Wal mart case study solution.shrikant rana
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Walmart has built a highly efficient supply chain management system centered around its distribution centers and use of innovative IT. It uses over 40 distribution centers located strategically across the US to stock over 80,000 items. Walmart owns the largest private fleet of trucks which it uses to directly pickup goods from manufacturers and deliver 85% of inventory to its stores. The company heavily invests in IT systems to track sales, inventory, and replenish stock based on demand. This efficient supply chain allows Walmart to offer the lowest prices through reduced costs and ensures stores are well stocked.
Wal mart case study solution.shrikant rana
- 1. Wal-Mart Supply Chain Management Case Study Distribution Management By; SHRIKANT R. RANA
- 2. 2 SHRIKANT RANA ( FB/11-13/IIPM/D ) 1. Wal-mart has been able to achieve respectable leadership in retail industry because of its focus on supply chain management. Discuss in detail the distribution and logistics system adopted by Wal-mart. Major strategy of Wal-mart is to buy goods from direct manufactures and they don’t give any room to suppliers because they will pick up goods from suppliers by own trucks. Wal-Mart preferred local and regional vendors and suppliers for better and fast SCM. Wal-mart had over 40 distribution centers located at different geographical locations in US. Over 80,000 items were stocked in these centers. And its own warehouse directly supplied 85 percent of the inventory, as compare to 50-65 percents of competitors Ship pining cost for Wal-mart worked out to be roughly 3% as against 5% for competitors.
- 3. 3 SHRIKANT RANA ( FB/11-13/IIPM/D ) 2. The use of innovative information technology tools had benefited Wal-mart’s supply chain management. In the light of the above statement, briefly explain how IT benefited Wal-Mart’s logistics and inventory management. Wal-mart invested heavily in IT and communication systems to effectively track sales and merchandise inventories in stores across the country. They have set up own satellite communication in 1983. Employees at the stores had the ‘Magic Wand’ , a hand – held computer which was linked to in-store terminals through a RFID network. These helped them to keep track of the inventory in stores, delivers and backup merchandise in stock at the distribution centers. And Point –of-Sales is done by Computer system. They have also developed algorithm system which enabled it to forecast the exact quantities of each items to be delivered, based on the inventories in each store. They have also made use of bar code and radio frequency technology to manage its inventories. This has enabled easy order packing and physical counting of the inventories. They have invested $4 bn to build retail link system to monitor the sales of their goods at stores and replenish inventories. And they owned the largest and most sophisticated computer system in private sector by making it effective in all companies operation; Wal-mart provides uninterrupted service to its customers, supplier, stockholders and trading partner. Because of technology they have reduced in lead time, faster inventory turnover, accurate forecasting of inventory levels, increased warehouse space, reduction in safety stock and better working capital utilization.
- 4. 4 SHRIKANT RANA ( FB/11-13/IIPM/D ) 3. What were the supply chain management process adopted by Wal-mart and how far were the effective? Discuss. They have developed fastest logistics infrastructure by giving service with 3,500 company owned trucks. And for that they have hired only experienced drivers who are truly professional. And they have to deliver loaded trucks from the distribution center to retail store each and every information and tracking of driver and truck is recorded by computerized systems. Driver is allowed to bring trailer in specific time only, they unload trucks in nights and in the gaps of two our so that they can track record of every items. And they have also taken record of every driver by “Private Fleet Driver Handbook”. In which they keeps every detail of driver’s activities. And to make its distribution process more efficient, Wal-mart uses logistic technique known as Cross Docking. By that they have reduced the handling and store of finished goods, virtually eliminating the role of the distribution centers and stores.
- 5. 5 SHRIKANT RANA ( FB/11-13/IIPM/D ) 4. What was the nature of benefited derived by Wal-mart from the efficient supply chain management practice and how far it has contributed to its sustainable competitive advantage? Explain. Wal-mart was one of the largest private sector employers in the world, with employee strength of approximate 1.28milion. They have focused on improving sales, constantly reducing cost, adopting efficient distribution and logistics management systems and using innovative IT tools. They have 40 distribution centers located at different geographical locations in the US. And over 80,000 items in this centers. Their core competency are vast range of products at lowest cost in shortest possible time. They have managed very good relations with suppliers and also vendors. They have always tried to deliver a product at minimum price to the customer. And by analyzing market demand and customer needs they succeeded every task. Wal-mart’s consistent flow of products to support the supply function is also its core competency. By enabling barcode technology and hand-held computer systems they operates smoother and faster. Another technique they have adopted is cross docking by which they changed their practice and focused ‘demand chain’ from ‘supply chain’ which meant that instead of the retailer ’pushing products in to the system’, ‘ customer could pull products, when they needed and where they need.