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- 2. "People think we got big by putting big stores in small towns. Really, we got big by replacing inventory with information." Sam Walton, Founder of Wal-Mart
- 3. Type Discount department store/Public (NYSE: WMT) Founded Rogers, Arkansas, USA (1962) Headquarters Bentonville, Arkansas, USA Key people Sa Walton (1918–1992), Founder H. Lee Scott, CEO S. Robson Walton, Chairman Tom Schowe, CFO Industry Retail Products Discount stores, grocery stores, and hypermarkets Revenue US$351.1 billion (2007) Industry US$11.3 billion (2007) Products 1.9 million (2007) Website http://www.walmart.com
- 5. Production Storage Customer Material Flow and Storage Information Flow and Storage Plan Implement Control Raw Materials
- 6. Supply Chain : The sequence of organizations - their facilities, functions, and activities - that are involved in producing and delivering a product or service. Sometimes referred to as value chains
- 7. Wal-Mart Supply Chain Source: Adapted from Garrison Wieland for “Wal-Mart’s Supply Chain,” Harvard Business Review 70(2; March–April 1992), pp. 60–71.
- 8. Lower inventories Higher productivity Greater agility Shorter lead times Higher profits Greater customer loyalty Wal-Mart gets benefited through Supply Chain
- 9. Wal-Mart Strategy “ Everyday low price” Effective use of logistics management Effective inventory control Bargaining power over suppliers Global Expansion for new market opportunity
- 10. How Wal-Mart Manage the Supply Chain ? Procurement and Distribution Logistics management Inventory management
- 11. Procurement and Distribution Management of Wal-Mart Bull whip effect Vendor managed inventory
- 12. Bull Whip Effect Occurs when slight demand variability is magnified as information moves back upstream.
- 13. Bull Whip Effect
- 14. Vendor Managed Inventory A means of optimizing Supply Chain performance in which the manufacturer is responsible for maintaining the distributors inventory levels. The manufacturer has access to the distributors inventory data and is responsible for generating purchase orders. 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
- 15. Logistics Management Cross Docking Hub and Spoke
- 16. Flow-Time Analysis Retail Link – real-time point-of-sales (POS) data transmission Cross Docking Fleet of 7,000 trucks in US
- 17. Cross docking Cross-docking means to take a finished good from the Manufacturing plant and deliver it directly to the customer with little or no handling in the process. In purest form this is done directly, with minimal or no warehousing. Conveyor System
- 19. What makes Wal-Mart successful ?
- 20. Wal Marts Communication Network Cross Docking relies on continuous communication between Wal Mart’s suppliers, distribution centers, and every point of sale system in each store. This enables orders to flow in, get packaged and then shipped.
- 21. How does Wal-Mart do this? Wal Mart operates their own satellite network. Wal Mart’s satellite network sends the point of sale (POS) data directly to 4000 vendors
- 22. Inventory Management The primary purpose to buffer against any uncertainty that might exist in the supply chain. Since holding of inventories can cost anywhere between 20 to 40 percent of their value, their efficient management is critical in supply chain operations. These include deployment strategies (push versus pull), control policies --- the determination of the optimal levels of order quantities and reorder points, and setting safety stock levels, at each stocking location
- 23. Radio Frequency Identification Automated Data collection based on an electronics – not a barcode Tag can be imbedded in the product or stuck on the exterior case or pallet Reader instead of a barcode scanner Allows fully automated data collection with the use of portals Can read many ID tags at a time
- 24. Bar code and point-of-sale data creates an instantaneous computer record of a sale Radio frequency identification (RFID) technology can send product data from an item to a reader via radio waves Internet allows companies to communicate with suppliers, customers, shippers and other businesses around the world, instantaneously Radio Frequency Identification cont…
- 26. How does RFID works ?
- 27. Information Technology: A Supply Chain Enabler Information links all aspects of supply chain E-business replacement of physical business processes with electronic ones Electronic data interchange (EDI) a computer-to-computer exchange of business documents
- 28. Increased productivity Reduction of paperwork Lead time and inventory reduction Facilitation of just-in-time systems Electronic transfer of funds Improved control of operations Reduction in clerical labor Increased accuracy Electronic Data Interchange
- 29. What we learned so far….
- 30. 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
- 31. 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
- 33. Sources www.wal-Mart.com www.altavista.com www.google.com Case Study of Retail