Wal Mart Retail Chain Nishant

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A Business SuccessA Business Success


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WalWal--Mart is the Worlds LargestMart is the Worlds Largest

Retail CompanyRetail Company


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World largest retail companies byWorld largest retail companies by

salessales -- 200920091. Wal-Mart

2. Carrefour (France)

3. Germanys Metro AG

4. United Kingdoms Tesco chain

2009 Forbes Magazine's Global 2000 Retail

8 Wal-Mart, US

83 CVS Caremark, US

127 Home Depot, US

137 Target, US

166 Lowe's, US

186 Walgreen, US


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Ranked first in the Global FortuneRanked first in the Global Fortune

500 list in 2001500 list in 2001--2002 financial year2002 financial year


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History of WalHistory of Wal--MartMart

The companys founder is SamThe companys founder is SamWalton.Walton.

He was born in 1918 at Oklahoma.He was born in 1918 at Oklahoma.

In 1940, he worked for the famousIn 1940, he worked for the famousretailer, J C Penney.retailer, J C Penney.


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Walton gave up the job and decidedWalton gave up the job and decidedto set up his own retail store.to set up his own retail store.

He purchased a store franchise inHe purchased a store franchise inArkansas.Arkansas.

Offering significant discounts onOffering significant discounts onprices, he became successful andprices, he became successful andacquired a second store in 3 years.acquired a second store in 3 years.


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By 1969, Walton had established 18By 1969, Walton had established 18WalWal--Mart stores.Mart stores.

In 1980s, WalIn 1980s, Wal--Mart continued to growMart continued to growdue to huge customer demands indue to huge customer demands in

small towns.small towns.


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WalWal--Mart was offering low prices,Mart was offering low prices,customer satisfaction guaranteed,customer satisfaction guaranteed,

and hours that were realistic for theand hours that were realistic for theway people wanted to shop.way people wanted to shop.

Open all night, for university studentsOpen all night, for university students

By 1984, there were 640 WalBy 1984, there were 640 Wal--MartMartstores in U.S.stores in U.S.


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WalWal--Mart suffered a setback in 1992,Mart suffered a setback in 1992,when Walton died.when Walton died.

But it continued its growth in the 1990s,But it continued its growth in the 1990s,focusing on overseas stores.focusing on overseas stores. 1992, Mexico (joint venture with Cifra)1992, Mexico (joint venture with Cifra)

1994, Canada (acquired 122 Woolco stores1994, Canada (acquired 122 Woolco stores

from Woolworth)from Woolworth) 1997, Germany (acquired 21 store of1997, Germany (acquired 21 store of

Wertkauf)Wertkauf)

Korea, Brazil, and so on.Korea, Brazil, and so on.


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The Growth of WalThe Growth of Wal--MartMart

This phenomenal growth of WalThis phenomenal growth of Wal--Mart is attributed to its continuedMart is attributed to its continued

focus on customer needs andfocus on customer needs andreducing cost through efficientreducing cost through efficientsupply chain managementsupply chain management

practicespractices..


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The Growth of WalThe Growth of Wal--MartMart

VideoVideo


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WalWal--mart Strategymart Strategy

WALWAL--MART STRATEGY & OPERATIONS STRUCTUREMART STRATEGY & OPERATIONS STRUCTUREEnable everyday low prices and above average profitability by procuring,Enable everyday low prices and above average profitability by procuring,distributing, and selling products, when and where needed, at lower costsdistributing, and selling products, when and where needed, at lower costs

than any competitor.than any competitor.

OperationsOperationsStrategyStrategy

Short Response TimesShort Response Times

Low Inventory LevelLow Inventory Level

Operations StructureOperations Structure Fast Transportation SystemFast Transportation System

Cross DockingCross Docking

Retail LinkRetail Link

RFIDRFID


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Hub and Spoke SystemHub and Spoke System

250 m ile

radius

Walm arts Centralized Hub -and-

Spoke System of Warehouses andDistribution Centers


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In the early 1970s, WalIn the early 1970s, Wal--Mart became oneMart became oneof the first retailing companies in theof the first retailing companies in theworld to centralize its distribution system,world to centralize its distribution system,

pioneering the retailpioneering the retail hubhub--andand--spokespokesystem.system.

Under the system, goods were centrallyUnder the system, goods were centrally

ordered, assembled at a massiveordered, assembled at a massivewarehouse, known as distribution centerwarehouse, known as distribution center((hubhub), from where they were dispatched), from where they were dispatchedto the individual stores (to the individual stores (spokespoke).).


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The hub and spoke system enabledThe hub and spoke system enabledWalWal--Mart to achieve significant costMart to achieve significant costadvantages by the centralizedadvantages by the centralizedpurchasing of goods inpurchasing of goods in hugehugequantitiesquantities....

and distributing them through itsand distributing them through its ownown

logistics infrastructurelogistics infrastructure to the retailto the retailstores spread across the U.S.stores spread across the U.S.


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WalWal--Marts ProcurementMarts Procurement

WalWal--Mart emphasized the need toMart emphasized the need toreduce purchasing costs and offerreduce purchasing costs and offerthe best price to the customer.the best price to the customer.

The companyThe company directlydirectly procured fromprocured frommanufacturers, by passing allmanufacturers, by passing allintermediaries.intermediaries.


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WalWal--Mart finalizes a purchase dealMart finalizes a purchase dealonly when it is fully confident thatonly when it is fully confident that

the products being boughtthe products being bought is notis notavailable else where at a loweravailable else where at a lowerpriceprice..


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WalWal--Mart spends a significantMart spends a significantamount of time meeting vendors andamount of time meeting vendors andunderstanding their cost structure.understanding their cost structure.

By making the process transparent,By making the process transparent,the retailer can be certain that thethe retailer can be certain that themanufacturers are doing their best tomanufacturers are doing their best tocut down costs.cut down costs.


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Using EDI for ProcurementUsing EDI for Procurement


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CrossCross--dockingdocking

To make its distribution process moreTo make its distribution process moreefficient, Walefficient, Wal--Mart also made use of aMart also made use of alogistics technique called crosslogistics technique called cross--docking.docking.

In this system, the finished goods wereIn this system, the finished goods weredirectly picked up from the manufacturingdirectly picked up from the manufacturingplant, sorted out and then directlyplant, sorted out and then directlysupplied to the customers.supplied to the customers.


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CrossCross--dockingdocking

The system reduced the handling andThe system reduced the handling andstorage of finished goods, virtuallystorage of finished goods, virtuallyeliminating the role of the distributioneliminating the role of the distributioncenters and stores.centers and stores.

The manufacturer directly forwarded theThe manufacturer directly forwarded thegoods to a place called the staging area.goods to a place called the staging area.

The goods were packed here according toThe goods were packed here according tothe orders received from different storesthe orders received from different storesand then directly sent to the respectiveand then directly sent to the respectivecustomers.customers.


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Inventory ManagementInventory Management


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WalWal--Mart invested heavily in IT andMart invested heavily in IT andcommunication systems to effectivelycommunication systems to effectivelytrack sales and merchandise inventories intrack sales and merchandise inventories in

stores across the country.stores across the country.

With the rapid expansion, it was essentialWith the rapid expansion, it was essentialto have a good communication system.to have a good communication system.

Hence, WalHence, Wal--Mart set up its own satelliteMart set up its own satellitecommunication system in 1983.communication system in 1983.


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WalWal--Mart was able to reduce unproductiveMart was able to reduce unproductiveinventory by allowing stores to manageinventory by allowing stores to managetheir own stocks,their own stocks,reducing pack sizesreducing pack sizesacross many product categories, andacross many product categories, and

timely price markdowns.timely price markdowns.

Instead of cutting the inventory across theInstead of cutting the inventory across theboard, Walboard, Wal--Mart made full use of its ITMart made full use of its IT

capabilities to make more inventoriescapabilities to make more inventoriesavailable in the case of items thatavailable in the case of items thatcustomers wanted mostcustomers wanted most, while reducing, while reducingthe overall inventory levels.the overall inventory levels.


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Employees at the stores had the MagicEmployees at the stores had the MagicWand, aWand, a handhand--held computerheld computer whichwhichwas linked to inwas linked to in--store terminals through astore terminals through a

radio frequency network.radio frequency network.

These helped them to keep track of theThese helped them to keep track of theinventory in stores, deliveries, and backupinventory in stores, deliveries, and backupmerchandise in stock at the distributionmerchandise in stock at the distributioncenters.centers.


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The order management and storeThe order management and storereplenishment of goods were entirelyreplenishment of goods were entirelyexecuted with the help of computersexecuted with the help of computersthrough the Pointthrough the Point--ofof--Sales (POS) system.Sales (POS) system.

Through this system, it was possible toThrough this system, it was possible to

monitor and track the sales andmonitor and track the sales andmerchandise stock levels on the storemerchandise stock levels on the storeshelves.shelves.


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VoiceVoice--based Order Filling (VOF)based Order Filling (VOF)

In 1998, WalIn 1998, Wal--Mart installed a voiceMart installed a voice--basedbasedorder filling (VOF) system in all its groceryorder filling (VOF) system in all its grocerydistribution centers.distribution centers.

Each person responsible for order pickingEach person responsible for order pickingwas provided with a microphone/speakerwas provided with a microphone/speakerheadset, connected to the portable (VOF)headset, connected to the portable (VOF)

system that could be worn on waist belt.system that could be worn on waist belt.

They were guided by the voice to itemThey were guided by the voice to itemlocations in the distribution centers.locations in the distribution centers.


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VoiceVoice--based Order Filling (VOF)based Order Filling (VOF)

The VOF system also verified quantitiesThe VOF system also verified quantitiespicked, and could respond to a variety ofpicked, and could respond to a variety ofrequests such as providing product detailrequests such as providing product detail

(type, price, barcode number, etc.)(type, price, barcode number, etc.)

By installing the VOF system, WalBy installing the VOF system, Wal--MartMarteliminated mispicks and product labelingeliminated mispicks and product labeling

costs since the system did not requirecosts since the system did not requirepaper lists and labels to be affixed on thepaper lists and labels to be affixed on thegoods.goods.


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Inventory Management: RFIDInventory Management: RFID

Radio FrequencyRadio FrequencyIdentificationIdentification

Automated Data collectionAutomated Data collectionbased on an electronicsbased on an electronics

not a barcodenot a barcode Tag can be imbedded inTag can be imbedded in

the product or stuck on thethe product or stuck on theexterior case or palletexterior case or pallet

Reader instead of aReader instead of a

barcode scannerbarcode scanner Allows fully automatedAllows fully automated

data collection with the usedata collection with the useof portalsof portals

Can read many ID tags atCan read many ID tags at

a timea time


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Inventory Management: HowInventory Management: How

does an RFID work?does an RFID work?


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WalWal--mart is the most famous retailermart is the most famous retailerimplementing RFID in its supply chainimplementing RFID in its supply chainmanagement system in January 2005.management system in January 2005.

It required its top 100 suppliers to useIt required its top 100 suppliers to useRFID technology at the pallet and caseRFID technology at the pallet and caselevel by January 2005,200 by Januarylevel by January 2005,200 by January2006,300 by January 2007, and so on2006,300 by January 2007, and so on


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Read PointsRead Points

WALWAL--MART STORE READ POINTSMART STORE READ POINTS


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SuggestionsSuggestions

1.1. Expand your vendor baseExpand your vendor base

2.2. Stop treating your employees like commoditiesStop treating your employees like commodities

3.3. Open up your businessOpen up your business

4.4. Use your extended warranty marketing as a model forUse your extended warranty marketing as a model for

other new servicesother new services

5.5. Lastly, announced youre running a big holiday TVLastly, announced youre running a big holiday TV

campaigncampaign


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It's Rollback Time At WalmartIt's Rollback Time At Walmart

Wal-mart


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Wal Mart Retail Chain Nishant