Walmart - Case report PDF

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HALF A CENTURY OF SUPPLY CHAIN MANAGEMENT AT WAL- MART

HALF A CENTURY OF SUPPLY CHAIN MANAGEMENT AT WAL- MART 1

Executive Summary Walmart is superior in the retailing industry when it comes to sales revenue, its customer base, its ability to drive down costs and deliver good value to its customers. After all, its the world’s largest corporation, employing 1.8 million associates worldwide, having one of the largest transportation fleets with approximately 6,100 tractors, 61,000 trailers and more than 7,800 drivers, and with a little more than 150 distribution centers. And is now one of the largest onsite green power generator in the U.S.Walmart has the ability to continuously improve efficiency in the supply chain with cross docking new technology and while meeting its corporate mandate of offering customers everyday low prices from their grocery and entertainment to sporting goods and crafts, Walmart provides the deep assortment that customers appreciate.

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TABLE OF CONTENTS

1. Executive Summary -------------------------------------------------------Pg. 1 2. Introduction ---------------------------------------------------------------- Pg. 3 3. Changing the face of Retail ----------------------------------------------- Pg.4. 4. Competitors -----------------------------------------------------------------Pg. 5. 5. Action Plan --- --------------------------------------------------------------Pg.6. 6. Justification ------------------------------------------------------------------Pg.7. 7. Supply Chain Management ------------------------------------------------Pg.8. 8. 3 Initiatives at Walmart to improve Supply Chain ----------------------Pg.8. 9. Sourcing Strategies That Worked for Walmart---------------------------Pg.9. 10. Conclusion -------------------------------------------------------------------Pg.10. 11. Refrences --------------------------------------------------------------------Pg.11.

Introduction

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Walmart Stores Inc. is synonymous with low prices and name brand quality products. The company basis of success and foundations cannot be credited to the current CEO Lee Scott but famed Sam Walton. Walmart formula for success simply put is their relationship with customers,employees, and technology that assists in forming relationships with their suppliers;places Walmart Stores Inc. as the top discount retailer. Walmart as we know it today evolved from Sam Walton’s goals for great value and great customer service. “Mr. Sam,” as he was known, believed in leadership through service. This belief that true leadership depends on willing service was the principle on which Walmart was built, and drove the decisions the company has made for the past 50 years. So much of Walmart’s history is tied to the story of Sam Walton himself, and so much of our future will be rooted in Mr. Sam’s principles. Sam Walton was born in 1918 in Kingfisher, Oklahoma. In 1942, at the age of 24, he joined the military. He married Helen Robson in 1943. When his military service ended in 1945, Sam and Helen moved to Iowa and then to Newport, Arkansas. During this time, Sam gained early retail experience, eventually operating his own variety store. In 1950, the Waltons left Newport for Bentonville, where Sam opened Walton’s 5&10 on the downtown square. They chose Bentonville because Helen wanted small-town living, and Sam could take advantage of the different hunting seasons that living at the corner of four states had to offer.Inspired by the early success of his dime store, and driven to bring even greater opportunity and value to his customers, Sam opened the first Walmart in 1962 at the age of 44 in Rogers, Arkansas.

Changing the Face of Retail

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Sam's competitors thought his idea that a successful business could be built around offering lower prices and great service would never work. As it turned out, the company's success exceeded even Sam's expectations. The company went public in 1970, and the proceeds financed a steady expansion of the business. Sam credited the rapid growth of Walmart not just to the low costs that attracted his customers, but also to his associates. He relied on them to give customers the great shopping experience that would keep them coming back. Sam shared his vision for the company with associates in a way that was nearly unheard of in the industry. He made them partners in the success of the company, and firmly believed that this partnership was what made Walmart great.

As the stores grew, so did Sam's aspirations. In addition to bringing new approaches and technologies to retail, he also experimented with new store formats—including Sam's Club and the Walmart Supercenter—and even made the decision to take Walmart into Mexico. Sam's fearlessness in offering lower prices and bringing Walmart's value to customers in the U.S. and beyond set a standard for the company that lives on to this day. His strong

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commitment to service and to the values that help individuals, businesses and the country succeed earned him the Presidential Medal of Freedom, awarded by President George H. W. Bush in 1992. It was during Sam's acceptance remarks that he articulated what would come to be Walmart's official company purpose. Today, "saving people money so they can live better" is the driving force behind everything we do. Competitors Target Corporation:Target: Retail industry, growing profits of 5.1% each year, quality products, 2nd in low-price ., customer loyalty, bright appearance, Canada Expansion Project. Kroger Co. : Food Retail Industry, largest grocery store chain, second largest general retailer, massive combinations of chains,growing profits of 6.6% each year, growth driven by grocery operations. Costco Wholesale Corp. : Costco Wholesale operates membership warehouses. Its products include a large variety of every items and place it as the most important competitor of walmart Amazon.com : Amazon.com serves consumers through its retail websites. It provides merchandise and content purchased for resale from vendors and those provided by third-party sellers.Walmart has to learn from this competitor to improve its e-commerce because amazon is the best on the web.

Dollar Tree, Inc. :Dollar Tree is an operator of discount variety stores providing merchandise at the fixed price of $1.00.It’s one of the most discount retail stores like 99cts stores and can be a competitor to Walmart but the quality of its product provides an advantage to walmart. At January 28, 2012, it operated 4,252 stores in 48 states and the District of Columbia, as well as 99 stores in Canada under the Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant and Dollar Bills names.

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Walgreen Co. :Walgreen, together with its subsidiaries, operates a retail drugstore chain. It sells prescription and non-prescription drugs as well as general merchandise, including household products, convenience and fresh foods, personal care, beauty care, photofinishing and candy. Carrefour S.A. :Carrefour is a distribution group based in France. It’s one of the most important retailer in Europe and conquer all the sector like hypermarkets; supermarkets; hard discount and E-commerce. Walmart if they want to conquer the world will have to face this competitors present all over the world. Walmart also have other competitors like Sears Holding Corp,Fred’s Inc.,Safeway Inc. ,Dollar General ,Big Lots, Inc.,CVS Caremark Corporation ,Tesco plc.

Action Plan Walmart as we said has to improve its E-commerce and has for that to improve its budget on this sector. Hire more in this sector and try to match with the big E-commerce company like Amazon. They have to improve this by also try to satisfy the customers who are more and more connected nowadays by like for example creating new app which on you could buy whatever you need for your house and your family. Walmart also needs to improve the quality of its products and its diversity to satisfy all the type of customers and beat its competitors and be the only one retail especially in the us.If they try to improve and take a real advantage online,they will be the biggest retail store in the US and moreover if they match with all the types of people like the vegan and everyone. Justification Walmart successfully integrated data collection with their suppliers, together built the most efficient supply chain in the retail market . Wal Mart's competitive advantage began to decrease when other competitors for example dollar tree replicated their innovative

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manufacturing process, data collection technology and distribution strategy. Companies would monitor walmarts processes of getting products into stores, everyday low prices and also negotiations with suppliers . Walmart the first corporation to implement cross docking the most efficient and low cost distribution strategy . To maintain the title of market leader Walmart is continually seeking more efficient strategies to decrease manufacturing costs, inventory costs and costs of supplies. In 1969 Sam walton assured Walmarts dominance by investing into a distribution center in Arkansas. The center allowed the company to purchase in buik, the suppliers became inclined to maintain low purchased prices.. The center also allowed for more stores to be opened close from one another, purposely to maintain a day distance drive. By the 1980s competitors realized that Walmart strategically placed stores close to highways to reduce wait times and costs. Other companies had stores separated to far from each other and mainly in prime urban sections of cities. Stores such as Kmart were unable to reach the rapid growth and if they opened may stores their infracture wouldn't support the demand A new approach of logistic operations led for more efficient trucks routes, on average conductors only traveled one hundred and thirty miles. With quicker routes Walmart experienced advantages that would allow for further expansion in inventory levels and control . Walmarts constant efforts to innovate led for new solutions to be created. Supply Chain Management The supply chain management is the collaboration with suppliers and customers, it has a strategic business function and can create value to any company it is also the key to creating competitive advantage for many companies. Many businesses fail because of supply chain problems thus anyone producing or selling a product or service must have an effective and efficient supply chain. One company that has a great supply chain management is Walmart.

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Walmart’s supply chain innovation began with the company removing a few of the chain’s links. In the 1980s, Walmart began working directly with manufacturers to cut costs and more efficiently manage the supply chain they specifically selected the suppliers who could meet their demand, collaboration was the key to their success. Some other strategies and decisions in supply chain management Walmart has are, the close monitoring of its stores, some technology innovations, they’re locating stores close to distribution centers, they are sharing information with suppliers, they have a private trucking operation, and they have a private label, with manufacturing in China.

3 Initiatives at Walmart to improve Supply Chain One way walmart improved supply chain was the way they procured products with global sourcing. Walmart Global Procurement was established in 2002 to facilitate the direct purchasing of merchandise. They are headquartered in Shenzhen, China, and they have over 1700 associates sourcing products from 50 countries. Another improvement was that they optimized product delivery to stores to increase on shelf availability. Walmart aligned the merchandise flow, their delivery schedules, and the store labor schedules together. Then, they reorganized their high velocity distribution centers to deliver category group pallets that allow their associates to easily transfer product from their trailers to the sales floor. Then, they added aisle and modular locations to the general merchandise case labels to make it easy for Walmart store associates to get these types of products onto the shelf. Walmart also found ways to leverage its strength in physical store locations to boost its online business.

Sourcing Strategies That Worked for Walmart Some of the sourcing strategies that worked for Walmart were Cross Docking and technology. Cross docking one of Walmarts best-known innovations, transfers products directly from inbound trucks to outbound trucks.

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Cross docking makes the process of distributing products to stores more cost efficient and gives a business logistical advantages. The diagram above shows two different scenarios, the left shows how complex it is to transport products to stores without a distribution center. Trucks need to make multiple trips in this case three separate stores. Inefficient use of gas and time will increase the cost of storage and shipping . The example on the right gives us the ideal distribution strategy. A more organized approach, each truck is loaded with different products, the product is unloaded where it is organized to be redistributed out quickly to stores. Inside the distribution center there are workers who assemble pallets from one side (inbound) to another (outbound) . The results are little to no storage, and suppliers are able to get product into retail stores quicker. In some cases when products are defective it can be traced and the mechanised can be sent back to the distribution center. Walmart effectively implemented this strategy we can make the assumption based on the shousand of products there superstores carry at everyday low prices. In the mid 1980s Walmart purchased a central database and a store level point of sales system. Walmart would become again the first retailer to UPC bar codes. The white and black lines you can find in most products today. All scans of products were recorded and stored in

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the database. The lump of data could be analyzed to make more accurate forecasting. In 2003 Walmart required its top one hundred supplier to use (RFID) tags on shipments. Radio frequency identification offered the ability to record all sales done within the store. For the first time Walmart a large retailer could record and analyze its company operations. The data would allow walmart to analyze stock availability. Trucks could be tracked, the location and how much stock is in each container. The priority was to minimize out of stock losses and surplus expenses. Walmart gave access to its suppliers with the contingency of getting more frequent shipments. When the market experiences sudden spikes of demand for certain products Walmart would be more likely to maintain in stock compared to competitors who didn't have agreements with suppliers. Conclusion In conclusion, Walmart dominates the retailing industry it operates more than 11,000 stores in 27 countries around the world, and manages an average of $32 billion in inventory. Walmart stores are located in low-rent, suburban areas close to major transportation systems. This enabled Walmart to be close to its distribution centers, reducing transportation costs, and time.Through the use of cross-docking, one of its best-known innovations. Walmart continues to push the supply chain toward greater efficiency by taking on new technologies.Walmart also developed the strategy of achieving high levels of growth and profitability through its rigorous control of manufacturing, inventory, and distribution. Some recommendations for Walmart should be reducing the excess inventory, and utilizing a lean system as much as possible. With their online competitor Amazon.com wanting to take over the retail industry Walmart should also step up their online presence.

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