A Report on

Sypply Chain Management Systems of WalMart

Course Name: Supply Chain Management
Course Code: MGT 4133

Submitted to:
Fahmida Akter Nipa
Lecturer
Department of Management Studies
Jagannath University

Submitted by:
Group Name: Dazzle
Section: A
BBA, 6th Batch
4th Year, 1st Semester
Department of Management Studies

Jagannath University
Date of Submission: November 19, 2014
Page | 1

Profile of Group Members:

Group Name: Dazzle
Section: A

SL. No.

Name

ID No.

1.

Simon Sarker

114903

2.

Imran Hoque Mollah

114919

3.

Sajid Iqbal

114969

4.

Naima Azad Ifa

114979

5.

114993

6.

Md. Mostafizur
Rahman
Romana Akther

7.

Manik Saha

115005

8.

Md. Taijul Islam

115007

9.

Md. Mahmudul Hasan

115009

10.

Delowar Hossain

115015

Remark
s

115001

Page | 2

Acknowledgement
First of all we would like to thank the Almighty for giving us the
strength and aptitude to complete this report within due time. We
are deeply indebted to our course teacher, mentor, and
counselor, Fahmida Akter Nipa for assigning us such an interesting
topic named Sypply Chain Management Systems of WalMart.We also express the depth of my appreciation to our
honorable course teacher for her suggestion and guidelines,
which helped us in completing this report.

Page | 3

Letter of Transmittal
November 19, 2014
Fahmida Akter Nipa,
Lecturer,
Department of Management Studies,
Jagannath University, Dhaka.
Subject: Submission of Report on Sypply Chain Management Systems of
Wal-Mart.

Dear Madam,
We are the student of Department of Management studies, Jagannath University, Dhaka
and also from the group named Dazzle. A report was given to us by you on Sypply
Chain Management Systems of Wal-Martfor submitting. We are really happy
to have such a challenging and interesting report like this and we also feel to say thank
you to you for making us worthy for corporate. During the preparation of this report we
learn something very extra in practical which will be very helpful for us in future. There
were some obstacles we have faced at the time of preparing this report. But we have
overcome all the obstacles by the endeavor effort by each member of our group.
We had taken at most care to present this report and this report has been excellent
outlet for combining theoretical and practical aspect. We are really grateful to you for
giving us such a great job & opportunity like this to prove our ability in making a quality
report. We had limitations at the time of preparing this report. So mistakes may occur in
preparing this report. We hope you will take our mistakes forgivingly.

Yours Sincerely,
On behalf of the group
Manik Saha
Sec: A
Group Name: Dazzle
Department of Management Studies
Jagannath University, Dhaka
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Table of Contents
Chapter

Topics
Executive Summery

Chapter-1

Introduction

Objectives of the Study

10

Methodology

10

SUPPLY

Chapter-2

Page No.

CHAIN MANAGEMENT

12-14

Functions of Supply Chain Management

14

About Wal-Mart

15-16

Wal-Mart at a glance

16-17

Strategic Position

18

Wal-Marts Supply Chain Description

20-23
24

Wal-Marts Business Processes

25-26
Procurement and Distribution
26-27
Logistics Management

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Company Supply Chain Strategy

28

Company Supply Chain Effectiveness

29-30

Chapter-2
Future Work and Discussion

Chapter-3

30-31

Recommendation

33

Conclusion

34

References

35

CHAPTER- ONE
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Introduction

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Executive Summery
Wal-Mart is one of the leading Fortune 500 companies, which is spread
across the globe. It is perhaps the largest retail chain which deals with
everything from food to consumer electronics.
Supply chain management has been the foundation to Wal-Marts success
and remains their chief competitive advantage in the retail/department store
industry. Wal-Mart is in the business of selling everything customers need in
their everyday lives. Wal-Mart was divided into three business segments:
Wal-Mart stores, Sams Clubs, and the International Division. Their
distribution system is generally regarded as the most efficient and they have
an approach to supply chain management that has long emphasized visibility
through the sharing of information with their suppliers. Wal-Mart was one of
the largest private sector employers in the world, with employee strength of
approximately 1.28 million. Supply chain management is moving the right
items to the right customer at the right time by the most efficient means. No
one does that better than Wal-Mart. Wal-Mart always emphasized the need to
reduce its purchasing costs and offer the best price to its customers. The
company procured goods directly from manufacturers, bypassing all
intermediaries. Wal-Mart was a tough negotiator on prices and finalized a
purchase deal only when it was fully confident that the products being
bought were not available elsewhere at a lower price.

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Introduction
Supply chain management (SCM) is "the systemic, strategic coordination of the traditional
business functions and the tactics across these business functions within a particular company
and across businesses within the supply chain, for the purposes of improving the long term
performance of the individual companies and the supply chain as a whole." It has also been
defined as the "design, planning, execution, control, and monitoring of supply chain activities
with the objective of creating net value, building a competitive infrastructure, leveraging
worldwide logistics, synchronizing supply with demand and measuring performance globally."
SCM is a cross-functional approach that includes managing the movement of raw materials into
an organization, certain aspects of the internal processing of materials into finished goods, and
the movement of finished goods out of the organization and toward the end consumer. As
organizations strive to focus on core competencies and becoming more flexible, they reduce
their ownership of raw materials sources and distribution channels. These functions are
increasingly being outsourced to other firms that can perform the activities better or more cost
effectively. The effect is to increase the number of organizations involved in satisfying customer
demand, while reducing managerial control of daily logistics operations. Less control and more
supply chain partners led to the creation of the concept of supply chain management. The
purpose of supply chain management is to improve trust and collaboration among supply chain
partners, thus improving inventory visibility and the velocity of inventory movement.
Wal-Mart was the largest retailing company in the world. The company was much bigger than its
competitors in the US - Sears Roebuck, K-Mart, JC Penney and Nordstrom combined (Refer
Exhibit I).In 2002, Wal-Mart operated more than 3,500 discount stores, Sam's Clubs and
Supercenters in the US and more than 1,170 stores in all major countries across the world. The
company also sold products on the Internet through its website, walmart.com. Wal-Mart was one
of the largest private sector employers in the world, with employee strength of approximately
1.28 million. The company's founder, Sam Walton (Walton) had always focused on improving
sales, constantly reducing costs, adopting efficient distribution and logistics management
systems and using innovative information technology (IT) tools. According to analysts, Wal-Mart
was able to achieve a leadership status ((Refer Exhibit II)) in the retail industry because of its
efficient supply chain management practices. Captain Vernon L. Beatty, aide-de-camp to the
commander, Defense Supply Center, Columbus, Ohio said, "Supply chain management is
moving the right items to the right customer at the right time by the most efficient means. No
one does that well than Wal-Mart."

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Objectives of the Study

Every task has a particular aim. A study without objective cannot reach its
destination. The main objective of the study is to know about Sypply Chain

Management Systems of Wal-Mart. Some other objectives of this study

mention in the following:
1. To know about Supply chain Management system.
2. To know about supply chain process.
3. To know about Wal-Mart.
4. To gather knowledge about supply chain management of Wal-Mart.
5. To get a real idea about supply chain system.
6. To increase knowledge about supply chain.
7. To know how to manage supply chain process from Wal-Mart.
8. To know about retail system.

Methodology
We have collected data in the following ways:

Website
Desk report of the related department.
Other manual information.
Different reference books of the library
News paper
Articles
Internship report

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CHAPTER- TWO

Page | 11

THEORETICAL ASPECTS

Page | 12

SUPPLY

CHAIN MANAGEMENT

The term "supply chain management" entered the public domain when Keith Oliver, a consultant at
Booz Allen Hamilton (now strategy&), used it in an interview for the Financial Times in 1982. The
term was slow to take hold. It gained currency in the mid-1990s, when a flurry of articles and books
came out on the subject. In the late 1990s it rose to prominence as a management buzzword, and
operations managers began to use it in their titles with increasing regularity.
Commonly accepted definitions of supply chain management include:

The management of upstream and downstream value-added flows of materials, final goods,
and related information among suppliers, company, resellers, and final consumers

The systematic, strategic coordination of traditional business functions and tactics across all
business functions within a particular company and across businesses within the supply chain,
for the purposes of improving the long-term performance of the individual companies and the
supply chain as a whole.

A definition is given by Hines (2004:p76): "Supply chain strategies require a total systems
view of the links in the chain that work together efficiently to create customer satisfaction at the
end point of delivery to the consumer. As a consequence, costs must be lowered throughout the
chain by driving out unnecessary expenses, movements, and handling. The main focus is turned
to efficiency and added value, or the end-user's perception of value. Efficiency must be
increased, and bottlenecks removed. The measurement of performance focuses on total system
efficiency and the equitable monetary reward distribution to those within the supply chain. The
supply chain system must be responsive to customer requirements."

The integration of key business processes across the supply chain for the purpose of
creating value for customers and stakeholders (Lambert, 2008)

According to the Council of Supply Chain Management Professionals (CSCMP), supply

chain management encompasses the planning and management of all activities involved
in sourcing, procurement, conversion, and logistics management. It also includes coordination
and collaboration with channel partners, which may be suppliers, intermediaries, third-party
service

providers,

or customers.

Supply

chain

management

integrates supply

and

demand management within and across companies. More recently, the loosely coupled, self-

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organizing network of businesses that cooperate to provide product and service offerings has
been called the Extended Enterprise.

Supply Chain Management (SCM) is the management of the relationship between the
supplier's supplier and the customer's customer through the supply chain participants
(Distributor/Wholesaler and Retailer) between them, mainly using information flow and logistics
activities to gain Competitive advantage and customer satisfaction.

Figure: Supply
Chain Management System
A supply chain, as opposed to supply chain management, is a set of organizations directly linked by
one or more upstream and downstream flows of products, services, finances, or information from a
source to a customer. Supply chain management is the management of such a chain.
In many cases the supply chain includes the collection of goods after consumer use for recycling.
Successful SCM requires a change from managing individual functions to integrating activities into
key supply chain processes. In an example scenario, a purchasing department places orders as its
requirements become known. The marketing department, responding to customer demand,
communicates with several distributors and retailers as it attempts to determine ways to satisfy this
demand. Information shared between supply chain partners can only be fully leveraged
through process integration.
Supply chain business process integration involves collaborative work between buyers and
suppliers, joint product development, common systems, and shared information. According to
Lambert and Cooper (2000), operating an integrated supply chain requires a continuous information
flow. However, in many companies, management has concluded that optimizing product flows

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cannot be accomplished without implementing a process approach. The key supply chain processes
stated by Lambert (2004) are:

Customer relationship management

Customer service management

Demand management style

Order fulfillment

Manufacturing flow management

Supplier relationship management

Product development and commercialization

Returns management

Functions of Supply Chain Management

SCM is a cross-functional approach that includes managing the movement of raw materials into an
organization, certain aspects of the internal processing of materials into finished goods, and the
movement of finished goods out of the organization and toward the end consumer. As organizations
strive to focus on core competencies and becoming more flexible, they reduce their ownership of
raw materials sources and distribution channels. These functions are increasingly being outsourced
to other firms that can perform the activities better or more cost effectively. The effect is to increase
the number of organizations involved in satisfying customer demand, while reducing managerial
control of daily logistics operations. Less control and more supply chain partners led to the creation
of the concept of supply chain management. The purpose of supply chain management is to improve
trust and collaboration among supply chain partners, thus improving inventory visibility and the
velocity of inventory movement.
Main functions of Supply Chain Management are as follows:

Inventory Management
Distribution Management

Channel Management

Payment Management

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Financial Management

Supplier Management

Transportation Management

Customer Service Management

About Wal-Mart

Wal-Mart was founded in 1962 by a man named Samuel Moore Walton. He was considered one
of the most influential retailers of the century (Wheelen & Hunger, 740). Sam Walton started his
retail career in management in 1940 with J.C. Penney Co. His training and hard work at J.C.
Penney Co. led him to his great Wal-Mart idea. He decided that small town populations would
welcome, and make profitable, large discount shopping stores. When Sam Walton created WalMart in 1962, he declared that three policy goals would define his business: respect for the
individual, service to customers, and striving for excellence (Walmartstores.com).
Wal-Mart stores sold nationally advertised, well-known-brand merchandise at low prices in
austere surroundings (Wheelen & Hunger, 738). The 1970s marked significant growth for WalMart with its first Wal-Mart Distribution Center as well as the Wal-Mart Home Office. By the end

Page | 16

of 1979, there were 276 Wal-Mart stores in 11 states and in 1991, the firm had 1,573 stores in 35
states to include the international market. Wal-Mart sales growth continued into the 1980s. WalMart was divided into three business segments: Wal-Mart stores, Sams Clubs, and the
International Division.
In 1983 the company opened its first three Sams Wholesale Clubs and began its expansion into
bigger city markets. Wal-Mart Supercenters were large combination stores that included a fullline grocery center, a general merchandise discount store, banks and some even offered a food
court of restaurants. Wal-Marts international expansion accelerated managements plans for
expansion and notoriety. In 2000, Fortune magazine named it as one of the 100 Best Places to
Work and in 2002, Wal-Mart officially became the worlds largest company based on its $245
billion in sales (Wheelen & Hunger, 731).
Wal-Marts winning strategy in the United States was based on selling brand products at low cost
while still offering the customer a quality product. Wal-Mart is in the business of selling
everything customers need in their everyday lives. This includes the consumer goods listed
above as well as food-service items.

Wal-Mart took pride in its domestic strategies and

programs that were based on a set of two priorities:

1) Customers would be provided with what they want, when they want it, all at a value.
2) Treating each other as we would hope to be treated, acknowledging our total dependency on
our Associate-partners to sustain our success (Wheelen & Hunger, 747).

Walmart at a glance
Wal-Mart Stores, Inc.

Type

: Public

Traded as

: NYSE: WMT
Dow Jones Industrial Average Component
S&P 500 Component

Industry

: Retail

Founded

: 1962; 52 years ago

Rogers, Arkansas, U.S.
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Founders

: Sam Walton

Headquarter
s

: Bentonville, Arkansas, U.S.

Number of
locations

: 11,088 (April 2014)

Area served

: Worldwide

Key people

: S. Robson Walton (Chairman)

: Doug McMillon (President & CEO)

Products

: Apparel/footwear specialty, cash & carry/warehouse

club, store,
hypermarket/supercenter/superstore,
supermarket, eCommerce

Revenue

: US$ 476.294 billion (2014)

Operating
income

: US$ 26.872 billion (2014)

Net income

: US$ 16.022 billion (2014)

Total assets

: US$ 204.751 billion (2014)

Total equity

: US$ 81.339 billion (2014)

Owners

: Walton family

Employees

: 2.2 million (2013)

Divisions

: Walmart Canada

Subsidiaries

: Asda, Sam's Club, Seiyu Group,Walmex, @WalmartLabs,

Walmart eCommerce

Website

: Corporate.Walmart.com
Walmart.com

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Strategic Position
1. Mission
Wal-Mart Stores, Inc. is a global retailer committed to improving the standard of living for our
customers throughout the world (Annual Report 2006).

2. Objectives
Comparative store sales is a measure which indicates the performance of our existing stores by
measuring the growth in sales for such stores for a particular period over the corresponding
period in the prior year.
Operating income growth greater than net sales growth has long been a measure of

success for us.

Inventory growth at a rate less than that of net sales is a key measure of our efficiency.
With an asset base as large as ours, we are focused on continuing to make certain our
assets are productive. It is important for us to sustain our return on assets (Annual Report
2006).

3. Policies
We earn the trust of our customers every day by providing a broad assortment of quality
merchandise and services at everyday low prices (EDLP) while fostering a culture that rewards
and embraces mutual respect, integrity and diversity. Putting Our Customers First.
EDLP is our pricing philosophy under which we price items at a low price every day so that our
customers trust that our prices will not change erratically under frequent promotional activity.
Our focus for SAMS CLUB is to provide exceptional value on brand-name merchandise at
members only prices for both business and personal use. Internationally, we operate with
similar philosophies (Annual Report 2006).

4. Strategies
We have developed several initiatives to help mitigate this pressure and to grow comparable
store sales through becoming more relevant to the customer by creating a better store shopping
experience, continual improvement in product assortment and an aggressive store upgrade
program to be instituted over the next 18 months.

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Our expansion programs consist of opening new units, converting discount stores to
supercenters, relocations that result in more square footage, as well as expansions of existing
stores.
Sams Club We believe that a greater focus on providing a quality in-club experience for our
members will improve overall sales, including sales in these categories.
International A shift in the mix of products sold toward general merchandise categories
which carry a higher margin (Annual Report 2006).

Sypply Chain Management Systems of Wal-Mart

Wal-Mart is the largest retailer operating from 15 countries and
according to them, Supply Chain management is the main source
through which their organization grows and achieves this status.
Even they claim that other retailing organizations are copying their
strategies in retail and supply chain like shared sales data with
suppliers, deployment of RFIDS and bar codes, enabled self-distribution
with in-house transit and fully digital point of sales to manage the
inventory levels. In the process of supply chain management there are
certain functions that are to be focused like the purchasing of the
products from the suppliers and wholesale dealers. The next phase is
of distribution which requires an efficient strategy through which costs
could be reduced and to use best transit modes at least cost. When
the product is ready to be sold at any point of sale, its retail strategy
should be formulated as at these stores, the products are to be sold
mostly at bulk level. The retail strategy comprises of all operations
from the level of logistics to store level and assists in reducing the
operating costs. Wal-Mart is very famous for deploying Just-in Time
process in their supply chain management that reduces a lot surplus
costs by stocking bulk of not required products. Using the immensely
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strategic and intellectual supply chain processing system, Wal-Mart has

managed to achieve a significant share within the US stock market that
can be viewed in the progressive manner.

Wal-Marts Supply Chain Description

When Sam Walton started establishing the chain of Wal-Mart Stores
back in 1962, he possessed an efficacious chain of stores under the
Ben Franklin Stores flag, a franchisor of mixture stores in the United
States. In spite of the fact that he was under contract to buy the vast
majority of his stock prerequisites from Ben Franklin Stores, Walton was
fit to specifically buy stock in mass from revamped suppliers and after
that transport the aforementioned merchandise to his stores
straightforwardly (Andel, 1995). Whenever Walton acknowledged that
another drift, rebate retailingdependent upon driving towering
volumes of item through ease retail outletswas clearing the country,
he chose to open up huge, warehouse-style saves keeping in mind the
end goal to contend. To stock his revamped warehouse-style stores, at
first named Wal-Mart Discount City, Walton would have done well to
step up his stock acquisition exertions. As none of the suppliers were
eager to send their trucks to his stores, which were spotted in
provincial Arkansas, in such circumstance, the self-distribution was the
only way out.
As Wal-Mart developed in the 1960s to 1980s, it started extracting the
advantages from better transportation facilities and the failure of it is
contenders to respond to updates in enactment, for example the
evacuation of resale value upkeep, which had averted retailers from
marking down stock (Andel, 1995). Following are some of the
important entities that developed within the Wal-Mart supply chain as
it started progressing and developing (Barry, 2006).

Purchasing Power and Capability :

As the purchasing power of Walton expanded in scale, Walton and his senior administration crew
could travel to establish new offices in New York City, removing the role of the mid-agents or
the wholesale dealers. Wal-Mart's U.S. purchasers found in Bentonville, went with suppliers to
guarantee that the right intermingles of staples and unique things were requested.
As time passes, a large number of Wal-Mart's most vast suppliers had business settings in
Bentonville, staffed by investigators and administrators supporting Wal-Mart's business. Still
having the same mechanism, Wal-Mart is often viewed and perceived as a negative entity for the
suppliers, yet
its effective strategy has enabled them to harvest significant profit.
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Distribution:
Wal-Mart's 75,000-employee logistics division and it is informative data frameworks division
incorporated the most substantial private truck armada worker base of any solid 7,800 drivers,
who conveyed the dominant part of stock sold at saves. Wal-Mart's 114 U.S. dissemination
centers, placed all through the United States, were an intermingle of general stock, nourishment
and delicate products circulation centers, handling over five billion cases a year through it is
whole grid.

Strategic Approach for Retailing :

As the distribution centers of Wal-Mart had been closer to real time information processing units
of each store; the merchandise can be placed within the stores automatically. Similarly, the
information systems at the store level, permitted makers to be informed whenever a thing was
obtained. In foresight of modifications popular for certain things, cohorts had the power to
manually include requests or override looming conveyances.
Conversely, a large portion of Wal-Mart's retail contestants did not give marketing obligation to
passage-level representatives as promoting templates were sent to stores through head office and
were wanted to be emulated correctly. To guarantee that workers were maintained, administration
imparted in-depth information systems about day/week/month save bargains with all
representatives throughout every day in an informal meeting of about few minutes.

Information Systems :
In contrast to this management endeavor, the analysts assessed the Wal-Mart's inventory network
force to co-ordinate the stream of features from suppliers' industrial facilities and determined any
store network issues, from schedule issues for example, guaranteeing that items were available
for pickup by Wal-Mart's trucks, and orchestrating the profit of damaged items, to final-moment
issues for example, maintaining sudden spikes popular for famous things. Whenever Wal-Mart
purchasers met, on an often premise, with a supplier's deals groups, two supplier's out-of-stock
rate and stock levels at Wal-Mart, evidences of how well recharging was being took care of.
Suppliers were furnished with focuses for out-of-stock rates and stock levels. Paramount themes
of assessment were the purchasers met, on an often premise, with a supplier's deals groups, two
paramount themes of assessment were the
Supply Chain Management is the discipline which encompasses the end to end business
activities carried out in any business, independent of the manufacturing or service sectors. It is
the synchronization of a network of facilities and distribution options that performs procurement
of materials, processing the materials into finished products, and distribution of the products to
customers. SCM is seen as involving five fundamental processes. These include planning,
sourcing, making, delivering, and returning. sourcing, making, delivering, and returning.

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Typical supply chain showing interrelations between all

involved parties:
[Source: Auto-ID: Managing Anything, Anywhere, Anytime in the Supply Chain, Bose and
Pal, ACM August 2005]
SCM subsists in both service and manufacturing environments. A typical supply chain consists of
many interactions between suppliers, manufacturers, distributors, retailers, with the vital goal of
providing either a service or a product to customers. This also works in reverse with the customer
at the head of the process when returning a product.
SCM is used as a means to assimilate planning, purchasing, manufacturing, distribution, and
marketing organizations that normally do not work together to achieve a common goal. Each
works toward goals specific to their own organization that accomplish narrow objectives. SCM is
a way of integrating these varying functions so that they work together to make best use of the
benefits for all involved.

Three levels of SCM: strategic, tactical, and operational:

Strategic SCM covenants with future planning than looking at market evaluation, capacity issues,
new products, and technology changes. This planning is addressing issues that may be factors
several years out. This is accomplished at the executive management level.
Tactical SCM involves a shorter planning cycle. It is more concerned demand planning,
inventory planning, and supply planning. This is determined at a less senior level than Strategic
SCM.
Operational SCM is current planning activities measured in at most weeks. Operational SCM
involves the mainstream of the operations. It includes demand fulfillment, scheduling,
production, transport, and monitoring.
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There are many decisions that are made while looking at SCM. They follow the categories as
discussed above. Strategic decisions are made over longer periods of time and linked to a
corporations strategy. Operational decisions are more or less short term in nature and look after
day to day activities. Mainly Four major decisions are considered. They include decisions on
location, production, inventory, and transportation. A geographically strategic placement of the
production facilities is key to creating a successful supply chain. Decisions on what products to
be produced have to be made wisely and strategically. Also, where these products (which
locations) will be manufactured is very important to SCM. Inventory decisions and management
is critical. Some inventories are necessary to hedge against uncertainty, but this comes with a
cost. Managing these inventories proficiently will be of benefit to the corporation. Transportation
decisions include cost versus benefit. Air transportation is costly, but fast and reliable. Other
modes of transportation may be cheaper, but the sacrifice has to hold inventories due to delays
that may occur. If the above decisions are made with careful and strategic thought as well as with
concern for integration, the supply chain should be efficient and successful.
The complete goal of SCM is to optimize supply chains in an endeavor to provide more accurate
and time sensitive information that can be used to improve process times and cut costs. Supply
chains have been around for decades and a constantly being improved. The newest opportunity
for improvement is the introduction of Radio frequency identification (RFID) tags. RFID
technology will provide real-time information that will allow manufacturers to get better
readings of customers and markets thus further improving supply chains. RFID will help retailers
provide the right products at the right places at the right times. Finally, maximizing sales and
profits

Wal-Mart has been leading the charge with RFID technology. Having the largest retailer adopt
and begin to use RFID technology has given strong backing to the technology and will only
further and quicken the expansion of RFID. They have begun requiring all their major suppliers
to implement RFID technology on all products supplied to Wal-Mart.
One example of what Wal-Mart has done with SCM and its suppliers is that of its
relationship with Proctor & Gamble. These two have built a software system that hooked
Proctor & Gamble up to Wal-Marts distribution centers. This system would then monitor supply
levels and when products run low, automatic alerts are sent out to require the shipment of more
products to that distribution center. Wal-Mart has taken this as far as going to the individual store
Page | 24

locations. The shelves are monitored in real time via satellite links that send inventory messages
whenever Proctor & Gamble products are scanned at a register. This allows Proctor & Gamble to
be fully aware of up to the minute product inventories at the actual store locations and ship
additional products as necessary. This concept is a huge step in making SCM as efficient as it can
be

Wal-Marts Business Processes :

Wal-Mart is one of the leading Fortune 500 companies, which is spread across the globe. It is
perhaps the largest retail chain which deals with everything from food to consumer electronics.
In terms of the revenue generated, it leads the fortune 500 companies like GE and Microsoft.
Simply put, it has everything a homemaker can ever think of. Affordable price range coupled
with aggressive online and market strategy has led to wide acceptance for Wal-Mart in towns and
cities alike. Wal-Mart is probably the only largest fortune 500 corporations in the world, which
directly services the common man.
Supply chain management has been the foundation to Wal-Marts success and remains their chief
competitive advantage in the retail/department store industry. Their distribution system is
generally regarded as the most efficient and they have an approach to supply chain management
that has long emphasized visibility through the sharing of information with their suppliers.

Business Model :
A Business model is crucial to any successful business. Wal-Mart is no exemption. Wal-Mart has
always been revolutionizing and enlightening its business model to suite its organizational goals
and also meet customer requirements, and so has managed to stay on top year after year. WalMart has employed a mixed-business model for its business for the same.
To understand the Business models used by Wal-Mart, firstly it is important to know the factors,
which go in defining those models, and how does it relate to Wal-Mart specifically.

Market Strategy of Wal-Mart :

Wal-Mart stresses primarily on their Everyday Low prices (EDLP) pricing philosophy, in
which they price items at a low price every day that builds & maintains customers trust in their
pricing. Since they employ both the clicks and bricks and bricks and mortar methods to
market their products, consumers get to choose their products either the traditional way or online
anytime of the day. Though Wal-Mart has not advertised in Advertising, as many of its
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competitors do, the trust people have built on the Wal-Mart brand has taken them far from their
competitors.

Procurement and Distribution :

Wal-Marts process of procurement involves reducing its purchasing costs as far as possible so
that it can offer best price to its customers. The company procures goods directly from the
manufacturers, bypassing all intermediaries.
Wal-Mart has distribution centers in different geographical places in US. Wal-Marts own
warehouses supplies about 80% of the inventory. Each distribution center is divided in different
groups depending on the quantity of goods received. The inventory turnover rate is very high,
about once every week for most of the items. The goods to be used internally in US arrive in
pallets & imported goods arrive in re-usable boxes.
The distribution centers ensured steady flow & consistent flow of products. Managing the center
is economical with the large-scale use of sophisticated technology such as Bar code, hand held
computer systems (Magic Wand) and now, RFID. Every employee has access to the required
information regarding the inventory levels of all the products in the center. They make 2 scansone for identifying the pallet, and other to identify the location from where the stock had to be
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picked up. Bar codes & RFID are used to label different products, shelves & bins in the center.
The hand held computers guide employee to the location of the specific product. The quantity of
the product required from the center is entered in the hand held computer, which updates the
information on the main central server. The computers also enabled the packaging department to
get accurate information such as storage, packaging & shipping, thus saving time in unnecessary
paperwork. It also enables supervisors to monitor their employees closely in order to guide them
& give directions.
This enables Wal-Mart to satisfy customer needs quickly & improve level of
efficiency of distribution center management operations.

Logistics Management :
This involves fast & responsive transportation system. More than 7000 company owned trucks
services the distribution centers. These dedicated truck fleets enables shipping of goods from
distribution centers to the stores within 2 days and replenish the store shelves twice a week. The
drivers hired are all very experienced & their activities are tracked regularly through Private
Fleet Driver handbook. This allows the drivers to be aware of the terms & conditions for safe.
Wal-Marts 158 distribution centers are hubs of activity for our business. Our distribution
operation is one of the largest in the world. Wal-Mart logistics has a fleet of 6,500 tractors,
55,000 trailers and more than 7,000 drivers. Wal-Mart is able to move goods to and from
distribution centers because we maintain a private fleet of trucks and a skilled staff of truck
drivers. We think our team of drivers is the best in the world. Theyre part of one of the largest
and safest fleets, and every year they drive 700 million miles to make millions of deliveries to
our stores and clubs. Each driver averages around 100,000 miles annuallythats like driving
around the world 4 times! Together with our truck drivers, were constantly working to ensure
that were moving merchandise in responsible, sustainable ways. Drivers follow the most
efficient routes to their destinations, and work to minimize the number of empty miles they
drive. This way, we use less fuel, we drive fewer miles and we maximize the merchandise we
deliver while minimizing our environmental impact.

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exchange of Wal-Mart property, along with the general code of conduct.

For more efficiency, Wal-Mart uses a logistics technique called Cross Docking. In this system,
finished goods are directly picked up from the manufacturing site of supplier, sorted out and
directly supplied to the customers. This system reduces handling & storage of finished goods,
virtually eliminating role of distribution centers & stores. Because of cross-docking the system
shifted from supply chain to demand chain which meant, instead of retailers pushing the
products into the system, the customers could pull the products, when & where they required

Inventory Management :
Considering the rapid expansion of Wal-Mart stores, it was essential to have a very good
communication system. For this, Wal-Mart set up its own satellite communication system in
1983. This allowed the management to monitor each and every activity going on in a particular
store at any point of the day and analyze the course of action taken depending on how the things
went.
Wal-Mart ensures that unproductive inventory is as less as possible, by allowing the stores to
manage their own stocks, thereby reducing pack sizes across many categories and timely price
markdowns. Wal-Mart makes full use of its IT infrastructure to make more inventories available
in case of items that customers wanted most, while reducing overall inventory. By making use of
Bar-coding & RFID technologies, different processes like efficient picking, receiving & proper
inventory control of the products along with easy packing and counting of the inventories was
ensured.
Wal-Mart owns the Massively Parallel Processor (MPP), largest & the most sophisticated
computer system in private sector, which enables it to easily track movement of goods & stock
levels across all distribution centers and stores. For emergency backup, it has an extensive
contingency plan in place as well.
Employees use Magic Wand, which is linked to in-store terminals through a Radio frequency
network, to keep track of the inventory in stores, deliveries and backup merchandise in stock at
the distribution centers. The order management and store replenishment of goods is entirely
executed with the help of computers through Point of Sale (POS) system. Wal-Mart also makes
use of sophisticated algorithm to forecast the quantities of each item to be delivered, based on
inventories in the store. A Centralized inventory database allows the personnel at the store to find
out the level of inventories and location of each product at a given time. It also shows the
location of the product like distribution center or transit on the truck. When the goods are
unloaded at the store, the inventory system is immediately updated.
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The feedback that was received for this category of products was very positive but it also gave
that information to customers that were even ethical from environmental point of

Company Supply Chain Strategy :

According to the coverage of a recent event, it was announced by the management of Wal-Mart
to their suppliers that they can audit and disclose the costs of their products, in other words WalMart invited 100,000 corporates globally to audit and evaluate their environmental and social
strengths which could lead the relevant businesses to decrease their wastage after the evaluation
and improvise their returns.
The corporate critics who always keep evaluating the strategies of Wal-Mart praised the
management of Wal-Mart for this act but they knew that Wal-Mart has a wider goal behind this
plan. Wal-Mart designs to consolidate information on water usage, environmental friendly gas
discharges, strong waste grounding, and worker morals into a database imparted worldwide,
which the group stated might be utilized to shape the first file of a feature's essence cycle sway.
According to Wal-Mart "Our goal is not to create our own index, but to spur the development of
a common database that can be used globally, a standard for all of us in the future to rely on,"
said Mike Duke, president and chief executive officer of Wal-Mart Stores, Inc., at a meeting of
employees, suppliers, academics, and environmentalists on Thursday at the company's corporate
headquarters in Bentonville, Arkansas. "Customers want and will expect retailers to have greater
transparency in the future. This is going to accelerate. We might as well get used to it." 2 It is
under the planning of Wal-Mart that Lifecycle Assessments (LCAs) would be responsible for the
provision of information regarding labeling found on the product.
Other than this Wal-Mart facilitates their customers in relevance to some categories of products
that they can evaluate that information by scanning them on the PDAs and evaluate the given
content on the packaging. Promoting this plan, Wal-Mart states that "A consumer will be able to
see the cotton farm, maybe even the farmer who raised the cotton," said John Fleming, the
company's chief merchandising officer. "The consumer of the future will be able to see, whether
from the sea or the ground, where that product came from." 3
The feedback that was received for this category of products was very positive but it also gave
that information to customers that were even ethical from environmental point of view but
somehow sales were reduced for some of the products and for that case Wal-Mart was held
responsible. On the other hand Wal-Mart was just focusing on the value that they were providing
to their customers, according to an individual from Wal-Mart, "As you look through the details,
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there is so much hidden cost, so much inefficiency," Duke said. "A lot of this can help us be more
productive, to lower costs, to give the customer better quality, and to live in a more sustainable
world."

Company Supply Chain Effectiveness :

Wal-Mart has become the largest retailer with the most rapid expansion in their discount
provision network and all of this has happened through proceeding in reducing the surplus costs
in all their operations and inhibiting the marginal expansions. All this has resulted in to an
increase in their net income by 25% that has been now $1.6 billion and 18% market share is
possessed by the discount department of their network. Wal-Mart has been always stronger than
its competitors as it has bonded the most powerful relation with every kind of suppliers, though
their always customizing operations and giving a spacious platform to brands to market their
branding and by consolidating with the industry on individual level.
Wal-Mart also looks after the demands of their customers; this also keeps an efficiency level in
their stocks and let the suppliers know about the sales of their products on run-time. After an
overall research it could be said that, Wal-Mart is able to lead the market of retail business by
possessing some qualities or strengths as compared to others. These strengths are that, the supply
chain dept. (Barry, 2006). of Wal-Mart keeps track of the demand of each product, tracking their
movement from other stores too which defines which region requires which sort of product in
which amount, by the deployment of a very effective information system that secures all sort of
transits and transactions, not only this but also analyses the sales, trend of customers in reference
to market information and also by becoming a middle party between the distributors and the
wholesale dealers. The growth and tremendous progress of Wal-Mart observed from the
following chart.
5

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Future Work and Discussion:

Wal-Mart has a firm belief that they could progress only by developing long-term relationship
with their suppliers so information sharing could be more credible and easy. Other than these
routes in transit system are designed very efficiently and their vehicles are integrated with special
navigational devices that keep their transportation system in record.
Now some weaknesses were also observed in their operating cycle, discussing them could be
utilized as for recommendations for their supply chain process. Wal-Mart deploys a system in
which distribution warehouse is linked directly to the shipment party; along this the individual
warehouse is also linked to the shipment party. It increases the operational costs as one shipment
is linked to the distribution warehouse and when the order is received, it is selected and again
packed and again then shipped individually to their stores location. This process increases the
time and costs of the transit. In this process at distribution level the storage was also evaluated
the storage levels or orders quantity of that specific product.
This whole process should be reengineered, time frame should be defined and the distribution
center and the individual store for every product should be cross docked on a specific time frame
of 2 days in contact with the shipment independently within the both platforms so cost and time
could be saved, this would create a good communication channel of the retailer with the
manufacturer directly as the shipment would not be then delayed by the manufacturer as they are
already aware of the demand at the point of sale, their distribution would be independent from
the Wal-Mart and would reach more efficiently at the individual store.
Other than this the Quick Response system of Wal-Mart is effective but with the deployment of
latest technological equipment all system involved in this program could communicate with each
other to reduce lying issues and the common factor in all three systems; Vendor managed QR,
Just-in Time System and Wal-Mart managed QR is the role of
supplier and this could be made more effective if the supplier is aware of the inventory and sales
so could increase their provisioning of the products from the vendors. Last but not the least, this
all could take place if the Human resource of Wal-Mart could cooperate with all these strategies
and by keeping the employees involved in their tasks by motivating them by certain techniques
and by letting the employees even know about the in-depth information about the customers
trend and demands.

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CHAPTER- THREE
CONCLUSION PART

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Recommendation
1. Wal-Marts public affairs strategy must work to make implementation of their policy goals happen. Its
public affairs strategy enables the company to move into other sectors of the marketplace and expand into
foreign countries. The public affairs strategy also involves gaining access to politicians who can help Wal-Mart
achieve its goals. Wal-Mart has a very active Political Action Committee that gives almost a quarter million
dollars annually.
2. Recently, Wal-Mart has been criticized for their opposition to allowing their employees to be unionized. WalMart needs to clarify their reasons for their opposition to unionization.
3. The public affairs strategy must also address the negative feelings harbored by some groups who feel that
Wal-Mart is encroaching into far too many other sectors retail than it should. These concerns must be addressed
if Wal-Mart is to enjoy continued success in creating positive name recognition.
4. There is a potential argument against Wal-Mart that they are paying less to their employees although they cut
a good sum of revenue from the customers because of the immense effort of their employees. Wal-Mart should
ensure proper remuneration to their employee on accordance to their legal demand.
5. Wal-Mart will need to implement these recommendations if they are going to remain at the top of the Fortune
500, while simultaneously keeping a good reputation and making their name synonymous with cheap prices and
good quality merchandise.

Conclusion
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In conclusion, Wal-Mart is the number one retailer in the United States and is at the top of the Fortune 500 listing.
Wal-Mart operates in many countries world-wide and is moving into new countries every year. Wal-Mart is also
expanding as a retailer. They have expanded into many other sectors of the marketplace, including groceries, gas
stations, electronics, and auto maintenance. Each year, Wal-Mart finds new ways to grow and offer more services
to their customers. Each year, the number of people who have a stake in Wal-Mart also grows. Each year, more
claims are made against Wal-Mart by the unions and other businesses that have been forced out of business.
Wal-Mart is often able to uncut many other local industries and more and more local businesses are shutting down
when Wal-Mart moves into town.

The unions are filing more court claims against Wal-Mart because they

encourage their workers not to join unions.

As a result of Wal-Mart's ever growing size and variety of services

they offer, their public affairs department is going to become more and more important. And as the animosity
against Wal-Mart becomes more widespread, here and in foreign countries, Wal-Mart is going to have to work
harder to maintain their good reputation. Wal-Mart's foundation will become increasingly more important for giving
things back to the community.

Wal-Mart strongly believed and constantly emphasized on strengthening its relationships with its
customers, suppliers and employees. The company was very vigilant and sensed the smallest
of changes in store layouts and merchandising techniques to improve performance and value
for customers. The company made efforts to capitalize on every cost saving opportunity. The
savings on cost were always passed on to the consumers, thereby adding value at every stage
and process. Wal-Mart also enjoyed the benefits of low transportation costs since it had its own
transportation system which assisted Wal-Mart in delivering the goods to different stores within
(or sometimes less than) 48 hours.

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References
http://www.usanfranonline.com/
http://careers.walmart.com/
http://www.scm3pl.com/
http://www.danielmillsap.com/
http://www.slideshare.net/sagarc1990/walmart-supply-chain-management
http://www.icmrindia.org/
http://www.arkansasbusiness.com/
http://www.scdigest.com/

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