Wal-Mart - Supply Chain MGMT

Wal-Mart: Supply Chain
Management
Background
Business Process Redesign:
Process, IT
Implications: Process, IT
cmpm A00267ppmmJun93G
-1-
WAL-MART: BACKGROUND
Wal-Mart Is the Largest and Fastest Growing Discount

Department Store
1992 revenues totaled $43.9 billion:
-
Increased 35% from previous year, whereas competitors growth rates averaged only 10%
Net income increased 25% to $1.6 billion

Operations include growing chain of stores, including discount department stores,
wholesale clubs, food stores, wholesale distributor of books and pre-recorded
music, and grocery distribution services
First discount department store chain to expand internationally:
-
Joint venture with CIFRA, Mexicos largest retailer
18% market share of $250 billion discount department store industry:

-
KMart, the next largest competitor, has 13.8%
Analysts estimate that by the year 1995, Wal-Mart will drive all competitors, aside from KMart and Target, out
of business
Wal-Mart grows through volume and market share gains rather than
margin expansions.
Source:
Annual report.
-2-
WAL-MART: BACKGROUND
Stronger Competitors and More Powerful Suppliers Are Challenging

Wal-Mart in Quickly and Effectively Responding to Customers
Competitors:
KMart
Suppliers:
Target
Improved operations
Improved operations
Foreign competition
Powerful brand
management
Industry consolidation
Wal-Mart
Intense price competition
Industry consolidation
Customer Demands:
The right product
In stock
The best value
Service and quality
-3-
WAL-MART: BUSINESS PROCESS
Satisfying Customer Demands Depends on Five Critical

Success Factors
Critical Success Factors

(CSF)
Customer Demands
Quick responsiveness
to market changes
The right products
Low inventory
In stock
Quick replenishment of
inventory
Best value
Service and quality
Effective human
resource system
Efficient distribution
system
-4-
Wal-Mart Fulfills the Customer-Satisfaction Critical

Success Factors
CSF
Quick Responsiveness
to Market Changes
Low Inventory
Quick Replenishment
Effective HR System
Efficient Distribution
System
Customer demand pulls product through the

supply chain
Tracking product movement at individual stores
by market traits (e.g., size, color)
Investment in IT ensures timely analysis of
sales/customer/market information and trends
Formal and informal cooperation among stores,
distribution centers, and suppliers
-5-

Success Factors (cont.)
CSF
to Market Changes
Low Inventory
Direct high-level and long-term relationship

with suppliers enabled by high information
sharing:
-
Quick Replenishment
Effective HR System
System
Some vendors directly manage distribution warehouse

inventory of their products
Efficient transportation system

Investment in IT (e.g., EDI, Quick Response,
Radio frequency terminals)
-6-

CSF
to Market Changes
All employees are considered

associates
Low Inventory
Extensive training and support

Quick Replenishment
Effective HR System
System
Stock-ownership program
Profit-sharing
Employees are your biggest capital investment, so it makes sense to

maintain themtheir skills, their morale, and their participation.
-7-

CSF
to Market Changes
Highly automated distribution centers

(e.g., laser-guided conveyor belts)
Low Inventory
Quick Replenishment
Effective HR System
System
A fleet of 2,000 company-owned trucks

High leverage of supplier relationships:
- Some suppliers ship goods sales floor
ready
-8-
The Traditional Supply Chain Includes Inefficient and

Unnecessary Steps
Distribution Warehouse
Retailer
Individual Store
Order
Order
Order
Receive
Select
Pack
Select
Tag/
Label
Storage
Sell
Storage
Wholesaler
Order
Receive
Select
Pack
Manufacturer
(Supplier)
Make
Pack
Shipper
Ship
Ship
Ship
-9-
Wal-Mart Simplified Its Supply Chain

Distribution Center
Retailer
Individual Store
POS
Order
Receive
Select
Pack
<48 hours
Ship
Receive
Storage
Sell
<48 hours
Wholesaler
Deliver
within
72 hours
of order
Manufacturer
(Supplier)
Make
Shipper
Select
Tag/
Label
Pack
Ship
Cross-docking in distribution centers results in product flow from

inbound to outbound shipping docks within 48 hours.
- 10 -
Wal-Mart Invests Heavily in Information Technology

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
Electronic Data Interchange (EDI):

- For electronic transmission of POS data, purchase orders, invoices, advance shipment notice,
etc. between Wal-Mart headquarters, suppliers, distribution centers, and individual stores
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
- 11 -
Wal-Mart Invests Heavily in Information Technology (cont.)

Various Quick-Response (QR) systems (retail-link) to allow direct store-tosupplier ordering: continuous replenishment
Vendor-managed QR
Wal-Mart-managed QR
Distribution
Center
Supplier
POS Data
Store
Wal-Mart
Order
Supplier
Store
Warehouse Just-in-Time System

Distribution
Center
Wal-Mart
POS Data
Supplier
Store
- 12 -
WAL-MART: IMPLICATIONS
Wal-Marts Inventory Management Improvements Have

Resulted in Efficiencies Unmatched by the Competition
Inventory in System (Days)
14
30
At Vendor
1:5.94
At Warehouse
In-Store
30
Inventory-to-Sales Ratio
1:4.58
3
2
3
Before New
After New
System
System
IT systems have improved Wal-Marts
in-stock position and increased vendor
responsiveness
Wal-Mart
KMart
Wal-Mart stores replenish inventory

twice a week vs. industry standard of
once every two weeks
Selling and Operating Expenses of Sales

28%
15%
Wal-Mart
Sears Roebuck & Co.
Wal-Mart has lowest cost of operations in the

retail area, aside from wholesale clubs
- 13 -
WAL-MART: IMPLICATIONS
Lessons Learned: The Road to Success Is Paved by

Technology and Better Use of People
Strong
Supplier
Relationships
Economies
of Sales:
Best Deals
Stable
Lower
Prices
Effective
IT Systems
Reduced
Cost of Sale
Effective
Distribution
Systems
Empowered
Employees
Predictable
Sale
Patterns
Decreased
Chance of
Out-of-Stock
Increased
Sales
and
Profits
In-Depth
Knowledge
of Customer/
Market
- 14 -
DOCUMENT ID
Client Name:
Project No.:
Pres. Date:
Prod. Date:
Author:
Title:
Location
Client Folder:
Doc. Folder:
or
Doc. Name:
Comments:
Template
Archive Information
B&W Pres 44
35mm Slides 44:
# of Pages:
Transparencies 44:
Lby Date:
Other:

Wal-Mart - Supply Chain MGMT

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Wal-Mart - Supply Chain MGMT

Încărcat de

Drepturi de autor:

Formate disponibile

Wal-Mart: Supply Chain

Wal-Mart Is the Largest and Fastest Growing Discount

Net income increased 25% to $1.6 billion

Joint venture with CIFRA, Mexicos largest retailer

18% market share of $250 billion discount department store industry:

KMart, the next largest competitor, has 13.8%

Stronger Competitors and More Powerful Suppliers Are Challenging

Intense price competition

WAL-MART: BUSINESS PROCESS

Satisfying Customer Demands Depends on Five Critical

Critical Success Factors

The right products

WAL-MART: BUSINESS PROCESS

Wal-Mart Fulfills the Customer-Satisfaction Critical

Customer demand pulls product through the

WAL-MART: BUSINESS PROCESS

Wal-Mart Fulfills the Customer-Satisfaction Critical

Direct high-level and long-term relationship

Some vendors directly manage distribution warehouse

Efficient transportation system

WAL-MART: BUSINESS PROCESS

Wal-Mart Fulfills the Customer-Satisfaction Critical

All employees are considered

Extensive training and support

Employees are your biggest capital investment, so it makes sense to

WAL-MART: BUSINESS PROCESS

Wal-Mart Fulfills the Customer-Satisfaction Critical

Highly automated distribution centers

A fleet of 2,000 company-owned trucks

WAL-MART: BUSINESS PROCESS

The Traditional Supply Chain Includes Inefficient and

WAL-MART: BUSINESS PROCESS

Wal-Mart Simplified Its Supply Chain

Cross-docking in distribution centers results in product flow from

WAL-MART: BUSINESS PROCESS

Wal-Mart Invests Heavily in Information Technology

Electronic Data Interchange (EDI):

Merchandising Artificial Intelligence System:

WAL-MART: BUSINESS PROCESS

Wal-Mart Invests Heavily in Information Technology (cont.)

Warehouse Just-in-Time System

Wal-Marts Inventory Management Improvements Have

Wal-Mart stores replenish inventory

Selling and Operating Expenses of Sales

Sears Roebuck & Co.

Wal-Mart has lowest cost of operations in the

Lessons Learned: The Road to Success Is Paved by

S-ar putea să vă placă și