VALUE CHAIN ANALYSIS

OF

PRESENTED
BY:
ARPAN,
BISHNU
MONICA
SUBHASHRE
KALYAN

 "People think we got big by putting big

stores in small towns. Really, we got big by
replacing inventory with information."
Sam Walton, Founder of Wal-Mart

PORTERS VALUE CHAIN

ANALYSIS
The value chain as the internal
processes
or
activities
a
company performs to design,
produce, market, deliver and
support its product.
PRIMARY ACTIVITIES

Inbound logistics
Operations
Outbound logistics

SUPPORT ACTIVITIES: Procurement

Technology development
Human resource
management
Firm infrastructure

VALUE CHAIN ANALYSIS OF

WAL-MART

FIRM INFRASTRUCTURE
2485 Wal-Mart stores
682 Supercentres, 457 Sams Clubs, 5 WalMart Neighbourhood Markets and 1007 units
of Wal-Mart International.
It serves over 100 million customers weekly
worldwide.
There are 1035000 associates, and the company
is Americas largest private employer.

HUMAN RESOURCES
MANAGEMENT
Almost 60% of all managers in Wal-Mart stores
started as hourly associates.
The employees are encouraged to communicate
openly, offer new ideas, take risks, strive for
excellence and have fun. Employees are getting
competitive wages and comprehensive benefits.
In recruiting new associates the company begins
a comprehensive recruitment program in the
community where the store is to identify
candidates.

 Recruitment programs are well publicised

and convenient, providing an opportunity
for job applicants and the company to
start getting acquainted
When new employees start at Wal-Mart
they are presented to the two basic rules
of Wal-Mart. These are:
Rule 1: The customer is always right
Rule 2: If the customer happens to be
wrong, refer rule 1.

TECHNOLOGY DEVELOPMENT
Wal-Mart set up its own satellite communication
system in 1983
Wal-mart uses 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.
Electronic data interchange (EDI)
a computer-to-computer exchange of business
documents

PROCUREMENT
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.

FLOW-TIME ANALYSIS

Customer
made a
purchase

Point-of-sale
system
captures data
in real-time

Data is
transmitted to
warehouses
for Inv. Mgmt.

Orders are
generated from
previous-day
sales

Merchandise is
loaded onto
trucks using
cross-docking

Retail Link
transmits
data to
supplier

Merchandise is
manufactured
based on historical
and real-time data

Merchandise
is shipped to
warehouses

Merchandise
is delivered to
the store

The store will restock the shelves

with merchandise

LOGISTICS
The drivers are tracked regularly through Private
Fleet Driver handbook Mart uses a logistics
technique called Cross Docking
Wal-Mart today about 60% inbound freight (closer
to 80% for - their grocery segment) is managed by
suppliers.
The
important
of
Wal-Mart's
logistics
infrastructure was its fast and responsive
transportation system.
The distribution centres were serviced by more
than 3,500 company owned trucks.

WAL*MART'S BUSINESS LOGIC

Everyday low prices

Lower prices
from suppliers

More customers

More goods sold

Lower operating
Costs

OPERATIONS
:Wal-Mart operations are comprised of three
business segments
WAL-MART STORES
Super- centres
Discount Stores
Neighbourhood Markets
SAMS CLUB-SAMS CLUB
WAL-MART INTERNATIONAL

MARKETING AND SALES

Employees wore blue vests to identify themselves
Aisles were wide
Apparel departments were carpeted in warm
colours
A store employee followed customers to their cars
to pick up their shopping carts
Customer was welcomed at the door by a people
greeter, who gave directions and struck up
conversations

SERVICE
Opening hours at Wal-Mart generally range from 7.00
a.m. to 11.00 p.m. six days a week, and from 10.00 a.m.
to 8.00 p.m. on Sunday.
All Wal-Mart stores maintain uniform prices, except
where lower prices are necessary to meet local
competition. Sales are primarily on a self-service, cashand-carry basis with the objective of maximizing sales
volume and inventory turnover while minimizing
expenses.

 Bank credit card programs, operates without

recourse to the Company, is available in all
stores.
The replenishment system also helps the store
adjust to customers demands. The stores are
organised the same way all over the world, so the
customers will recognise the stores wherever they
go.

WAL*MARTS VALUE
CHAIN
Suppliers
Suppliers

Vendors are WalMart's suppliers.

They deliver
products to WalMart's distribution
center or directly to
one of the stores.
Wal-Mart is able to
bargain for the
lowest possible
price because of
the high volume of
sales. Therefore,
Wal-Mart passes
this savings to its
customers.

Wal-Mart
Distribution
Center
Once the products
are delivered to the
distribution center,
they are sorted and
placed on trucks to
be delivered to
stores. This allows
for less than 48
hour deliveries to
stores and
increased efficiency
on trucks with
backhauls.

Wal-Mart
Store
After products are
delivered to the
stores, they are
placed on the
appropriate shelf
location for
customers to view.
Store locations are
located throughout
the U.S. in rural and
urban towns.

Wal-Mart
Shopper

Customers can
purchase products
at very low prices
and have the ability
to return any item.

Wal-Mart Supply Chain

Source: Adapted from Garrison Wieland for Wal-Marts Supply Chain,

Harvard Business Review 70(2; MarchApril 1992), pp. 6071.

Walmart Value Chain

The World of Walmart Map

Growth of Walmart