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company directly procured from manufacturers, by passing all intermediaries.
The
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Wal-Mart’s Procurement…
Wal-Mart
finalizes a purchase deal only when it is fully confident that the products being bought is not available else where at a lower price.
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The
Cross-docking

To make its distribution process more efficient, Wal-Mart also made use of a logistics technique called “cross-docking.”
In this system, the finished goods were directly picked up from the manufacturing plant, sorted out and then directly supplied to the customers.
With the rapid expansion, it was essential to have a good communication system. Hence, Wal-Mart set up its own satellite communication system in 1983.
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Inventory Management…

Wal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks, reducing pack sizes across many product categories, and timely price markdowns.
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Hub and Spoke System

In the early 1970s, Wal-Mart became one of the first retailing companies in the world to centralize its distribution system, pioneering the retail hub-and-spoke system.
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Cross-docking

The system reduced the handling and storage of finished goods, virtually eliminating the role of the distribution centers and stores.

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The Diffusion of Wal-Mart
Video
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History of Wal-Mart…

This phenomenal growth of WalMart is attributed to its continued focus on customer needs and reducing cost through efficient supply chain management practices.
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By
Using EDI for Procurement

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.
History of Wal-Mart…
Walton
gave up the job and decided to set up his own retail store. He purchased a store franchise in Arkansas. Offering significant discounts on prices, he became successful and acquired a second store in 3 years.
The manufacturer directly forwarded the goods to a place called the “staging area.”


The goods were packed here according to the orders received from different stores and then directly sent to the respective customers.
Instead of cutting the inventory across the board, Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most, while reducing the overall inventory levels.
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History of Wal-Mart…

By 1969, Walton had established 18 WalMart stores. By late 1970s, the retail chain had established a pharmacy and an auto service center.
Video
19
Logistics Management
An
important feature of Wal-Mart‟s logistics infrastructure was its fast and responsive transportation system.
distribution centers were serviced by more than 3500 company owned trucks.


On receiving information about the sales of various products, the suppliers shipped the required goods to Wal-Mart‟s distribution centers.
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Wal-Mart and China
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History of Wal-Mart

The company‟s founder is Sam Walton. He was born in 1918 at Oklahoma. In 1940, he worked for the famous retailer, J C Penney.


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20
The
Logistics Management…
Wal-Mart
believed that it needed drivers who were committed and dedicated to customer service.
company hired only experienced drivers who had driven more than 300,000 accident-free miles, with no major traffic violation.
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Inventory Management

Wal-Mart invested heavily in IT and communication systems to effectively track sales and merchandise inventories in stores across the country.
16
Wal-Mart’s Procurement…
Wal-Mart
spends a significant amount of time meeting vendors and understanding their cost structure.
making the process transparent, the retailer can be certain that the manufacturers are doing their best to cut down costs.
Wal-Mart’s Supply Chain
A Business Success
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Wal-Mart is the World’s Largest Retail Company
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3
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Ranked first in the Global Fortune 500 list in 2001-2002 financial year
– and distributing them through its own logistics infrastructure to the retail stores spread across the U.S.
14
Wal-Mart’s Procurement
Wal-Mart
emphasized the need to reduce purchasing costs and offer the best price to the customer.
But it continued its growth in the 1990s, focusing on overseas stores.
– 1992, Mexico (joint venture with Cifra) – 1994, Canada (acquired 122 Woolco stores from Woolworth) – 1997, Germany (acquired 21 store of Wertkauf) – Korea, Brazil, and so on.
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).
13

Hub and Spoke System…
The
hub and spoke system enabled Wal-Mart to achieve significant cost advantages by the centralized purchasing of goods in huge quantities..
– Open all night, for university students
By
1984, there were 640 Wal-Mart stores in U.S.
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History of Wal-Mart…

Wal-Mart suffered a setback in 1992, when Walton died.
In 1980s, Wal-Mart continued to grow due to huge customer demands in small towns.
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History of Wal-Mart…

Wal-Mart was offering low prices, customer satisfaction guaranteed, and hours that were realistic for the way people wanted to shop.
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