supply chain management of wal-mart

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Supply Chain Management of Wal-Mart

Wal-Mart Stores, Inc.

Founded by Sam Walton in 1962, runs a chain of large, discount department stores. In Mexico as Walmex, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best price. It has 7,870 stores, including 890 discount stores, 2,970 supercenters which are combinated discount and grocery stores and 600 warehouse stores (Sam's club). 14 countries, 2 million employees

Strategy - to target low-income families in rural areas by offering significantly lower costs.

Four core principles

focus on the improvement of sales, constantly reducing costs to be passed on the customers, the adoption of efficient distribution and logistics management systems for constant flow of the goods

highly-advantageous innovative information technology (IT) tools that makes the operating processes even faster, efficient.

Insight to Worlds Best Supply Chain Management Practices by Wal-Mart: PROCUREMENT

It always emphasized the need to reduce its purchasing costs procured goods directly from manufacturers, bypassing all intermediaries.

tough negotiator on prices- the products being bought were not available elsewhere at a lower price.

Wal-Mart was able to provide replenishments within two days (on an average) against at least five days for competitors.


Walmart has around 120 distribution centers around US. Goods meant for distribution within the country arrived in pallets, while imported goods arrived in re-usable boxes or cases.

Some suppliers delivered goods directly to the stores. 85% of the goods which were available at the stores passed through the distribution centers.

Employees had an access to real-time information regarding the inventory levels of all the products in the center.

He has to make two scans _ one to identify the pallet, and the other to identify the location of stock

Different barcodes are used to label different products, shelves and bins in a center.

The hand-held computer guides the employee with regard to the location of a particular product from a particular bin or shelf in the center.

The quantity of the product required from the center is entered into the hand-held computer by the employee and then the computer updates the information on the main server.

Logistics Management:

The distribution centers are serviced by more than 3,500 company owned trucks.

These dedicated truck fleets shipped goods from DCs to the stores within two days and replenish the store shelves twice a week.

Private Fleet Driver Handbook- purpose is to educate the drivers with regard to the code of conduct.

These retail stores were considered as customers by the distribution centers.

Coordinators give information to the driver as to what is the expected time of arrival or delivery of the goods .

There was a gap of two hours between unloading of each trailer.

Wal-Mart also invented unique Cross-Docking technique. This reduced cost of sales and made everyday low prices possible.

reduction in lead time, speedy inventory turnover, accurate forecast of inventory levels, reduction in safety stock,

reduction in the dependency of the distribution center, reduction in errors.


Wal mart used in IT and communications systems to effectively track sales and merchandise inventories in stores.

Wal-Mart has its own satellite communication system -technicians sit in front of the computer screens talking on the phone to any stores that might be having a problem with the system, -important or urgent to communicate to the stores and distribution centers -Wal-Mart executive can walk back to TV studio and get on that satellite transmission and get it right out there.

Had collaboration with P&G for maintaining the inventory in its stores built an automated re-ordering system, which linked all computers between P&G and its stores and other DCs.

The computer system at Wal-Mart stores identified an item which was low in stock and sent a signal to P&G.

The system then sent a re-supply order to the nearest P&G factory through the satellite communication system.

Wal-Mart also made use of bar coding and radio frequency technology to manage its inventories.

used a centralized inventory data system using which the personnel at the stores could find out the level of inventories

It has a retail link system were in 10,000 Wal-Mart retail suppliers used it to monitor the sales of their goods at stores and replenish inventories.

details of daily transactions were processed through this integrated system and were furnished to every Wal-Mart store by 4 a.m., the next day.

It also showed whether a product was being loaded in the distribution center or was in transit on a truck.

Once the goods were unloaded at the store, the store was furnished with full stocks of inventories of a particular item and the inventory data system was immediately updated.

Radio frequency identification (RFID)

RFID tag is a small microchip with an antenna to enable them to receive and respond to radio-frequency queries from an RFID transceiver.

Reduces costs of inventory management unique ID code to tell wherethe product came from and where it was purchased at.

The store could then figure the purchase done most and try to advertise such things to you as you shop in their store.

It helps to manage stock more accurately due to the availability to track their merchandize so that the shelf in the stores will never be found empty.

Retail Inventory Control: product inventory, theft detection, point-of-sale verification Manufacturing: track a products progress through the manufacturing cycle ;track when it was manufactured Logistics & Supply Chain: moving goods through loading docks Container/Pallet Tracking ID Badges and Access Control Fleet Maintenance

individual objects (pallets, cases, boxes, packages) are equipped with an inexpensive tag that contains a digital memory chip.

This chip carries product-related data such as quantity, price, color, purchase date and manufacturing date.

The tag has its own electronic code that can be read by an interrogator, which is an antenna containing a transceiver and decoder.

This interrogator can, from anywhere in the world, send a signal to the chip and read the information contained in it, then pass the information on to its host computer.

The tag is also activated if it passes through an electromagnetic zone that detects and reads the chip and then sends the data to the computer.

Green logistics

Wal-Mart in 2000 adopted a new strategy of making logistical processes more economically friendly.

Green logistics, means implementing a system that can independently monitor overseas suppliers to make sure they meet social and environmental standards.

As per customers environmental concerns, the company launched a campaign to convince its suppliers to provide environmentally safe products in recyclable or biodegradable packaging.