By: Dheeraj TripathiPGDM 2013-15Roll no: 1301-065Section A

Case Analysis: SCM at WAL-MART

INTRODUCTION

•World’s largest retailer with over USD 312.4 Billion in sales worldwide

•More than 6500 stores in the world with 1.8 million employees known as ‘Associates’.

•1.3 mn employees in US

•Established by Sam Walton in 1962

• Direct purchasing from the suppliers, cutting out Middlemen (Wholesalers and distributors)

• Sourced products globally• Developed private label Merchandise

• Accounted 20% of 2005 sales- $62.5 Billion • Generated higher margins

• Around 90000 suppliers, single invoice price• Did not pay suppliers for co-operative

advertising, discounting or distribution

PURCHASING

• Hub-and-spoke design of high volume distribution centers serving a cluster of stores

• 114 Distribution centers in US• Coastal distribution center for merchandise purchased from

offshore locations• Average distance from distribution center to stores- 130 miles

DISTRIBUTION

• Stores located in low-rent, suburban areas, close to major highways

• 75000-person strong logistics division- with largest private truck fleet -7800 truck drivers

• Private fleet operated as for-hire carrier when not busy transporting merchandise

• Trucking employees – non-unionized and in-house

DISTRIBUTION

• Discount stores- avg 8-27% lower prices than competition

• ‘Everyday low prices’ (EDLP)• Real-time information on each store’s

in-stock levels• Associates were given more authority

– override impending deliveries, alter merchandising template

• Product-mix in the stores tailored to suit the community it was located in.

• ‘Category Captains’ assigned from suppliers to get input on shelf space allocation

RETAIL STRATEGY

• Central database, store-level POS system and Satellite network

• Chain-wide implementation of UPC bar codes• Retail Link (570 TB)- largest civilian database in the

world• Gave suppliers access to real time sales data• Adopted CPRF ( Collaborative Planning, forecasting and

replenishment)• VMI (Vendor Managed Inventory) program : Continuous

Replenishment

INFORMATION SYSTEMS

• Remix aimed to reduce the percentage of out-of-stock merchandise at stores by redesigning its network of distribution centers

• ‘High Velocity’ food distribution centers• Smaller, • had temperature control• less automation

• RFID (Radio Frequency Identification Tags) : to increase the ability to track inventory

• RFID readers installed: At the Dock, Throughout backroom, In the Box Crushing Area

• 16% fewer out-of-stocks at Wal-Mart Stores• Cost of RFID tags: 17 cents

REMIX & RFID

• EDI (Electronic Data Interchange)– Connected to suppliers– Enable them to download purchase order along with store to

store sales information relating to their products sold.

• Magic Wands– Given to employees at store– Linked through in house terminals through radio frequency

network– Helped to keep a track of Inventory in stores and back up

merchandise in stores at distribution centers

NEW STRATEGIES

• Trucking industry not developed, fragmented• Bad infrastructure : Roads• Strategic location of warehouses• Not associated with suppliers as Wal-Mart

INDIAN RETAIL INDUSTRY

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