ASSIGNMENT # 01

Q: Analyze the strategy of Wal-Mart with respect to the

drivers of supply chain management?
ANS:
Wal-Mart is an American Multinational retail corporation that operates a
chain of hypermarkets, discount departments stores and grocery
stores. The company was founded by SAM Walton in 1962 and
incorporated on 1969. Until now it has 11,535 stores in 28 countries with a
head office in Bentonville, Arkansas. The company operates in US as
Walmart, in Mexico as Walmart de Mxico y Centroamrica, in UK as Asda, In
Japan as Seiyu and in India as Best Price. Moreover it has wholly owned
operations in Argentina, Brazil and Canada.
The Walmart started its business with a simple philosophy of selling
more for less. Gradually this philosophy triggered and Walmart become
a huge success. But this cannot happens in a single day, it takes years by it
to become the industry leader in this regard. The question there is that how
Walmart could achieve this? The answer according to me is establishing an
efficient and responsive SUPPLY CHAIN MANAGEMENT. In order to
do so it focuses on three elements distribution practices, operating its own
fleet and gathering/acquiring new and new technology to be better. Now lets
take a look on each single driver of SCM one after other.
1. Inventory:
The wall marts strategy of doing business is completely based on
EDLP so it has to cover all the segments of consumer market with the
focus on as low as possible that no one can other offer. To do so it
exhibit all the strategies like Cross docking and VMI (Vendor managed
Inventory). C.D is a system in which the inventory is shipped to the
desired store directly from one location to other without storing in
warehouse. While VMI is a collaborative partnership with a
manufacturer to make the stocks available at respective store without
any chance getting out of stock. Cross docking helps in reducing cost
and VMI helps in reducing irregularities in maintaining availability of
stocks at stores. We can say that CD ensures efficiency and VMI
ensures responsiveness.
2. Transportation:
After Inventory the next prime focus of Walmart is on the driver
of Transportation. To achieve a high responsiveness at an efficient cost

Walmart runs its own fleet of transportation. This would raise its capital
investment but improved the level for availability of product. To be
efficient on every regard Walmart maintain a standard for its fleet of
vehicles and crew. According to a study by Truckers Logic, in the past
three years the Walmart transport division drives for more than 250000
miles round the globe with thousands of drivers without a single event
of any mishap. This also proves that Walmart I efficient too in utilizing
its transport division.
3. Facilities:
For this section rather building big and as many as it can
Walmart focuses on Distribution Channels/Centers (DC). It operates
centralized DC within its stores network. It has an integrated team of
professionals that keep its store connected with the suppliers round the
year. Walmart has a network of about 160 covering the area of 120
million square feet. Surprisingly Walmart keep a distance of 130 miles
from DC or supplying store. This strategy enable Walmart to lower its
capital and operational cost and make itself as efficient as it can.
Walmart also open a store only there wher it can have a justifiable
demand of a products supported by the nearby DC.
4.

Sourcing:
In regard to sourcing driver Walmart identify as well as develops
a relationship with the manufacturer of each product it sells on its
desired (i.e. as low as one can afford) price. Walmart managers first
determine what products to be sell and then they determine that from
where and to whom they have to get these products. After this
Walmart also exploit its suppliers by the spoon of bulk production to
achieve economies of large scale to reduce the cost.

5. Information:
In supply the most important one is to forecast the uncertainties
or variations of the upcoming event. For this a strong communication is
required among all the stake holding factors of SCM. So we can say this
is the game changing driver for Walmart according to me. Also this was
the most attention taking driver of SCM in regard to investment point
of view. The different research studies indicates that Walmart is the
leader in utilizing information driver to compete its competitor over
both the challenges of efficiency and responsiveness. It uses different
technological software to get the right information at right time. This
enable its vendors not only to produce the product according to the
demand but also in right quantity to reduce the operational cost. For
this it uses several softwares like SAP, CVNET, and AGILEPOINT etc.

Also to track down it merchandises it now using one of the expensive

software RFID since 2007. Study by UNIVERSITY OF ARKANSAS shows
that by using this Walmart is capable of reducing 16 % of out stocking.
6. Pricing:
By doing all of the above Walmart become more and more
efficient day by day. This leads it to proudly offer its customer EDLP for
its products. This ensures that customers demand for its products
would remain streamlined and future predictions can be made easy
that enable in getting responsiveness with efficiency.
In short we can say that Walmarts supply chain management strategy has
provided the company with several sustainable competitive advantages,
including lower product costs, reduced inventory carrying costs, improved instore variety and selection, and highly competitive pricing for the consumer.
This strategy has helped Walmart become a dominant force in a competitive
global market. As technology evolves, Walmart continues to focus on
innovative processes and systems to improve its supply chain and achieve
greater efficiency.