Sam’s Clubs

SUPPLY CHAIN MANAGEMENTWal-Mart Stores, Inc.

a presentation by Group D

Content to be Covered

• About Wal-Mart

• Operation

• Procurement and Distribution Channel

• Logistic Management

• Inventory Management

• Core Competence

• SWOT Analysis

About WALMART

• According to analysts, “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 Wal-Mart”.

• Sam Walton founder of Wal-Mart.• US base Wal-Mart ranked 1st in the global

fortune 500 list in the financial year 2001-02 earning revenues of $219.81 billion.

• Largest retailing company in the world.

• Operates more then 3,500 discount stores.

• Focused on improving sales, constantly reducing cost, adopting efficient distribution and logistics management systems and using IT.

Achievements

2006• Number of weekly customers grew to more than 176

million around the world, with 6,779 locations.

• Wal-Mart had record net sales of $345 billion.

• The company increased its ownership stake in Seiyu in Japan, to 53.3 percent, and increased its ownership of CARHCO to 51 percent, renaming the company Wal-Mart Central America.

Cont….

2007

• In August, Wal-Mart and Bharti Enterprises announced an agreement to establish Bharti Wal-Mart Private Limited, a joint venture for wholesale cash-and-carry and back-end supply chain management operations in India.

• The 3000th international store, a Supercenter in Sao Paulo, Brazil, opened in November 2007.

Cont….

2008• On April 10, 2008, Sam's Club celebrated its 25th

anniversary. In 2008, Sam's Club operates more than 590 locations nationwide and more than 100 locations internationally.

Operations

• Today, 7,390 Wal-Mart stores and Sam’s Club locations in 14 markets employ more than 2 million associates, serving more than 200 million customers per year.

• Wal-Mart Logistics has approximately 88,000 associates, 7,200 tractors, and 53,000 trailers.

PROCUREMENT AND DISTRIBUTION

• Walmart emphasized on reducing its purchasing costs and offer the best price to its customers.

• The company procured goods directly from manufacturers, bypassing all intermediaries.

• Walmart spent significant amount of time meeting with vendors.

• Goods distributed within the us arrived in pallets.

• Imported goods arrived in re- usable boxes or cases.

• Wal-mart used sophisticated barcode technology and handheld computer systems managing the center.

• Different barcodes were used to label different products, shelves and bins in a center.

• Hand held computer also enabled the packaging department to get accurate information about the products to be packed.

LOGISTICS MANAGEMENT

• Fast and responsive transportation system.

• More then 3500 trucks.

• Two hours gap between unloading of each trailer.

DISTRIBUTION CENTER

RETAIL STORES

• “Private Fleet Driver Handbook” for drivers regarding code of conduct.

• They use logistics technique “Cross- docking”.

Bullwhip effect

• The Bullwhip Effect (or Whiplash Effect) is a problem which occurs because of lack information between demand and supply. It is also known as Forrester Effect.

• Customer demand is rarely perfectly stable, businesses must forecast demand in order to properly position inventory and other resources.

• Bullwhip Effect is a problem in forecast-driven supply chains, and careful management of the effect is an important goal for Supply Chain Managers.

• It is necessary to extend the visibility of customer demand as far as possible.

• Establishing a demand-driven supply chain which reacts to actual customer orders.

• In manufacturing, this concept is called Kanban.

• Successfully implemented in Wal-Mart’s distribution system.

• Individual Wal-Mart stores transmit point-of-sale (POS) data from the cash register back to corporate headquarters several times a day.

• This demand information is used to queue shipments from the Wal-Mart distribution center to the store and from the supplier to the Wal-Mart distribution center.

• Better information leads to better inventory positioning and lower costs throughout the supply chain.

INVENTORY MANAGEMENT

• Wal – mart invested heavily in IT and communications system to effectively track sales and merchandise inventories in stores across the country.

• Wal- Mart set up its own satellite communication system in 1983.

• The company entered into collaboration with P&G and its stores and other distribution centers.

CORE COMPETENCE

• Wal-Mart strongly belived in strengthening its relationships with its customers, suppliers, and employees.

• Wal- Mart also enjoyed the benefits of low transportation cost by its own transportation system by delivering the goods less than 48 hrs or 48hrs.

• Wal-mart priced its goods economically and the prices varied from day to day having good bargaining power as it purchased huge quantities.

• Reduction in lead time faster inventory turnover , accurate forecasting of inventory levels, increased warehouse space, reduction in safety stock and better working capital utilization.

• It eliminated old stocks and maintained quality of goods.

• Bar coding and radio frequency technologies

enabled accurate distribution of goods.

• Cross-docking also helps in reducing inventory storage costs, to cut down labor and other handling costs involved in the loading and unloading of goods.

Strength WeaknessCost advantage Low price & customer-orientedStrong supply chainPeople are key to success

Ignore store decorationSince Wal-Mart sell products across many sectors (such as clothing, food, or stationary), it may not have the flexibility of some of its more focused competitors.

Opportunity ThreatBuild its own brandPut efforts on social welfare better imageNew locations and store typesOverseas markets

Other competitorsIntense price competition

WALWal-Mart Stores, Inc. and SWOT Analysis

Bibliography

• www.walmartstores.com

• www.icmrindia.org

• www.supplychains.in

• www.supply-chain.org

• www.ibef.org