Alisa Cosmina Stan_Wal-Mart_Logistics Project_BA 2nd Year_8832 (1)

8/18/2019 Alisa Cosmina Stan_Wal-Mart_Logistics Project_BA 2nd Year_8832 (1)

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STAN ALISA COSMINASEAA – Business Administration – 2nd year of study, 8832 Grou

Supply ChainManagementat Wal-Mart

Lo!isti"s

By: Alisa Cosmina Stan

May 2015



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# Stan A$isa Cosmina, BA, II%nd year, 8832 Grou

ContentsIntro&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&2

Background of Wal-Mart Stores, Inc.:&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&2

Competencies possessed by Wal-Mart Stores, Inc.:&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&3

Supply chain problems faced by Wal-Mart:&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&'

Information systemtechnology !orks in Wal-Mart"s supply chain management&&&&'

Metrics&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&(

Competitors #inancial Information&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&8

Supply Chain $erformance Metrics&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&8

Case study % key competiti&e ad&antage of Wal-Mart supply chain&&&&&&&&&&&&&&&&&&&&&&)

'nalysis&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&*+

S.W.O.T. Analysis&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&*+

Qualitative&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&*2

Quantitative&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&*'

Alternatives&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&*

Recommendation&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&2+

Conclusion&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&22

(eferences&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&22

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Intro

Wal-Mart Store, Inc., as the largest retailer in the world, e!t holding its to! !osition in"iscal #$%# &Walmart, #$%#'. With ())*,+$ million revenues, it raned the third in the

loal /ortune $$ 0ist &122Money, #$%#'. /rom %+*#, when the "irst Wal-Mart storewas o!ened y Sam Walton in Rogers, Ar to #$%#, Wal-Mart runs over %$,$$$ retailoutlets in #3 countries, the com!any has e4!erienced a dramatic growth &Walmart,#$%#'. This growth can, more o"ten than not, e attriuted to its e""icient su!!ly chainmanagement initiatives 50#6&Trau, #$%#'. It was estimated that Wal-Mart7s distriutioncosts constituted aout %.38 o" its cost o" sales, which was "ar less than the "igure "or itscertain com!etitors, say, 9mart &:.8' and Sears &8'&;ohnson, #$$*'. This study willattem!t to demonstrate that in"ormation system<technology does o" im!ortance in thesuccess o" su!!ly chain management at Wal-Mart through analysing Wal-Mart7scom!etencies, !rolems, in"ormation technologies used to "acilitate its su!!ly chainmanagement and certain metrics o" the ha!!y results.

Background of Wal-Mart Stores, Inc.:

Wal-Mart, lie most o" to! retailers, has oth online and o""line usinesses. Accordingto the annual re!ort, its revenues are mainly generated y !hysical stores that can egenerally divided into "ive di""erent ty!es, including discount store, Sam7s clu&memershi!-only stores', su!ercentres &the comination o" discount and grocerystores' and some smaller outlets such as 2eighourhood Maret and Walmart =4!ress.Also, the "act that Wal-Mart owns over %$,$$$ retail outlets determines that thecom!any is characterised y its huge numer o" associates, e4ceeding # million

&Walmart, #$%#> ;ohnson, #$$*'.

The acground o" Wal-Mart egan with the strategy o" o""ering a road assortment o"?uality merchandise and service at the lowest !rices. The stores were su!!lied throughsel"-distriution and tight relationshi!s were develo!ed with su!!liers. Some o" Wal-Mart7s initiatives to drive !rices down include the rollac cam!aign "unded y su!!liers,standardi@ed case si@es.

1urrently Wal-Mart7s strengths are a high volume o" sales s!anning % countries.istriution costs are low at only %.38 o" sales. Wal-Mart also has achaul revenue o"(% illion a year to utili@e em!ty return trucs. Wal-Mart still uses a centrali@edo!erating ase.

1urrently some o" Wal-Mart7s weanesses e4ist in a timely unloading system at the storelevel. Wal-Mart also has e4cess inventory and is ho!ing to reduce (* illion. Threats"rom com!etition come "rom various segments and other retailer using advanced datain"ormation systems. Wal-Mart also has a negative re!utation due to its tight relationshi!with su!!lier and treatment o" em!loyees.

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Moreover, the =0B &=veryday 0ow Brices' !ricing !hiloso!hy is o" crucialim!ortance in the o!eration o" the com!any. Almost every usiness !rocess serves andrein"orces this clear !rinci!le, including su!!ly chain management. To guarantee awide range o" ?uality !roducts and services !rovided at a relatively low !rice than mosto" retailers, Wal-Mart always "ollows =01 &=veryday 0ow 1osts' !hiloso!hy, which

means reducing costs while enhance !roductivity and e""iciency throughout its su!!lychain &Walmart, #$%#'.

Competencies possessed by Wal-Mart Stores, Inc.:

Wal-Mart is, doutless, the largest retailer worldwide due to its huge revenue, which is"ar more than other strong com!etitors. In terms o" gross !ro"it, Wal-Mart is as large asmore than "our times com!ared with Target, its closest com!etitor.&Aaterusso, #$%$'.

/ew can deny the reality that Wal-Mart7s e""icient su!!ly chain does gain com!etitiveedge "or the com!any. 50:6The !ercentage o" inventory directly su!!lied y its ownwarehouse constitutes C8> while "or its com!etitors, this "igure ranges "rom $8 to*8. Also, the re!lenishment !rocess only taes # days on average, com!ares with atleast days "or others. Additionally, oth o" Wal-Mart7s shi!!ing costs and trans!ortcosts stand at a!!ro4imately :8, o" the total costs, while "or its com!etitors, these two !ercentages are aout 8 &1handran, #$$:'.

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Another com!etitive advantage is that there are a great many !ower"ul su!!liers whoare willing to sell their merchandise to Wal-Mart regardless o" the lower !rices !rovided y the com!any. The reason "or this may e the strong !urchasing !ower !ossessed y Wal-Mart. It was estimated that sales to Wal-Mart com!rised %38 o" BD7s revenues and %:8 o" illette7s revenues &;ohnson, #$$*'.

Supply chain problems faced by Wal-Mart:

To ensure Ethe right !roducts reach the shelves at the right time and at a lower cost andthus oost sales and !ro"itsF is always the maGor challenge "or almost all retailers>Wal-Mart is no e4ce!tion &1ottrill, %++3'. According to Hill Simon, Wal-Mart S 1=O,the !rolem o" ee!ing stores shelves stoced has lasted "or two years and it is gettingworse, even can !ose a threat to Wal-Mart. This issue stems "rom a decision made inearly #$%%, which was to declutter stores and reduce the level o" inventories in store.

ue to this change, Wal-Mart chose to discontinue carrying aout C,$$ !roducts.Jowever, the decision seemed to ac"ire. And many o" Wal-Mart7s customers were !ushed to its com!etitors to uy merchandise that is not in-stoc at Wal-Mart. Hesides,when attem!ting to reintroduce those C,$$ !roducts, Wal-Mart has !rolems withinventories currently K i.e., vendors "ail to get new items into outlets ?uicly whilee4isting !roducts are out-o"-stoc, which has led to are shelves at Wal-Mart &Su!!ly1hain igest, #$%:> 0undgren, #$%:'.

To enhance e""iciency throughout su!!ly chain, coo!eration etween Wal-Mart and itssu!!liers is re?uired. Thus, another challenge "or this retail giant arises "or tworeasons50)6. /irstly, Wal-Mart owes %$$.$$$ su!!liers di""ering "rom com!any si@e and

!roduct sales volume, to mae all the vendors !rovide !roducts needed at the lowest !rice, a collaorative is necessary. Hut striing a alance o" !ro"it margin etweendi""erent !arties is very di""icult &Walmart, #$%#> 1hiles D au, #$$'. Secondly, ecause o" the =0B !romise to customers, Wal-Mart is a tough negotiator when !urchasing items "rom manu"actures. And the uyers o" the com!any com!lete !rocure !rocess only when they "eel customers cannot easily "ind lower !rices "or certain items"rom their com!etitors &1handran, #$$:'. According to an article called EShould you Gust say no to Wal-MartLF written y Howman &%++3 cited in Hloom D Berry, #$$%',there are many su!!liers "eeling eing s?uee@ed and !ressured y Wal-Mart y meanso" lowering !rices, shortening delivery time, o""ering s!ecial allowances and carryinge4tra inventories.

Information systemtechnology !orks in Wal-Mart"s supply chain

management

This !art will e introduced "rom three segments within su!!ly chain, including !rocurement and distriution, logistics and inventory management.

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Brocurement and distriutionN

In order to com!ly with =01 !hiloso!hy, Wal-Mart7s decided to go directly tosu!!liers to !rocure items needed, eliminating all the intermediaries> moreover, the uyers generally s!end much time negotiating with manu"actures, learning aout their

cost structure and maing !urchasing "orecasts e"ore !lacing orders &BrocurementInsights, #$%$> 1handran, #$$:'.The retail giant has actually e4!erimented central dataase, store-level !oint-o"-salesystems and satellite networ since mid-%+C$s. When comining with the utilisation o" arcodes, it would e !ossile "or sta"" ac?uiring and analysing real-time in"ormation instores. And the comination o" sales in"ormation and certain e4ternal data, say, weather "orecast, enales Wal-Mart to hel! uyers maing !urchasing "orecasts more accurate&;ohnson, #$$*'.

In terms o" distriution, Wal-Mart7s distriution centres are geogra!hically di""erentand each distriution centre could e divided into di""erent sections according to the

?uantity o" goods and e managed in the same way "or oth cases and !allets. Theinventory turnover is "re?uent, roughly once two wees "or maGority items. And the !ercentage o" goods sitting in distriution centres e"ore eing directly delivered tostores y manu"actures hit C8. Thus, e""icient management o" distriution centres iso" crucial im!ortance in ensuring steady and consistently "low o" merchandise&1handran, #$$:'.

The ado!tion o" in"ormation technologies such as arcodes or currently R/I &Radio/re?uency Identi"ication' might "acilitate this !rocess. Hoth o" these two mae it !ossile "or sta"" to ac?uire real-time in"ormation aout all !roducts stored indistriution centres. Jowever, R/I, as the ne4t generation o" traditional arcodes, can etter satis"y retailers7 needs and demands "or three reasons. /irstly, Eo4es do not haveto e manually staged to otain the line o" sight necessary "or ar coding readingF,which can hel! in saving handling costs &Tirchwell, #$$)'. Then, R/ tags are ale tostore more data than traditional ar codes Ki.e., it can identi"y an individual oGectinstead o" an S9 only &Mitchell D 1ha!!ell, #$$:> Hooth-Thomas, #$$: cited in;ones, et al., #$$'. R/ tags enales sta"" involved to get access to in"ormation such aswhen and where the items was !roduced and its e4!iry date &Brater, #$$'. 0ast ut notleast, R/I technology aids in identi"ying and tracing inventory Eas it "lows "rom"actories to warehouses to storesF &0andy, #$$) cited in ;ones, et al., #$$'.

ue to the road range o" !roducts and services it !rovides it com!etes with a roadsegment o" stores including grocery, clothing, de!artment and wholesale. Wal-Mart7slarge retailer com!etition is retailers such as 1ostco, Target 1or!, Jome e!ot and the9roger 1om!any in the .S. When looing at com!arale same store sales "or retailcom!etitor we see those Wal-Mart stores show a :8 increase and Sam7s 1lu store showa 8 increase in sales. Wal-Mart7s strong com!etition is with 1ostco with a 38 increasein sales, 9roger 1o. with a .+8 increase in sales, Sa"eway Inc. with a .+8 increase insales and Target 1or! a .*8 increase in sales. 0arger retailer com!etition in othercountries includes 1arre"our SA in /rance, Metro A in ermany and Royal Ahold in

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Jolland. Wal-Mart7s is one o" the to! retailers that accounts "or only :$8 o" worldwideretail sales and with illions sold in various categories Wal-Mart could ca!ture more sales !er category.

0ogisticsN

Wal-Mart7s logistics in"rastructure is est characterised with its !ower"ul trans!ortsystem. The numer o" trucs serving "or distriution centres e4ceeds :,$$. Thesetruc "leets are ca!ale o" "inishing goods shi!ment "rom distriution centres to storeswithin two days and re!lenishing inventory every wee &1handran, #$$:'.In order to oost e""iciency o" distriution, Wal-Mart ado!ted cross docing techni?ue.This system can sort and route !roducts "rom manu"acturers to Wal-Mart7s warehouses,and then shi!!ed to stores without sitting "or long !eriods o" time in inventory. And this,can not only contriute to reduction in inventory, handling costs, distriution costs,o!erating costs, ut also can hel! in saving s!ace &Ryder, #$%:'.

2evertheless, the integration o" R=MI technology, the gloal satellite system that has ene"ited Wal-Mart greatly in recent years, seems to change the way used currently todistriute high velocity !roducts &read, lettuce, etc.' that are cross doced in smaller warehouses and have lower level o" automation throughout the su!!ly chain. Instead,this technology enales one distriution centre to serve a cluster o" retail outlets so thatto add "ood distriution centres handling high velocity !roducts &Aaterusso, #$%$'.

Inventory managementN

The e""ective inventory management at Wal-Mart relies heavily on the ado!tion o" in"ormation system<technology.Hy the use o" IT ca!acities !ossessed, Wal-Mart can etter control the level o" inventory K i.e., storing more items that are !o!ular among customers while reducing overallinventory. /urthermore, com!uters can lin Wal-Mart with the vendors. /or instance,Wal-Mart is coo!erating with BD to maintain inventories in retail outlets and uildreordering system lining all com!uters o" BD to the com!any7s stores andwarehouses, the com!uter system would send message to BD when identi"yingcertain !roduct needs to e re!lenish, and then the system will send a re!lenishmentorder to the nearest BD e"ore BD delivers items demanded to distriution centre or to stores &1handran, #$$:'.

Another IT a!!lication installed "or enhancing communication and coo!eration etween !layers within su!!ly chain is Retail 0in. Wal-Mart develo!ed Retail 0in inthe early %++$s "or three !ur!osesN &%' to store data> &#' to share data with vendors> &:'to hel! in shi!ment routing assignment &1hiles D au, #$$'.In %++$, Wal-Mart ado!ted collaorative !lanning, "orecasting and re!lenishment&1BR/' to !lan and "orecast more accurately through su!!ly chain data sharing with itsvendors &;ohnson, #$$*'.Hesides, In"orem and R/I can also "acilitate inventory management. In"orem is asystem contriuting to the automation o" Wal-Mart7s re!lenishment !rocess. This



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system can decide when to order and how many inventories to order, which rendersre!lenishment more accurate &1hiles D au, #$$'. And the installation o" R/technology enales retailers to now the location and ?uantity o" inventory accuratelywithout counting manually, which can e very time-consuming and !rone to errors&unneD0usch, #$$'. Hut a critical !rolem limiting the wides!read e4!erimentation

o" R/I system is costs involved. In #$$$, the cost o" a single tag was roughly (%. In#$$:, the average !rice o" R/ tags varied "rom % to #$ cents. Hut it is !redicted that theuse o" R/I would e wides!read !rovided that only when the cost o" each tag canreach cents or lower &onovan, #$$: cited in Brater, et al., #$$'.

Overall, Wal-Mart seems always ado!ts in"ormation technology "or su!!ly chainmanagement "rom mid-%+C$s to now, and the installation o" these systems<technologies

does hel! in each lin within a su!!ly chain> also, these technologies aiding enhancingcore com!etencies have een e!t changing and innovating.

Metrics

Some claim that success"ul su!!ly chain management &S1M' generally contriutes tolower !roduct costs and highly com!etitive !ricing "or the uyer &niversity o" San

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/rancisco, #$%:'. Thus, the ha!!y end would e measured "rom these two as!ects.Brice o" goods can e used as a reliale indicator o" the im!rovement o" su!!ly chain atWal-Mart. Over recent years, it does not guarantee the lowest !rice in the maret, ut itcan guarantee a relatively low overall !rice K i.e., it is !ossile "or other retailer to !ricecertain !roducts lower than Wal-Mart at certain time, say, !romotional activity &1hiles

D au, #$$'.

Wal-Mart7s /inancials should e monitored. Some o" the com!arisons with !reviousyears should e gross margin, !ercentage o" inventory to net sales, cost o" sales to netsales.

Competitors #inancial Information

This "inancial in"ormation includes the segment or category o" com!etition. It also

includes "inancial in"ormation such as sales, costs o" goods sold, S D A, net income,inventories and assets.

The accuracy o" "orecasting demand should e measured. This should e monitored atthe store level as well as with individual su!!liers. This should e done on a monthly asis to e ale to communicate accurate "orecast. /or the su!!liers this is im!ortantcommunication "or a continued mutually ene"icial relationshi!.

Supply Chain $erformance Metrics

Category )utcomes *iagnostics

1ustomer Satis"action Order "ul"illment1ustomer satis"actionBroduct ?uality

elivery to order dateReturns

Time Order "ul"illment lead time 1ycle timeRes!onse time

1osts Total su!!ly chain costs Palue-added !roductivity

Inventory 0evels ays o" su!!ly /orecast accuracyInventory osolescence

1a!acity utili@ation1ategory

Stoc outs 1ategory

=m!loyee Satis"action =""iciencyBer"ormance=ngagement

1hec drivers, warehouseem!loyees,

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Moreover, in"ormation technologies hel! Wal-Mart to reduce handling costs, laour costs and warehouse and distriution costs. Tae the installation o" R/I technology asan e4am!le. It is estimated that Wal-Mart could save (C.: illion annually y using

R/I - mostly in laour costs "rom not having to manually scan the ar codes o" incoming goods &Hoyle, #$$:, n.!. cited in ;ones, et al., #$$'. Hesides, warehouse anddistriution costs can e reduced y : to !ercent through ado!ting R/ technology&Wrolstad, #$$) cited in ;ones, et al., #$$'.

Case study % key competiti&e ad&antage of Wal-Mart supply chain

How can Wal-Mart’s supply chain remain a key competitive advantage for

Wal-Mart as it sees it’s first profit decline in over a decade?

Because Wal-Mart is able to offer the lowest prices, maintain a centralized

operating base, use self-distribution and maintain tight supplier relationships it

continues to be North America’s number one retailer. Even though distribution

costs are only 1.7% of sales, Wal-Mart recognizes that there is excess inventory.

With the aim to reduce inventory by $6 billion and to meet a target of holding

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inventory growth to half the level of sales growth, Wal-Mart needs to make

changes. Changes need to be made to keep their supply chain more efficient

maintaining a higher net profit and in the end offering the lowest price to its

customers.

•Recommendations for Wal-Mart’s supply chain in the immediate future are tofurther analyze the current inventory level and it’s cost.

• It is also recommended to upgrade the Retail Link Software and analyze the

current forecasting methods and communication to the distribution centers.

• The next steps would be to establish cross-functional teams implementing lean

initiatives with the main objective of minimizing inventory levels. One example

of excess inventory exists at the store level when employees spend time

sorting through truckload to find fast selling items.

• Information for the cross-functional team would include benchmarking other

retail chains inventory restocking systems. The competition is threatening toWal-Mart with competing information systems, through a broad range of

products and services and other low cost large retailers.

• It is recommended that Wal-Mart design new transportation trucks and trailers.

• In the long term it is recommended that to ship directly to the stores to help

eliminate inventory carrying costs.

• Finally it is also recommended that Wal-Mart mandate that all merchandise or

packaging get RFID tags. Radio frequency identification tags can be put on

individual or case package.

The metrics include monitoring the financials to previous years, gross margin,and percentage of inventory to net sales and cost of sales to net sales.

Competitors financial information should also be monitored and know the

percentage increase in sales from the competition is important for Wal-Mart

maintaining it cost leadership position. A complete supply chain performance

metrics will include customer satisfaction, employee satisfaction, time, and costs;

forecast accuracy, inventory levels and stock out.

If Wal-Mart can minimize inventory substantially and operate with a leaner

distribution system it will be more competitive in when establishing stores in other

countries.

'nalysis

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S.W.O.T. Analysis

Strengths

• (:%#.) illion in sales "rom o!erations s!anning % countries

• istriution costs only %.38 o" its cost o" sales

• In #$$* Wal-Mart o!erated a!!ro4imately :,+$$ stores in the nited States and

#,*$$ stores in %: other countries

• Wal-Mart has internal analysts that wor to "orecast demand as well as woring

with su!!liers. =4ternal data goes into the "orecast and these include weather andeconomic "orecasts.

• The su!!lier networ is ale to access real time sales data

• Wal-Mart had achaul revenue o" more than (% illion !er year

• ue to trucing em!loyees that were non-unioni@ed and in-house Wal-Mart was

ale to im!rove delivery !rocedures, mae adGustment to the entire "leet andim!rove on communication.

• Wal-Mart elieved in centrali@ation ecause o" lower costs and im!rovedcommunication etween di""erent divisions and their head o""ice continues to elocated in Hentonville, Aransas.

• Wal-Mart caters to the areas demogra!hics called the Estores o" the community

• =m!loyees are e!t u! to date with detailed in"ormation at daily meetings

• istriution centers had real time in"ormation and manu"actures received

in"ormation as soon as an item was !urchased

• =m!loyees were ale to manually in!ut orders in antici!ation o" changes in

demand. This was di""erent "or retail com!etitors.

Weanesses

• elays in restocing shelves occurred when there was an increase o" grocery store

items and em!loyees s!ent time sorting through trucloads o" arrivingmerchandise to "ind "ast selling merchandise

• Wal-Mart had e4cess inventory and y #$$* was ho!ing to eliminate as much as (*

illion in e4cess inventory.

• Wal-Mart relies on it warehouses and distriution centers to ee! the logistics

distriution system e""icient ut this involves additional warehousing costs thatmay not e most ene"icial to the com!any

O!!ortunities

• Wal-Mart could "urther increase its net sales "rom the com!etition with increasedservices

• Wal-Mart could e4!and and o!en stores to cater to various demogra!hics that there

current !roduct and services haven7t ca!tured.

• With technology always advancing Wal-Mart could im!rove its communication and

data collection "rom su!!liers

• Wal-Mart could continue to locate in various countries

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• Wal-Mart could continue to learn more e""ective distriution systems y

enchmaring the com!etition

• Wal-Mart7s is one o" the to! retailers that accounts "or only :$8 o" worldwide retail

sales and with illions sold in various categories Wal-Mart could ca!ture moresales !er category. A "ull list o" sales in each category that could e ca!tured is

listed in ?uantitative analysis.• In March #$$* Wal-Mart !urchased a maGority share in 1entral American Jolding

1om!any, giving it control over :3 su!ermarets and stores in 1entral America

• In Me4ico and 1anada Wal-Mart is the largest retailer and enGoys strong !ro"its

Threats

• Other retailers were using ar codes, shared sales data with su!!liers, had in house

trucing "leets, and !ossessed com!uteri@ed !oint o" sale systems that collecteditem level data

• ue to the road range o" !roducts and services it !rovides it com!etes with a

road segment o" stores including grocery, clothing, de!artment and wholesale

• Wal-Mart7s large retailer com!etition is retailers such as 1ostco, Target 1or!, Jome

e!ot and the 9roger 1om!any in the .S. 0arger retailer com!etition in othercountries includes 1arre"our SA in /rance, Metro A in ermany and RoyalAhold in Jolland. When looing at com!arale same store sales "or retailcom!etitor we see those Wal-Mart stores show a :8 increase and Sam7s 1lustore show a 8 increase in sales. Wal-Mart7s strong com!etition is with 1ostcowith a 38 increase in sales, 9roger 1o. with a .+8 increase in sales, Sa"ewayInc. with a .+8 increase in sales and Target 1or! a .*8 increase in sales.

• With Wal-Mart eing non-unioni@ed, union started targeting Wal-Mart and ecause

o" its si@e it ecame a target "or the com!etition

•

Wal-Mart has a negative re!utation due to its tight relationshi! with su!!liersdictating what they do, !ayment entirely on Wal-Mart7s terms, which thesu!!lier7s su!!liers are.

• In the .9. Wal-Mart doesn7t hold as strong a !resence as the maret leader

T=S1O.

• Wal-Mart wasn7t as success"ul in South 9orea as it ho!ed to e.

• Wal-Mart e4ited the erman maret with losses o" aout % illion

Qualitative

Hacground

• Wal-Mart7s strategy is to !rovide a road assortment o" ?uality merchandise and

services at Eeveryday low !ricesF. ue to the road range o" !roducts andservices it !rovides it com!etes with a road segment o" stores including grocery,clothing, de!artment and wholesale

• /rom Sam Walton7s e4!erience and reali@ing there was a new trend toward discount

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retailing he o!ened warehouse style stores and "rom necessity su!!lied this storethrough sel"-distriution. Sam Walton and senior management wored directlywith su!!liers to ensure that the correct mi4 o" sta!les and new items wereordered. The su!!liers egan to set u! o""ices in Hentonville, the home o" Wal-Mart head o""ice, with analysts and managers to su!!ort Wal-Mart7s usiness.

•

Wal-Mart introduced their !rivate lael in the %+C$7s generating higher margins that randed !roducts

• Wal-Mart was one o" the "irst to use a hu and s!oe design "or distriution to

saturate the area within a day7s driving distance o" the distriution centers in aleto gain economies o" scale. To ensure that cases moved e""iciently through thedistriution centers, Wal-Mart wored closely with su!!liers to standardi@e casesi@es and laeling. Merchandise !urchased "rom o""shore locations was !rocessedat coastal distriution centers e"ore shi!ment to .S. stores.

• The retail strategy o" Wal-Mart dis!layed !roducts at a steady !rice and not

discounted on a regular asis. Wal-Mart introduced the !rice rollac cam!aignwhich were "unded y su!!liers with the goal o" increasing !roduct sales etween

#$$ and $$ !ercent• Wal-Mart stores o!erated with real-time in"ormation and merchandise could e sent

to stores automatically and manu"actures were noti"ied as soon as an item was !urchased. =m!loyees could manually in!ut orders in antici!ation in changes o"demand.

• In the mid %+C$7s Wal-Mart invested in a central dataase, store-level !oint o" sale

systems, and a satellite networ. It also im!lemented B1 ar codes and usede4ternal in"ormation in its "orecast.

• In the %++$7s Wal-Mart develo!ed Retail 0in, the largest civilian dataase in the

world. Wal-Mart e4!ected their su!!liers to !roactively monitor and re!lenish !roduct on a continual asis. Wal-Mart also ecomes one o" the "irst to use1BR/-collaorative !lanning, "orecasting and re!lenishment. The vendermanaged inventory !rogram re?uired su!!liers to restoc to agree u!on servicelevels.

• Sam Walton and his management team would o"ten enchmar its com!etition.

• Wal-Mart elieved in centrali@ation ecause o" lower costs and im!roved

communication etween di""erent divisions and their head o""ice continues to elocated in Hentonville, Aransas.

• Wal-Mart was ale to thrive in a non-union environment

Remi4

Remi4 aimed to reduce the !ercentage o" out o" stoc merchandise at stores yredesigning its networ o" distriution centers. The aim was that "ast movingmerchandise would go to dedicated Ehigh velocityF "ood distriution centers. Thesecenters were smaller, had tem!erature controls and had less automation.

R/I Tags

*3



23


R/I tags were mandated on merchandise shi!!ed y Wal-Mart7s to! %$$ su!!liers andwere an attem!t to increase the aility to trac inventory. This was a way to increase instoc rates and reduce tracing costs. It also meant that smart a!!lications would e aleto direct our associates to where the !roduct is so that shelves can e re!lenished sooner.This would also hel! Wal-Mart trac !romotion e""ectiveness and reduce out-o"-stoc

sales losses and overstoc e4!enses. R/I rage readers were at the doc wheremerchandise came in, throughout the ac room, at the door "rom the stocroom to thesales "loor and at the o4 crushing station.

Retail 0in ataase

Wal-Mart7s Retail 0in ataase gathers in"ormation at the store level and then the datais transmitted to the su!!lier networ and the distriution centers. ata is transmitted viaa loal Satellite 2etwor. The dataase is located in Hentonville head?uarters. Thesu!!lier networ is ale to access real-time sales data. Wal-Mart7s internal analysts worto "orecast demand, woring with su!!liers. Included in this "orecasting is e4ternal data

such as weather "orecasts and economic "orecasts. Merchandise is then shi!!ed todistriution centers.

Quantitative

• Wal-Mart stores sold (:%#.) illion in sales in #$$* and the ne4t iggest gloal

retailer is (CC.# illion in sales.

• In #$$* Wal-Mart o!erated a!!ro4imately :,+$$ stores in the nited States and

#,*$$ stores in %: other countries

• Wal-Mart stoced more than %$$,$$$ S97s

• Researchers estimated that # !ercent o" out-o"-stoc inventory was eithermis!laced on the "loor or miss-shelved in the ac room and C !ercent o"merchandise was out o" stoc at any given time resulting in lost sales. Wal-Martstores with R/I had %* !ercent "ewer stoc outs. R/I tags cost %3 cents each

• Wal-Mart as the world7s largest retailer has more than *,$$ stores worldwide. The

com!any has %.C million em!loyees worldwide. It is estimated that Wal-Martserves more than %:C million customers !er wee

• Wal-Mart had achaul revenue o" more than (% illion !er year

• (:%#.) illion in sales "rom o!erations s!anning % countries

• istriution costs only %.38 o" its cost o" sales

•

Wal-Mart had 3,$$$ !eo!le woring in the logistics de!artment and %%) .S.distriution centers.

• In the #$$* "iscal year ended ;anuary :%, the com!any !osted a sales increase o"

+. 8 "rom the !revious year while its inventory grew C.#8. The !revious yearsales increased y %%.:8 while inventory grew %%.C8.

• .S. retail sales reached #.C trillion in #$$. 0isted are the various categories and

sales "or that category

*'



23


When looing at com!arale same store sales "or retail com!etitor we see those Wal-Martstores show a :8 increase and Sam7s 1lu store show a 8 increase in sales. Wal-Mart7sstrong com!etition is with 1ostco with a 38 increase in sales, 9roger 1o. with a .+8increase in sales, Sa"eway Inc. with a .+8 increase in sales and Target 1or! a .*8increase in sales.

Competitors #inancial Information in Millions

Company Sales C)+S S+

'

et

Income

of /otal

Companie

s

of

Sales

In&entorie

s

of

Sales

'ssets

'lbertsons

Inc.

)$,:C #+,$:C %$,$C# ))* #.:8 %.%%8 :,$:* 3.#8 %3,C3%

#ederated

*epartment

Stores

##,:+$ %:,#3# *,+C$ %,)$* 3.)%8 *.#C8 ,)+ #).:C8 ::,%*C

+ap Inc. %*,$#: %$,%) ),%#) %,%%: .C*8 *.+8 %,*+* %$.C8 C,C#%

0roger Co. *$,: ),* %%,$#3 +C .$8 %.C8 ),CC* C.$38 #$,)C#Sears 1olding

Corp.

)+,%#) :,$ %$,3+ CC ).#8 %.38 +,$*C %C.)*8 :$,3:

Safe!ay Inc. :C,)%* #3,:$: %%,%%: *% #.+*8 %.)*8 #,3** 3.#$8 %,33

/arget Corp. #,*#$ :),+#3 %%,%C #,)$C %#.*+8 ).C8 ,C:C %%.$+8 :),++

Wal-Mart

Stores

:%#,)#3 #)$,:+% *,3:: %%,#:% +.%38 :.+8 :#,%+% %$.:$8 %:C,%C3

*-



23


/otal %C+C%

The tale aove shows Wal-Mart7s "inancial in"ormation in #$$) com!ared to other retailsegments. These amounts are in millions o" dollars "or e4am!le sales "or Wal-Mart was(:%#,)#3,$$$,$$$. Wal-Mart sales are almost *$8 o" these to! %$ retailers. Whenlooing a !ercentage o" net income com!ared to sales we see that Wal-Mart is in themidrange and this would e due largely to Wal-Mart7s !ricing strategy. Wal-Martre?uires to and does sell more to mae more. When looing at the !ercentage o"inventory com!ared to sales Wal-Mart once again is in the midrange at %$.:8. /romcom!aring these to! ten retailers we see that the lowest inventory level is 3.#8 o" sales.Wal-Mart could ene"it "rom enchmaring inventory levels and restocing systems withSa"eway, 9roger 1o. and Alertsons Inc. Although these are all grocery stores,

im!lementing a leaner and Gust in time inventory system it would e a huge cost savingsto Wal-Mart.

0ey #inancial #igures

2333 2334 2332 2335 2336 2337 2338 (ange

et Sales %*,#)+

%C$,3C3 #$),$%% ##+,*%*

#*,:#+ #C,### :%#,)#3

%*,%3C

Cost of Sales %#%,C#

%)$,3#$ %+,$+3

%3C,#++

%+C,3)3 #%+,3+: #)$,:+%

%%C,**

+ross $rofit

Margin

$.##$:#

$.##%*: $.##$%

$.##:)+

$.##)*) $.##+)$ $.#:$3

$.$%$#

of Cost of

Sales to et

Sales

33.+38 33.C)8 33.+C8 33.*8 33.)8 33.$*8 3*.+)8 -%.$:8 3.+#8

et Income ,:#) *,#: *,+# 3,+ +,$) %$,#*3 %%,#:% ,+$3

of et

Income to et

Sales

:.)%8 :.)8 :.#:8 :.)*8 :.:8 :.*$8 :.+8 $.%+8 :.3C8

In&entories %+,#+* #$,+C3 ##,$: #),)$% #*,*%# #+,3*# :#,%+% %#,C+

of

In&entory to

et Sales

%#.:8 %%.*%8 %$.C%8 %$.*:8 %$.:C8 %$.):8 %$.:$8 C.#*8

This tale shows the ey "inancial "igures "or #$$$ to #$$*. /rom tale we can see thatthe increase in net sales in * years almost douled. The cost o" sales also almost douled

*



23


and net income did doule and was an increase o" (,+$3,$$$,$$$. The !ercentage o"cost o" sales to net sales went down over * years y %8. This is a !ositive trend ut thereis room "or im!rovement in this area. Jigh inventory levels would e one area that this !ercentage could im!rove. Bercentage o" net income to net sales shows a growth o"$.%+8. Although this is an increase it is not y much and once again reducing high

inventories and eliminating waste could hel! im!rove this area. The last com!arison is in8 o" inventory to net sales. We see here that the !ercentage is decreasing. This is a goodindicator that inventory levels !er sales are decreasing. At %$.:8 there are im!rovementsto e made. Hut the ?uestion is what is the target level and at this level what is the ris o" stoc-outs.

Alternatives

1.Divide transportation of goods into fast selling and slow selling and refrigeration.

This would mean three shi!ment ty!es. This would e set u! to reduce delays inrestocing shelves that occurred when there was an increase o" grocery store items.=m!loyees s!end time sorting through trucloads o" arriving merchandise to "ind "astselling merchandise.

Advantages to dividing the trans!ortation are that em!loyees could di""erentiate etweenwhat re?uires a sense o" urgency and what does not. It would also mean that the sortingo" "ast selling, slow selling and re"rigeration could ha!!en at the warehouse level.isadvantages to this are that more trucs may e needed and the !lanning would have to

ha!!en at the distriution level. The "easiility o" this is reasonale considering thevolume o" merchandise those Wal-Mart shi!s. More trucs may e needed and there may e more e""ective ways to get the result o" a more e""ective inventory system.

2.Rework existing distribution centers to handle the shipping of fast selling and slow

selling items more effectively.

elays in restocing shelves occurred when there was an increase o" grocery store itemsand em!loyees s!ent time sorting through trucloads o" arriving merchandise to "ind "astselling merchandise Im!lement R/I tags on all items or on all !acaging. The e""ectiveo" the distriution centers has really not een addressed ut two indicators are the

!rolem aove and the "act that Wal-Mart has high levels o" inventory and would lie toreduce this y (* illion.

Advantages to this are that the distriution centers would e more e""ective and in storeem!loyees would save time when restocing shelves. isadvantages to this are that itwould e time consuming to !lan and may tae some time to im!lement. Although timeconsuming, this would e a "easile o!tion. =""ective distriution centers should estandardi@ed and can hel! with cost savings.

*(



23


:.Continue with Remix program.

Remi4 is aimed to reduce the !ercentage o" out o" stoc merchandise at stores yredesigning its networ o" distriution centers. The aim was that "ast moving

merchandise would go to dedicated Ehigh velocityF "ood distriution centers. Thesecenters were smaller, had tem!erature controls and had less automation. This alternativecould e !ut into !lace i" reworing the e4isting distriution centers was not an o!tionand i" there is ade?uate s!ace at the "ood distriution centers.

Advantages to this are that the "aster moving merchandise would automatically ese!arated "rom the slower moving merchandise. isadvantages to continuing with theremi4 !rogram are that it would re?uire !lanning and may e costly i" the "ooddistriution centers need e4!ansion. The remi4 !rogram is already in !lace so this o!tionis more "easile. This could also e done on a trial asis until Wal-Mart im!lements amore e""ective system and is ale to reduce the level o" inventory.

). Establish a cross functional team to work together to eliminate waste.

One o" the wastes that would e most im!ortant to eliminate is inventory. Wal-Mart7sgoal is to reduce their inventory y (* illion. Other waste that the cross-"unctional teamwould loo at would e over!roduction or trans!ortation and the e""ective handling o"inventory. The !rocessing o" inventory oth at an ordering level and a receiving levelwould need to e analy@ed and recommendations and !olicies im!lemented.

Advantages to this would e that there would e a thorough understanding o" waste at thesu!!lier, distriution center, store, and trans!ortation and data collection level. A cross-"unctional team rings diversity and a shared !ur!ose to !rolem solving. isadvantagesto develo!ing a cross "unctional team to hel! reduce inventory levels is that diversity canlead to con"lict and em!loyees would either need to e hired or taen "rom other !ositions that would then need to e "illed. The "easiility o" this would wor since thereare a lot o" !eo!le trained in si4-sigma methodology. Wal-Mart could hire a 1onestoga1ollege Su!!ly 1hain graduate.

.!pgrade Retail "ink #oftware and analy$e forecasting methods and communication

to distribution centers.

This would e looing at the e""ectiveness o" the current system. Henchmaring otherretail chain inventory stocing systems could do this. It could also e done y looing atvarious metrics such as "orecasting, stoc out levels, inventory costs, and trans!ortationcosts. This would also hel! to im!rove the vendor managed inventory !rogram andim!rove communication o" su!!lier out o" stoc rate. Wal-Mart7s Retail 0in ataasegathers in"ormation at the store level and then the data is transmitted to the su!!liernetwor and the distriution centers.

Advantages to this would that it would hel! to minimi@e inventory and reduce stoc outs

*8



23


at the same time resulting in cost savings. isadvantages to this are that it would e timeconsuming and may need a small investment. It also may need some outside consultation"rom technology e4!erts and commodity traders and "orecasting analysts. The "easiilityo" this is great and it is something that should e done immediately to maintain the ene"its.

*.#hip direct to stores from suppliers.

Advantages to this would e that warehouse and distriution center s!ace would eminimi@ed reducing the level o" inventory re?uired. A disadvantage to this is that itwould tae a lot o" !lanning ut with the high level o" merchandise shi!!ed it could e"easile. Some o" the merchandise that Wal-Mart could do a trial run on would e 9ra"t !roducts, toilet !a!er, seasonal distriution o" Wal-Mart rand clothing, seasonal goodssuch as outdoor "urniture and arecues, 1hristmas merchandise.

%.&andate that all merchandise or packaging get R'(D tags.

R/I !acaging could e on the shi!!ing !acaging and "or the maGority o" !roducts thismay e more "easile. R/I tags were mandated on merchandise shi!!ed y Wal-Mart7sto! %$$ su!!liers and were an attem!t to increase the aility to trac inventory. This wasa way to increase in stoc rates and reduce tracing costs. It also meant that smarta!!lications would e ale to direct our associates to where the !roduct is so that shelvescan e re!lenished sooner. This would also hel! Wal-Mart trac !romotion e""ectivenessand reduce out-o"-stoc sales losses and overstoc e4!enses. R/I rage readers were atthe doc where merchandise came in, throughout the ac room, at the door "rom thestocroom to the sales "loor and at the o4 crushing station.

Advantage to this is that inventory would e traced and em!loyees would now how to etter locate merchandise. A disadvantage to this is the cost at %3 cents each and well itwould mean !lanning and e time consuming "or em!loyees and su!!liers.

C. 'urther analy$e the current inventory level and its cost.

The amounts o" inventory at each distriution center should e analy@ed to see how longit is staying at the distriution center. It should also e noted what ty!es o" merchandiseare causing high inventory costs. It would also tae into account the various carryingcosts o" inventory such as insurance, damage, osolescence, storage costs, handling, ta4esand interest. The analysis would also tae a loo at the reasons "or having inventoriedsuch as minimi@e stoc outs, in transit inventory, s!eculative, u""er stoc and o!eratinginventory. An AH1 inventory analysis would also e com!leted. Inventory at thesu!!lier would also e analy@ed "or !otential cost savings.

An advantage to this would e that it would show ine""iciencies in the vendor managedinventory !rograms. Other than eing time consuming there really isn7t any real

*)



23


disadvantages. This could e done y the cross-"unctional team estalish or y thematerials de!artment with the hel! o" the "orecasting de!artment. Recommendationswould then e made to senior management.

).Design new transportation trucks and trailers.

1urrently Wal-Mart has a "leet o" *,$$ tractor-trailers. Trucs could e designed to emore aerodynamic and e more "uel-e""icient. The trailers could have de!artments "orre"rigeration and could have se!arate doors to hel! with the se!aration o" "ast and slowmoving merchandise. Other materials "or trailers could e utili@ed such as caron "iner !anels.

Advantages to this are increased cuic ca!acity, a lighter trailer, increased "uel mileage,im!roved environmental im!act and "le4iility in shi!!ing. isadvantage would e thecost o" the new trailers and the cost o" dis!osal "or the old trailers. This could e "easile ecause shi!!ing !er"ormance would e im!roved and the trailers could e !hased in

gradually.

1*. +enchmark other retail chain inventory restocking systems.

When looing at the !ercentage o" inventory com!ared to sales Wal-Mart once again is inthe midrange at %$.:8. /rom com!aring these to! ten retailers we see that the lowestinventory level is 3.#8 o" sales. Wal-Mart could ene"it "rom enchmaring inventorylevels and restocing systems with Sa"eway, 9roger 1o. and Alertsons Inc. Althoughthese are all grocery stores, im!lementing a leaner and Gust in time inventory system itwould e a huge cost savings to Wal-Mart. Stores that are not grocery stores that could e enchmared are 1ostco, Jome e!ot, and Target 1or!.

Advantages to this would e ways to incor!orate cost savings could e "ound> new andim!roved su!!ly chain systems would e im!lemented. This could !rove to e timeconsuming though

%%. In Wal-Mart7s case maing little to no changes may e a viale o!tion since Wal-Mart already stands aove the com!etition. Advantages to this are to minimi@eany costly changes. isadvantages are that there may e lost o!!ortunity that acom!any such as Wal-Mart would want to ca!itali@e on. This could e a "easileo!tion.

Recommendation

Immediate

In the immediate "uture it is recommended that Wal-Mart "urther analy@e the current

2+



23


inventory level and its cost. It is also recommended that Wal-Mart u!grades the Retail0in So"tware and analy@e "orecasting methods and communication to distriutioncenters.

This would e looing at the e""ectiveness o" the current system. It could also e done

y looing at various metrics such as "orecasting, stoc out levels, inventory costs, andtrans!ortation costs. This would also hel! to im!rove the vendor managed inventory !rogram and im!rove communication o" su!!lier out o" stoc rate. The amounts o"inventory at each distriution center should e analy@ed to see how long it is staying atthe distriution center. It should also e noted what ty!es o" merchandise are causinghigh inventory costs. It would also tae into account the various carrying costs o"inventory such as insurance, damage, osolescence, storage costs, handling, ta4es andinterest. The analysis would also tae a loo at the reasons "or having inventoried such asminimi@e stoc outs, in transit inventory, s!eculative, u""er stoc and o!eratinginventory. An AH1 inventory analysis would also e com!leted. Inventory at thesu!!lier would also e analy@ed "or !otential cost savings.

Short Term

In the short term it is recommended to estalish cross-"unctional team woring towardslean initiatives and enchmar other retail chains inventory restocing systems.

When looing at the !ercentage o" inventory com!ared to sales Wal-Mart once again is inthe midrange at %$.:8. /rom com!aring these to! ten retailers we see that the lowestinventory level is 3.#8 o" sales. Wal-Mart could ene"it "rom enchmaring inventorylevels and restocing systems with Sa"eway, 9roger 1o. and Alertsons Inc. Althoughthese are all grocery stores, im!lementing a leaner and Gust in time inventory systemwould e a huge cost savings to Wal-Mart. Stores that are not grocery stores that could e enchmared are 1ostco, Jome e!ot, and Target 1or!.

When woring towards lean initiatives the waste that would e most im!ortant toeliminate is inventory. Wal-Mart7s goal is to reduce their inventory y (* illion. Otherwaste that the cross-"unctional team would loo at would e over!roduction ortrans!ortation and the e""ective handling o" inventory. The !rocessing o" inventory othat an ordering level and a receiving level would need to e analy@ed andrecommendations and !olicies im!lemented.

Advantages to this would e that there would e a thorough understanding o" waste at thesu!!lier, distriution center, store, and trans!ortation and data collection level. A cross-"unctional team rings diversity and a shared !ur!ose to !rolem solving. isadvantagesto develo!ing a cross "unctional team to hel! reduce inventory levels is that diversity canlead to con"lict and em!loyees would either need to e hired or taen "rom other !ositions that would then need to e "illed. The "easiility o" this would wor since thereare a lot o" !eo!le trained in si4-sigma methodology. Wal-Mart could hire a 1onestoga1ollege Su!!ly 1hain graduate.

2*



23


Medium Term

esign new trans!ortation trucs and trailers. 1urrently Wal-Mart has a "leet o" *,$$

tractor-trailers. Trucs could e designed to e more aerodynamic and e more "uel-e""icient. The trailers could have de!artments "or re"rigeration and could have se!aratedoors to hel! with the se!aration o" "ast and slow moving merchandise. Other materials"or trailers could e utili@ed such as caron "iner !anels. Advantages to this are increasedcuic ca!acity, a lighter trailer, increased "uel mileage, im!roved environmental im!actand "le4iility in shi!!ing. isadvantage would e the cost o" the new trailers and thecost o" dis!osal "or the old trailers. This could e "easile ecause shi!!ing !er"ormancewould e im!roved and the trailers could e !hased in gradually.

0ong Term

In the long term it is recommended to shi! directly to the stores and mandate that allmerchandise or !acaging get R/I tags.

Advantages to shi!!ing directly to the store would e that warehouse and distriutioncenter s!ace would e minimi@ed reducing the level o" inventory re?uired. Adisadvantage to this is that it would tae a lot o" !lanning ut with the high level o"merchandise shi!!ed it could e "easile. Some o" the merchandise that Wal-Mart coulddo a trial run on would e 9ra"t !roducts, toilet !a!er, seasonal distriution o" Wal-Mart rand clothing, seasonal goods such as outdoor "urniture and arecues, 1hristmasmerchandise.

R/I !acaging could e on the shi!!ing !acaging and "or the maGority o" !roducts thismay e more "easile. R/I tags were mandated on merchandise shi!!ed y Wal-Mart7sto! %$$ su!!liers and were an attem!t to increase the aility to trac inventory. This wasa way to increase in stoc rates and reduce tracing costs. It also meant that smarta!!lications would e ale to direct our associates to where the !roduct is so that shelvescan e re!lenished sooner. This would also hel! Wal-Mart trac !romotion e""ectivenessand reduce out-o"-stoc sales losses and overstoc e4!enses. R/I rage readers were atthe doc where merchandise came in, throughout the ac room, at the door "rom thestocroom to the sales "loor and at the o4 crushing station.

Conclusion

In conclusion, Wal-Mart, the largest retailer over the world, has held its to! !ositionwithin retail sector "or many years. It shows in the case that Wal-Mart7s com!etitiveadvantages can e mostly attriuted to its e""icient su!!ly chain &lower distriutioncosts, less delivery time, etc.'. And IT and communication systems have "ully een usedand e!t innovating "or enhancing the !roductivity while reducing costs o" Wal-Mart7ssu!!ly chain since last century. Moreover, these systems<technologies can, to some

22



23


e4tent, hel! the retail giant solve !rolems "aced through ensuring the accuracy ande""iciency o" the whole su!!ly chain and !romoting communication and collaoration etween Wal-Mart and its !artners within su!!ly chain.

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;ones, M.A. et al., #$$. The ado!tion o" R/I technology in the retail su!!lychain.3he Coastal +usiness ournal4 )&%', !!. #+-)#.

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• Su!!ly 1hain igest, #$%:. #upply Chain ;ews5 ,almart !# Chief #ays #ales

are #uffering +ecause of Challenges in <eeping #tores #helves #tocked. 5Online6Availale atNhtt!N<<www.scdigest.com<ontarget<%:-$:-$)-%.!h!Lcid*3+)Dcty!econtent

• Tirchwell, B., #$$). Retailers raise the ar on logistics !er"ormance. 3he ournal

of Commerce, &:', %)-%+.• Trau, T., #$%#. ,al-&art !sed 3echnology to +ecome #upply Chain "eader .

5Online6Availale atNhtt!N<<www.aransasusiness.com<article<C$C<wal-mart-used-technology-to-ecome-su!!ly-chain-leaderL!ageall

• niversity o" San /rancisco, #$%:. ,almart/s <eys to #uccessful #upply Chain

&anagement . 5Online6Availale atNhtt!N<<www.usan"ranonline.com<wal-mart-success"ul-su!!ly-chain-management<

• Walmart, #$%#. * years of helping customers save money and live better4 2*12

0nnual Report . HentonvilleN Walmart.

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Documents

Alisa Cosmina Stan_Wal-Mart_Logistics Project_BA 2nd Year_8832 (1)