranks 1 - Fortune 500 List-’14Ranks 1 - Fortune 500 List-’14

Mission Statement:Mission Statement:Save Money. Live Better.Save Money. Live Better.

Targeted Demographic:Targeted Demographic:•Modest IncomesModest Incomes•Shoppers interested in pricesShoppers interested in prices..

The Walmart Effect The Walmart Effect

Wal-Mart

Recent ventures:Recent ventures:Wal-Mart Online Wal-Mart Online : : e-commerce website, Online Music and moviese-commerce website, Online Music and movies..

Push/Pull System :Push/Pull System :Push system because it is based on the downstream demand forecast.Push system because it is based on the downstream demand forecast.Pull System because it tells its manufacturers what to produce and how much to produce.Pull System because it tells its manufacturers what to produce and how much to produce.

Focuses on:Focuses on:•Hub and Spoke Distribution NetworkHub and Spoke Distribution Network•Minimal inventoryMinimal inventory•Go GreenGo Green•Cross DockingCross Docking•Less Lead timeLess Lead time


Wal-Mart’s - Meat

Largest Supplier of Meat and Fish in the US.Largest Supplier of Meat and Fish in the US.

First Step First Step ::Identify the suppliers.Identify the suppliers.Lowest possible price.Lowest possible price.Win-Win situation.Win-Win situation.

Second Step:Second Step:Transports the products directly from the manufacturers site to the distribution center where Transports the products directly from the manufacturers site to the distribution center where cross docking happens.cross docking happens.

Third Step:Third Step:Replenishment Replenishment


First Step: Supplier Selection

• Walmart directly connects with the manufacturer bypassing intermediaries.Walmart directly connects with the manufacturer bypassing intermediaries.• Walmart spends some considerable amount of time meeting vendors and Walmart spends some considerable amount of time meeting vendors and

understanding their cost structure.understanding their cost structure.• WalmartWalmart seals a deal only when it is fully confident that the product being bought is not seals a deal only when it is fully confident that the product being bought is not

available else where at a lower price.available else where at a lower price.• It also ensures that the supplier meets the US laws & standards.It also ensures that the supplier meets the US laws & standards. GFSI – GFSI – Global food safety Initiative standards.Global food safety Initiative standards. FDA FDA – Food and Drug Administration Standards.– Food and Drug Administration Standards. USDA – USDA – United States department of Agriculture.United States department of Agriculture. MSCMSC -- -- Marine Stewardship Council Certified.Marine Stewardship Council Certified.

Hillshire Brands CoHillshire Brands Co Angus BeefAngus Beef Vita Sea productsVita Sea products

The Walmart EffectThe Walmart Effect

Second Step: Transportation

• Walmart directly ships its products from the manufacturer with its own fleet of Walmart directly ships its products from the manufacturer with its own fleet of trucks.trucks.

• Hub and Spoke System – It purchases orders in huge quantities and distributes Hub and Spoke System – It purchases orders in huge quantities and distributes them on its own. them on its own.

• The drivers have a very stringent selection process – Eg.300,000 accident free The drivers have a very stringent selection process – Eg.300,000 accident free miles.miles.

• The unloading process is carried out with equally spaced intervals (2hrs).The unloading process is carried out with equally spaced intervals (2hrs).• Lead time at Walmart is 48hrs compared to 5 days in other companies.Lead time at Walmart is 48hrs compared to 5 days in other companies.


6500 Tractors6500 Tractors 55000 trailers55000 trailers

Wal-Mart’s Network - CA

Distribution Centers - 9Distribution Centers - 9 Supercenters - 17Supercenters - 17 Sam’s Club – 35Sam’s Club – 35 Neighborhood Markets: 50 >Neighborhood Markets: 50 >

•Sort goods intended for different locations.Sort goods intended for different locations.•Cross Docking : lots are unloaded from an incoming truck and directly loaded onto the Cross Docking : lots are unloaded from an incoming truck and directly loaded onto the outbound truck with no storageoutbound truck with no storage..•Various types of distribution centers exist and are categorized by facility type and location.Various types of distribution centers exist and are categorized by facility type and location. ExEx : : Grocery and Perishable food distribution center, Fashion Distribution centerGrocery and Perishable food distribution center, Fashion Distribution center


Distribution center Distribution center : : •1 million square feet in size, 5 miles of 1 million square feet in size, 5 miles of conveyor belts. conveyor belts.

•Larger loads are split into smaller Larger loads are split into smaller loads and sent to the retail outlets.loads and sent to the retail outlets.

Walmart-Supplier Communication.


Wal-Mart’s Distribution Centers

The Walmart Effect

Distribution centers, This figure illustrates the four types of distribution centers and their locations. Source: www.mwpvl.com

Source: www.mwpvl.com

ISCM-Internal Supply Chain Management

ISCM interacts with both macro components of SCM(SRM and CRM).ISCM interacts with both macro components of SCM(SRM and CRM).

The Walmart EffectThe Walmart Effect Source: www.walmart.com

Strategy Planning

LocationLocation of the facility, its capacity and the warehouse location are determined.of the facility, its capacity and the warehouse location are determined.

Distribution centers - General DC deliver directly to the retail store. There are some Distribution centers - General DC deliver directly to the retail store. There are some centers staffed by Walmart and some run by third party. centers staffed by Walmart and some run by third party.

Branding the new products in store.Branding the new products in store.

EDLP EDLP

TheThe Walmart Walmart EffectEffect

Demand Planning

Walmart has the largest IT infrastructure of any private company in the world.Walmart has the largest IT infrastructure of any private company in the world.

Their technology and network design allows them to accurately forecast their demand.Their technology and network design allows them to accurately forecast their demand.

Walmart implemented the UPC bar code system to analyze the store level information.Walmart implemented the UPC bar code system to analyze the store level information.

Universal Product Code is used for tracking the trade items in stores.Universal Product Code is used for tracking the trade items in stores.


Supply Planning

ERP software is used to manage the data from demand planning and strategy planning ERP software is used to manage the data from demand planning and strategy planning to produce an optimal supply planning. to produce an optimal supply planning.

Communication and relationship network with suppliers helps to improve material flow Communication and relationship network with suppliers helps to improve material flow with minimal inventory.with minimal inventory.

Uses Radio Frequency Identification(RFID)to manage inventory.Uses Radio Frequency Identification(RFID)to manage inventory.


Fulfillment and Field Service

Online customer help center.Online customer help center.

Customer service center with 24/7 availability.Customer service center with 24/7 availability.

In store service desk. In store service desk.


ERP Software

The Walmart Effect

Marketing:

The first pitch that brought thousands into the first store of (then Ben Franklin) Walmart in The first pitch that brought thousands into the first store of (then Ben Franklin) Walmart in 1962 were :1962 were :

1.1.Sunbeam coffee maker priced at $19.95 for just 13.47Sunbeam coffee maker priced at $19.95 for just 13.47

2.2.A lawn mover discounted from $59.95 to $37.77A lawn mover discounted from $59.95 to $37.77

These set a successful retail model for Walmart.These set a successful retail model for Walmart.


Pricing Strategy :

Walmart products are priced 20% less than its competitors.Walmart products are priced 20% less than its competitors.

A standard markup of 30% is fixed.A standard markup of 30% is fixed.

Provide statistical dataProvide statistical data

They generate large profit by selling more.They generate large profit by selling more.

Ensure strict control overhead costs spending less on facility paying minimal rent.Ensure strict control overhead costs spending less on facility paying minimal rent.


Price comparison :

ProductAldi Kroger Trader Joe's Publix Walmart

Price Weight Price Weight Price Weight Price Weight Price Weight

Chicken Breasts, frozen

$5.49 3 lbs $8.99 3 lbs $6.99 2.5 lb $6.49 32 oz $6.98 3 lbs

Chicken Nuggets, frozen

$3.99 32 oz $3.79 13.25 oz $3.79 16 oz $5.99 29 oz $4.47 29 oz

Chicken Tenderloins, frozen

$5.99 2.5 lbs $8.99 3 lbs $6.99 2.5 lb $6.99 32 oz $6.98 3 lbs


Customer service

Wal-Mart trains employees on problem solving and customer relatioship techniques.The Wal-Mart trains employees on problem solving and customer relatioship techniques.The slogan of "satisfaction guaranteed" is something that Wal-Mart seriously follows.slogan of "satisfaction guaranteed" is something that Wal-Mart seriously follows.

Wal-Mart trains employees to ask customers if they need assistance and also provides Wal-Mart trains employees to ask customers if they need assistance and also provides tutorials on how a particular product functions.tutorials on how a particular product functions.

Another function of Wal-Mart customer strategy is to have greeters at the door of every Another function of Wal-Mart customer strategy is to have greeters at the door of every store. store.

Wal-Mart management feels that if customers are greeted by a friendly face,it will Wal-Mart management feels that if customers are greeted by a friendly face,it will enhance their shopping experience.enhance their shopping experience.


Satisfying customer needs:

Wal-Mart caters to a variety of customers who want to enjoy and live comfortably without Wal-Mart caters to a variety of customers who want to enjoy and live comfortably without draining their check book. draining their check book.

Their entire inventory is priced to compete with other discount stores in their market. Their entire inventory is priced to compete with other discount stores in their market.

However, it’s not only the low prices that entice customers; it’s also the convenience of However, it’s not only the low prices that entice customers; it’s also the convenience of having almost everything in one place. For a shopper that has to buy food, household having almost everything in one place. For a shopper that has to buy food, household items, toys and clothes, and doesn’t have a lot of time to do it, Wal-Mart is there. items, toys and clothes, and doesn’t have a lot of time to do it, Wal-Mart is there.


By stocking a variety of items, Wal-Mart can attract it’s customers to buy more things by By stocking a variety of items, Wal-Mart can attract it’s customers to buy more things by making it easy and convenient. Customers who want the ease of one-stop-shopping can making it easy and convenient. Customers who want the ease of one-stop-shopping can do so at these stores. do so at these stores.

Wal-Mart also makes the effort to go the extra mile when it comes to making people feel Wal-Mart also makes the effort to go the extra mile when it comes to making people feel comfortable and creating a friendly environment. Customers who shop at Wal-Mart are comfortable and creating a friendly environment. Customers who shop at Wal-Mart are given a sense of well-being and treated as individuals, not just as a faceless shopper.given a sense of well-being and treated as individuals, not just as a faceless shopper.


Order management

Voice based order fillingVoice based order filling

Each person responsible for order picking is provided with a microphone/speaker Each person responsible for order picking is provided with a microphone/speaker headset connected with a VOF worn on belt. This guides them to the product in a headset connected with a VOF worn on belt. This guides them to the product in a distribution center.distribution center.

The VOF system verifies the quantity picked and also the product.The VOF system verifies the quantity picked and also the product.

This system eliminates miss picks and paper labels for the products.This system eliminates miss picks and paper labels for the products.


Order management

Order management and store replenishment of goods were entirely executed with the Order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system. help of computers through the Point-of-Sales (POS) system.

Through this system, it was possible to monitor and track the sales and merchandise Through this system, it was possible to monitor and track the sales and merchandise stock levels on the store shelves.stock levels on the store shelves.


Thank You

Walmart's Supply Chain

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