Management Information System for

Gloria Garza, Tracy Li, Wesley Thomas, Brianna Vela, Destiny Zavala

History and Overview

Created in 1964 by Sam Walton

Public corporation that runs large discount department stores and warehouses

Is the world’s largest and most profitable retailer

Wal-Mart operates so well that many companies like General Electric look up to its business model

Competitors include: Target, K-mart

Biggest competitor is Dollar General

World wide influence

Why Wal-mart?

Their success

The efficiency of its business process

They’re pioneers in computer systems

IT has been a very important factor in Wal-Mart’s growth

One of the best inventory systems

Business ModelKey

activities

Value Propositio

n

KeyResource

s

KeyPartnership

Customer

segment

Revenue streams

Cost structure

Distribution channel

Customer Relationshi

p

The core of the business model is:

Their business model is based on cost leadership.

Value proposition

Key Resources3 categories:

1. Physical resources

2. Human resources

3. Company Culture: Continuous self-improvement, discipline and loyalty

Close buyer-supplier relationship

Wal-mart has a strong negotiation power

Key Partnership

Wal-Mart's Business Process

What is a Business process?Tasks or activities companies use to produce goods

or services.

There are 3 fundamental processes:

1. Procurement

2. Production

3. Fulfillment

Wal-mart has : Procurement and fulfillment process.

Procurement ProcessSteps taken to acquire necessary materials

For Wal-Mart these materials are already finished products that they will retail

6 steps in the procurement process:1. Purchase requisition

2. Purchase order

3. Packing List

4. Goods receipt document

5. Vendor Invoice

6. Vendor Payment

Purchase requisitionWal-mart uses Vendor Managed inventory.

What is it?

A type of business model.

It is the vendor who monitors the inventory and decides when inventory is running low.

Customer trusts the vendor to manage the inventory

Supplier has control over the size and the time of the deliveries

How it works…

Vendor I. Monitors customers’ inventory: Customers call/fax/e-mail Remote telemetry units Set levels to trigger call-in

II. Controls inventory replenishment & decides:

When to deliver How much to deliver How to deliver

Fulfillment processSupplier to Wal-Mart

SALES

1.Receive customer inquiry

2.Create & send quotation

3.Receive customer purchase order

4.Create sales order

Warehouse

5.Prepare shipment

6.Send Shipment

Accounting

7.Create & send invoice

8.Receive Payment

Vendor Inventory ManagementContinuous Replenishment Process

(CRP)

HistoryBetween Wal-Mart and P&G, CRP is best-known as the

vendor-managed inventory program.

In 1987, P&G and Wal-Mart pioneered in Continuous Replenishment Process (CRP).

P&G makes the main inventory replenishment decisions for Wal-Mart.

P&G monitors Wal-Mart’s inventory levels (physically or via electronic messaging) and makes periodic resupply decisions regarding order quantities, shipping, and timing.

Transactions customarily initiated by Wal-Mart (like purchase orders) are initiated by P&G instead.

Consignment“The process of a supplier placing goods at a

customer location without receiving payment until after the goods are used or sold”.

Traditional practice: a customer pays for goods within a set time period after receiving them (often 30 days).

The supplier receives nothing until it is used or sold. This could result in a serious cash flow problem for the supplier if goods continue to be produced but money is not collected.

Advantages of VMICustomer

Less resource for inventory management

Assurance that product will be available when required

Vendor

More freedom in when & how to manufacture product and make deliveries

More uniform utilization of resources

Better coordination of inventory levels at different customer

Better coordination of deliveries to decrease transportation cost

Pitfalls of Vendor Managed Inventory

1. EDI problems: Extensive EDI testing should be done to validate the data being sent. Is the distributor sending all the data that should be sent? Is each field populated with the correct data?

2. Acceptance: It's not enough to just sell the concept to senior management; all employees who are involved must be willing participants and fully understand this new way of doing business.

3. Promotions/Events: Lots communication need to be involved. Anything that adds or takes away from the normal ordering pattern must be properly communicated.

4. Customer Base: communication between large customers and manufacturers. Any large customers, either gained or lost, must be communicated to the manufacturer. The distributor must guide the manufacturer on how this will affect sales.  

5. Over/Obsolete Stock: An agreement must exist between the manufacturer and the distributor on what to do if an overstock does occur (or in the case of an ordering error). Also, both parties must agree on how to handle obsolete stock.

6. Time: Both parties involved must understand that this is a learning process. Errors will occur. You will probably not have a perfect process in place from day 1

Applications of VMIChemical Industry

Air products distribution

Carbon black distribution

Petrochemical industry

Gas stations

Automotive Industry

Parts distribution

Consumer Products

Department and grocery stores

Inputs and Outputs in the Retail Link System

Retail Link systemIntroduced in Wal-Mart in 1991

It is a system that keeps track of and stores all of Walmart's sales data in order to more effeciently run their business

The RLS is connected to each store and warehouse to keep track of inventory.

Input information from barcodes, registers, and warehouse managers

Output response in form of shipping out more inventory or holding inventory in store

RLS continued…

Walmart also allows other companies to register for access to their RLS in order to see how their product is selling in Walmart stores

Input info from barcodes, registers, and warehouse managers to 3rd party

companies

Output response from the companies (if they should keep selling through Walmart, how they should adjust prices, etc.)

Wal-Mart barcode transaction/RDFI transaction

Barcode transaction/RFID transaction What is it?

A systematic way of handling the flow of material in Wal-mart’s inventory.

Uses RFID (radio frequency identification)

What does it do?

The barcode scanning allows Wal-mart employees to know how much inventory is in their store.

Barcodes allow employees to known when materials are needed and how many more of each item they need.

Bar code processWhen you purchase something at Wal-Mart the barcode is checked at the checkout counter:

Network passes the scanned information to the database.

Subtracts purchase from the total inventory in the supply chain.

Automatically directs store replenishment and supplier purchase transaction.

Barcode label printed at the distribution center tells the order clerk to pull that product from the storage bin and replace it on the conveyor.

Barcode reader automatically routes product along the conveyor to a truck that will deliver it to the appropriate.

Questions