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Management Development Institute - Gurgaon

Supply Chain Management

Wal-Marts Supply Chain

SCM Case Presentation
1 2 3 4 5 6 7

Case 04


11P171 11P207 11P208 11P210 11P231 11P237 11P239

Suryansh Kapoor Naved Siraj Nayan Jain Paritosh Baisoya Sumit Chandra Vikram Agarwal Vishesh Garg

Presentation Date: July 12, 2012

Post-Graduate Programme in Management

(PGPM: 2011-13) Section: C


Term: IV (13 Jun 1 Sep, 2012)

Walmart Supply Chain - Video


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 - Captain V L Beatty

Founded by Sam Walton in 1962 In 2012 it is the largest retailer in the world It has 8,500 stores in 15 countries, under 55

different names Service 100 million customers on weekly basis


Walmart Supply Chain Practices


Procurement & Distribution Management Procurement of goods directly from

manufacturers bypassing all intermediaries Tough Negotiator on prices, ensures 100% process transparency Believed in establishing long term relationship with the vendor Ensure product is not available elsewhere at even lower prices Proffered local and regional vendors & suppliers Own warehouse supplied 85% of inventory compared to 50 -65% of competitors Provides replenishments in 2 days compared to 5 days for competitors Shipping cost 3% of total cost compared to 5% for competitors Each distribution centre had provision of food, sleep, bath & personal business Barcode, RFID, hand held computer systems 7/31/12

Distribution Network
Hub and Spoke System

One of the first retailing companies in the world to centralize its distribution system, pioneering the retail hub-and-spoke system. Under the system, goods were centrally ordered, assembled at a massive warehouse, known as distribution center (hub), from where they were dispatched to the individual stores (spoke). 7/31/12

W alm arts Centralized Hub -andSpoke System of W arehouses and Distribution C enters

250 m ile radius

EDI for Procurement

EDI : Electronic Data Interchange

The computer systems of Wal-Mart were connected to those

of its suppliers.

EDI enabled the suppliers to download purchase orders along

with store-to-store sales information relating to their products sold. the suppliers shipped the required goods to Wal-Marts distribution centers.

On receiving information about the sales of various products,


RFID : 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

Advantages of using RFID

Reduce the possibility of inventory shrinkage and out-of-stock situation. Improve fulfillment rates. Improve the customer service. Reduce inventory and labor cost. Eliminate many manual process and improve the operation efficiency


Logistics Management

Fast & responsive transportation system Ships goods within 2 days, 3500 company owned trucks, replenishes store shelves twice every week Hired only experienced drivers who had driven more than 300,000 accident free miles with no major violation Private Fleet Handbook , maintained strict vigil over drivers Cross Docking , supply chain demand chain , push - pull

Supply Chain Demand Chain Push Pull


Cross Docking

Finished goods were directly picked up from the manufacturing plant, sorted out and then directly supplied to the customers (virtually eliminating the role of the distribution centers and stores) Advantages of cross docking Reduces operating costs, inventory levels Increases throughput Helps in increase of sales space Eliminates unnecessary handling and storage of product Reduces product damages and product obsolescence



CPFR : Collaborative Planning, Forecasting and Replenishment By implementing CPFR, WalMart began a just-in-time delivery program that reduced costs for both the retailer and its suppliers Process for two or more companies in a supply chain to synchronize their demand forecasts into a single plan to meet customer demand Parties electronically exchange

past sales trend point-of-sale data on-hand inventory scheduled forecasts promotions &

CRP - Continuous replenishment program, DRP- Distribution Requirements Planning


Inventory Management
Use of RFID technology and hand-held computer systems

RFID, Hand held computer system Own satellite communication system, Automated reordering system Point of sale system Sophisticated algorithm system Centralized inventory data system Retail link system Internet enabled technologies

Hand Held computer guides an employee with regard to the location of a particular product from a particular place in the shop

Walmart IT systems
Inventory Tracking and Management System at distribution centers:
Identifies every product and its location in the warehouse Integrated with some 8.5 miles of laser-guided conveyor belts Lasers read the bar code on every product box and route them to appropriate loading dock

Merchandising Artificial Intelligence System:

To adjust vendor merchandise assortments based on the need of each particular store State-of-the-art satellite communication network which supports data, voice, and video



Nature of benefits Derived


Thank You