Description
The PPT describes about Drivers and Metrics of Supply Chain at Walmart.
DRIVERS AND METRICS OF SUPPLY CHAIN
@ WAL-MART
AGENDA
• Overview of Wal-Mart
• Competitive strategy of Wal-Mart
? Logistics management ? Cross functional drivers
• Benefits reaped
Wal-Mart’s History
• Started in 1962 by Sam Watson • By 1967 Wal-Mart had 19 stores and sales of $ 9 million • From 1970 to 1985 Wal-Mart’s number of stores increased from 32 to 859
• In 2004 Wal-Mart had 1568 discount centers, 1251 supercenters and 525 Sam’s club
Products/Services
• Wide variety of general merchandise • 36 departments
– – – – – apparel, health & beauty aids, household needs, electronics, jewelry
• Pharmacy Department, Tire & Lube Express, garden center, snack bar or restaurant, Vision Center and One-Hour Photo Processing
Competitive Strategy
• Reliable • Low cost retailer
• Efficiency
• Responsiveness
Logistical drivers
• Facilities • Inventory • Transportation
Facilities
• 40 Regional distribution centers • Each with over 1 million sq feet in size
• Centrally located
• Increasing efficiency
Inventory
• Cross docking • Allowing stores to manage their own stock
• Magic Wand and Point of sales system
Transportation
• Runs its own fleet • Hired only experienced drivers
Cross-Functional drivers
• Information • Sourcing
• Pricing
Information
• Significant investment on technology • Used EDI (Electronic Data Interchange) system efficiently • Implemented RFID (Radio Frequency Identification) by 2005
EDI
• WM pioneered the use of technology in the Retail industry. • It gave over 3200 vendors the POS data for inventory position from approx 2000 stores. • This fine-tuning allowed WM to reduce the SKUs by 25%, while the sales kept on increasing
….EDI
• The integration with the suppliers was not easily copied by the competitors. The competitors lost out in the race • In August 2002, WM made it mandatory for the suppliers to use EDI over Internet using AS2 software from Isoft • The software was very cheap costing just $300 for a supplier to connect with WM
….EDI
• So, there existed a large gap between WM and its competitors. So WM possessed substantial advantage in information on supply and demand • By November 2003, 98% of the job was over
RFID
(Source:http://en.wikipedia.org)
•RFID uses tags that transmits radio signals •The tracking of inventory became more precise and fine tuned
…RFID
• There was a huge reduction of labor involved in the activities such as manual scanning of bar codes etc. • This was implemented by November 2005. • The estimated cost saving on this was to the tune of $8 billion.
Sourcing
• Large orders • Economies of scales
• 30 days credit
• Direct procurement from manufacture
Pricing
• Every day low pricing
“Always Low Price, Always”
Benefits Reaped
• Strengthening relationship • Was very quick to pass on a learning among the other WM stores. • Low transportation cost
• Good bargaining power
Wal Mart
Source: “Competing on capabilities” by Stalk, Evans and Shulman, HBR, 1992
References
• ICFAI ICMR Case collection
– Wal-Mart Supply chain Strategy by P.Mohan Chandran
• www.wikipedia.com • www.wal-mart.com • Strategic Management and competitive advantage by Barney and Hesterly
Thank You
doc_975658138.ppt
The PPT describes about Drivers and Metrics of Supply Chain at Walmart.
DRIVERS AND METRICS OF SUPPLY CHAIN
@ WAL-MART
AGENDA
• Overview of Wal-Mart
• Competitive strategy of Wal-Mart
? Logistics management ? Cross functional drivers
• Benefits reaped
Wal-Mart’s History
• Started in 1962 by Sam Watson • By 1967 Wal-Mart had 19 stores and sales of $ 9 million • From 1970 to 1985 Wal-Mart’s number of stores increased from 32 to 859
• In 2004 Wal-Mart had 1568 discount centers, 1251 supercenters and 525 Sam’s club
Products/Services
• Wide variety of general merchandise • 36 departments
– – – – – apparel, health & beauty aids, household needs, electronics, jewelry
• Pharmacy Department, Tire & Lube Express, garden center, snack bar or restaurant, Vision Center and One-Hour Photo Processing
Competitive Strategy
• Reliable • Low cost retailer
• Efficiency
• Responsiveness
Logistical drivers
• Facilities • Inventory • Transportation
Facilities
• 40 Regional distribution centers • Each with over 1 million sq feet in size
• Centrally located
• Increasing efficiency
Inventory
• Cross docking • Allowing stores to manage their own stock
• Magic Wand and Point of sales system
Transportation
• Runs its own fleet • Hired only experienced drivers
Cross-Functional drivers
• Information • Sourcing
• Pricing
Information
• Significant investment on technology • Used EDI (Electronic Data Interchange) system efficiently • Implemented RFID (Radio Frequency Identification) by 2005
EDI
• WM pioneered the use of technology in the Retail industry. • It gave over 3200 vendors the POS data for inventory position from approx 2000 stores. • This fine-tuning allowed WM to reduce the SKUs by 25%, while the sales kept on increasing
….EDI
• The integration with the suppliers was not easily copied by the competitors. The competitors lost out in the race • In August 2002, WM made it mandatory for the suppliers to use EDI over Internet using AS2 software from Isoft • The software was very cheap costing just $300 for a supplier to connect with WM
….EDI
• So, there existed a large gap between WM and its competitors. So WM possessed substantial advantage in information on supply and demand • By November 2003, 98% of the job was over
RFID
(Source:http://en.wikipedia.org)
•RFID uses tags that transmits radio signals •The tracking of inventory became more precise and fine tuned
…RFID
• There was a huge reduction of labor involved in the activities such as manual scanning of bar codes etc. • This was implemented by November 2005. • The estimated cost saving on this was to the tune of $8 billion.
Sourcing
• Large orders • Economies of scales
• 30 days credit
• Direct procurement from manufacture
Pricing
• Every day low pricing
“Always Low Price, Always”
Benefits Reaped
• Strengthening relationship • Was very quick to pass on a learning among the other WM stores. • Low transportation cost
• Good bargaining power
Wal Mart
Source: “Competing on capabilities” by Stalk, Evans and Shulman, HBR, 1992
References
• ICFAI ICMR Case collection
– Wal-Mart Supply chain Strategy by P.Mohan Chandran
• www.wikipedia.com • www.wal-mart.com • Strategic Management and competitive advantage by Barney and Hesterly
Thank You
doc_975658138.ppt