Management Development Institute, Gurgaon
Supply Chain Management
Case 03:
Walmart Supply Chain
Management Practices
SCM
Case
Presentation
Presentation Date: 10/7/2014
ID
Name
13P166
Shashank Shukla
13P
Abhinay Abhilash
13P190
Akshay Bhandari
13P
Mayank Taparia
13P
Prateek Panwala
13P
Post Graduate Programme in Management
PGPM (2013 15 Batch)
Term IV (June Aug, 2014)
Introduction
Ranked 1st in the global
Fortune 500 list for FY2001-02
Operated more than 3500
discount stores, Sams Clubs
and Supercenters in the US and
1170 stores in other major
countries
One of the largest private
employers in the world
Always Focused on
Improving sales
Constantly reducing prices
Efficient distribution systems
Logistics management systems
Innovative IT tools
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 Vernon L. Beatty, aide-de-camp,
2
Defense supply centre, Columbus, Ohio
Growth Years
Walmart grows through volume and market share
gains rather than margin expansions
1969
18 Walmart
stores
$44 million
sales
1970s
Acquired 16
Mohr-Value
stores
1984
640 Walmart
stores
$4.5 billion
sales
$200 million
profits
1990s
Overseas
expansion
in Mexico,
Canada
and
Germany
3
Strategic Highlights
Located at a convenient place in
a big warehouse
Targeted customers who bought
merchandise in bulk
Focus on customer needs and
reducing costs
Large investment in technology
and automation processes
Tough negotiator on prices
Procurement directly from
manufacturers thereby reducing
channel intermediaries
Maintained low inventory by
reducing unproductive inventory
Networked Suppliers through
computers
4
Procurement and Distribution
Procured goods directly from manufacturers bypassing all
intermediaries
Tough negotiator on prices
finalized a deal only when it knew that no one else was selling the
product cheaper
Put in significant time and effort in understanding the cost
structure of suppliers
Could dictate terms to suppliers due to economies of scale
5
Distribution Network
Had over 40 distribution centers in the US
High inventory turnover rates, about once every two weeks for
most items
Supply from company
owned warehouses
Replenishment days
Shipping costs
WalMart
Competitors
85%
50-65%
3%
5%
Logistics Infrastructure
Distribution
centers
services by
3500
company
owned trucks
Stores
replenished
twice a week
Goods
shipped from
distribution
centers to
stores within
2 days
Fast and
responsive
transport
system
Only
experienced
drivers >3,00,000
accident free
miles with no
major truck
violation
Cross Docking
Finished goods directly picked up from the manufacturing plant, sorted out and
then directly supplied to the customers
Distributor
Flow-Through
Manufacturer delivered the goods
There was a constant inflow and
directly to the retailer. No
outflow of goods from the distribution
intermediaries involved
center. Most suitable for perishable
goods
Opportunistic
Exact info where the required goods
was to be shipped and from where it
has to be procured and the exact
quantity to be shipped was needed
Pre-Allocated
Manufacturing
Goods are already packed and labeled
Cross docking facilities served the
by the manufacturer and it is ready for
factories and acted as temporary
shipment to the distribution center
mini warehouses.
from where it is sent to the store
Inventory Management
Invested heavily in It systems
to track sales and merchandise
inventory in stores
Stores allowed to manage their
own stocks, reducing pack
sizes
and
timely
price
markdowns
Installed
a
centralized
inventory data system using
which real time information
about inventory levels and
location were made available
Multiple delivery plans that
could be chosen by individual
stores
Wal-Mart
Store
Command
Centre
Distribution
9
Centre
Attract
the
price
conscious customers
Accurately forecast the
product
sales
and
smoothes out demand
swings
Way to enter a new
geographical market
It does it at a very low
cost
Everyday
low prices
Expanding
around DCs
Big Box
Electronic
Data
Interchange
with
suppliers
Large amount of inventory
like a warehouse
Located at same place
where
customer
buys
goods
Decrease the transaction cost
with ordering and payment of
goods
High degree of control with
Wal-Mart
in
scheduling
of
product
10
Builds a
distribution
center (DC)
at a central
location in
the new area
Looks for
areas that
can support
a group of
new stores
Looks for
areas that
can support
a group of
new stores
Locati
on
Strate
gy
DC acts as
bridgehead
of the supply
chain in the
new territory
New stores
can be
opened at
very low
marginal cost
11
12
13
14
Thank You
15
