SUPPLY CHAIN MANAGEMENT WALMART Introduction 1. Wal-Mart is the brainchild of Sam Walton.

. The first Wal-Mart opened in Rogers, Arkansas in 1962. There were 36 different departments in Wal-Mart, selling everything from tires to cosmetics. The retail giant is ranked 1st in Global Fortune 500 list in 2009-10, earning revenues of $408.214 billion. Supply Chain Management has generated substantial interest in recent years for a number of reasons. Managers in many industries now realize that actions taken by one member of the chain can influence the profitability of all others in the chain. In 2009 -10 Wal-Mart, the largest firm in the world by sales, is looking to improve its already efficient supply chain. The company's supply chain is closely integrated with its retail and information systems strategies and has been developed incrementally over the past 38 years. Aim 2. To give a brief on Supply Chain Management (SCM) and its effective implementation by Wal-Mart. Supply Chain Management WalMart 3. Supply chain process refers to the integrated, coordinated network of value delivering business that converts raw material to final products and delivers them to customers. The principles of SCM are known to all and studied by many. But no retailing company has been able to implement it more efficiently than Wal-Mart. 4. Many people wonder how Wal-Mart is able to charge such low prices and continue to make a profit. There are several factors in their business model that contribute to this ability, but a big one is their ability to adapt to an ever-changing global marketplace. Some criticize Wal-Mart's efforts to deliver to their customers a quality product at low prices, but in reality, Wal-Mart has been able to deliver low prices by being efficient. This efficiency is present in several areas but one of the most important places is how they are able to manufacture products all over the world and get them to retail outlets, which are also all over the world. This ability requires a flawless logistical system that allows product to be shipped anywhere at a moments notice. 5. WalMart has implemented the elements of supply chain management in the following way: (a) Direct deals with OEMs. They axed the middle men / intermediaries and instead of procuring through retailers / distributors, bought directly from OEMs.

2 (b) Bulk Purchase. In order to generate interest amongst OEMs / manufacturers to sell items to them. (c) Lower Pricing. Wal-Mart's pricing is based on the philosophy that more units can be sold at a lower price; resulting in greater profits than if they charge a higher price. (d) Relationship. A significant time is spent to meet vendors, build relationships and negotiate best possible deals with no kickbacks. (e) Logistic and Inventory Management. Techniques and technologies like cross docking, RFID, networking etc have been effectively used to streamline the supply chain from point of origin to point of sale, reduce handling cost, operating costs, storage of inventory. The transmission of point of sale (POS) data from retail store to corporate headquarters several times a day and integrated with information from RFID database reduces, or eliminates warehousing costs. This information disseminating results in better supply chain management and low costs throughout the supply chain. 6. 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, 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. This gives Wal-Mart a huge amount of leverage when dealing with suppliers. If a particular supplier knows that a company has found a lower price, it will lower its price accordingly. However, if the supplier also knows that it will be incredibly difficult for the company to make the proper adjustments to ensure a smooth transition to a different supplier, then they will be less inclined to lower their price as much. This is not how existing suppliers deal with WalMart; when they see that Wal-Mart has found a supplier that will give them a lower price, the current suppliers lower their prices accordingly. They know that Wal-Mart's logistical system can handle transition seamlessly and therefore they gain no additional leverage since it won't be difficult or costly for Wal-Mart to choose another supplier. 7. Wal-Marts success is attributable to their steady acceptance of the fast developing IT industry and research in SCM techniques. The following are cardinal features of Wal-Marts supply chain:(a) Hub and Spoke System. Under the system, goods are centrally ordered, assembled at a massive warehouse, known as distribution center (hub), from where they are dispatched to the individual stores (spoke). It helps achieve significant cost advantages by the centralized purchasing of goods in huge quantities. (b) Fast and Responsive Transportation. An important feature of Wal-Marts logistics infrastructure is its fast and responsive transportation system. The distribution centers are serviced by more than 3500 company owned trucks. The company hires only experienced drivers who are committed and dedicated to customer

3 service and who have driven more than 3,00,000 accident-free miles, with no major traffic violation. (c) Voice-Based Order Filling (VOF). Wal-Mart has voicebased order filling (VOF) system in all its grocery distribution centers. Each person responsible for order picking is provided with a microphone/speaker headset, connected to the portable (VOF) system that could be worn on waist belt. They are guided by the voice to item locations in the distribution centers. The VOF system also verifies quantities picked, and could respond to a variety of requests such as providing product detail (type, price, barcode number, etc.) By installing the VOF system, Wal-Mart eliminated mis picks and product labeling costs since this system does not require paper lists and labels to be affixed on the goods. (d) Web Enabled EDI. In October 2002, Wal-Mart asked its 14,000 suppliers to switch over from the existing Value Added Networks (VAN) EDI to web enabled EDI. VANs routed and managed EDI messages for their customers. By implementing web-EDI, Wal-Mart saved millions of dollars in the form of license fees to the private VANs. Retail Link connects Wal-Marts EDI network with an extranet, accessible to Wal-Marts thousands of suppliers. The suppliers can find out their product performance vis-a-vis competitors products in a particular product category. All information related to sales and inventories are passed on through an advanced satellite communication system. SWOT Analysis. 8. The firms strength lies in its low - competitive pricing, customer oriented approach and strong supply chain. Its weakness is also its strength; product variety. It has so many different products and therefore it may not have the flexibility of some of its more focused competitors. The firm has great opportunity in building own brand and expanding business overseas. The threat is from increasing competition from companies entering and their competitive pricing. Conclusion 9. 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 WalMart.

4 Bibliography 1. 2. 3. 4. 5. www.walmartstores.com www.icmrindia.org www.supplychains.in www.supply-chain.org www.google.com