wal mart

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Wal-Mart is the World’s Largest Retail Company:

2 Wal-Mart is the World’s Largest Retail Company

History of Wal-Mart:

3 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. 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 By 1969, Walton had established 18 Wal-Mart stores.

History of Wal-Mart…:

4 History of Wal-Mart … By late 1970s, the retail chain had established a pharmacy and an auto service center. In 1980s, Wal-Mart continued to grow due to huge customer demands in small towns By 1984, there were 640 Wal-Mart stores in U.S. Wal-Mart suffered a setback in 1992, when Walton died. 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.

Wal-Mart’s Procurement:

5 Wal-Mart’s Procurement Wal-Mart emphasized the need to reduce purchasing costs and offer the best price to the customer. The company directly procured from manufacturers, by passing all intermediaries. 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 . Wal-Mart spends a significant amount of time meeting vendors and understanding their cost structure. By making the process transparent, the retailer can be certain that the manufacturers are doing their best to cut down costs

Using EDI for Procurement:

6 Using EDI for Procurement The computer systems of Wal-Mart were connected to those of its suppliers. EDI (Electronic data interchange) enabled the suppliers to download purchase orders along with store-to-store sales information relating to their products sold. On receiving information about the sales of various products, the suppliers shipped the required goods to Wal-Mart’s distribution centers.

Logistics Management:

7 Logistics Management An important feature of Wal-Mart’s logistics infrastructure was its fast and responsive transportation system. The distribution centers were serviced by more than 3500 company owned trucks. Wal-Mart believed that it needed drivers who were committed and dedicated to customer service. The company hired only experienced drivers who had driven more than 300,000 accident-free miles, with no major traffic violation


8 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.

Inventory Management:

9 Inventory Management Wal-Mart invested heavily in IT and communication systems to effectively track sales and merchandise inventories in stores across the country. 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. 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.

Inventory Management…:

10 Inventory Management … 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 Employees at the stores had the “Magic Wand,” a hand-held computer which was linked to in-store terminals through a radio frequency network. These helped them to keep track of the inventory in stores, deliveries, and backup merchandise in stock at the distribution centers.

Voice-based Order Filling (VOF):

11 Voice-based Order Filling (VOF) In 1998, Wal-Mart installed a voice-based order filling (VOF) system in all its grocery distribution centers. Each person responsible for order picking was provided with a microphone/speaker headset, connected to the portable (VOF) system that could be worn on waist belt. They were guided by the voice to item locations in the distribution centers. The VOF system also verified quantities picked, and could respond to a variety of requests such as providing product detail (type, price, barcode number, etc.)

RFID Technology (Radio Frequency Identification):

12 RFID Technology (Radio Frequency Identification) In efforts to implement new technologies to reduce costs and increase the efficiency, in July 2003, Wal-Mart asked its top 100 suppliers to be RFID compliant by January, 2005. Wal-Mart planned to replace bar-code technology with RFID technology. The company believed that this replacement would reduce its supply chain management costs and enhance efficiency. Because of the implementation of RFID, employees were no longer required to physically scan the bar codes of goods entering the stores and distribution centers, saving labor cost and time. Wal-Mart expected that RFID would reduce the instances of stock-outs at the stores.

RFID Technology (Radio Frequency Identification):

13 RFID Technology (Radio Frequency Identification) Although Wal-Mart was optimistic about the benefits of RFID, analysts felt that it would impose a heavy burden on its suppliers. To make themselves RFID compliant, the suppliers needed to incur an estimated $20 Million. Of this, an estimated %50 would be spent on integrating the system and making modifications in the supply chain software.


summary Wal-Mart strongly believed and constantly emphasized on strengthening its relationships with its customers, suppliers and employees & made efforts to capitalize on every cost saving opportunity. The savings on cost were always passed on to the consumers, thereby adding value at every stage and process, Wal-Mart also enjoyed the benefits of low transportation costs since it had its own transportation system which assisted Wal-Mart in delivering the goods to different stores within (or sometimes less than) 48 hours.. Wal-Mart priced its goods economically and the prices varied from day to day. The company enjoyed good bargaining power as it purchase huge quantities.

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