Management Development Institute, Gurgaon

Supply Chain Management

Case 03:
Walmart Supply Chain
Management Practices
SCM
Case
Presentation

Presentation Date: 10/7/2014

ID

Name

13P166

Shashank Shukla

13P

Abhinay Abhilash

13P190

Akshay Bhandari

13P

Mayank Taparia

13P

Prateek Panwala

13P

Post Graduate Programme in Management

PGPM (2013 15 Batch)
Term IV (June Aug, 2014)

Introduction
Ranked 1st in the global

Fortune 500 list for FY2001-02

Operated more than 3500

discount stores, Sams Clubs

and Supercenters in the US and
1170 stores in other major
countries

One of the largest private

employers in the world

Always Focused on
Improving sales
Constantly reducing prices
Efficient distribution systems
Logistics management systems
Innovative IT tools

Supply Chain Management is moving the right items to

the right customer at the right time by the most efficient
means. No one does that better than WalMart.
Captain Vernon L. Beatty, aide-de-camp,
2
Defense supply centre, Columbus, Ohio

Growth Years
Walmart grows through volume and market share
gains rather than margin expansions

1969

18 Walmart
stores
$44 million
sales

1970s

Acquired 16
Mohr-Value
stores

1984

640 Walmart
stores
$4.5 billion
sales
$200 million
profits

1990s

Overseas
expansion
in Mexico,
Canada
and
Germany
3

Strategic Highlights
Located at a convenient place in
a big warehouse

Targeted customers who bought

merchandise in bulk

Focus on customer needs and

reducing costs

Large investment in technology

and automation processes

Tough negotiator on prices

Procurement directly from

manufacturers thereby reducing
channel intermediaries

Maintained low inventory by

reducing unproductive inventory

Networked Suppliers through

computers
4

Procurement and Distribution

Procured goods directly from manufacturers bypassing all

intermediaries
Tough negotiator on prices

finalized a deal only when it knew that no one else was selling the
product cheaper

Put in significant time and effort in understanding the cost

structure of suppliers
Could dictate terms to suppliers due to economies of scale
5

Distribution Network
Had over 40 distribution centers in the US
High inventory turnover rates, about once every two weeks for

most items
Supply from company
owned warehouses
Replenishment days
Shipping costs

WalMart

Competitors

85%

50-65%

3%

5%

Logistics Infrastructure
Distribution
centers
services by
3500
company
owned trucks

Stores
replenished
twice a week

Goods
shipped from
distribution
centers to
stores within
2 days

Fast and
responsive
transport
system

Only
experienced
drivers >3,00,000
accident free
miles with no
major truck
violation

Cross Docking
Finished goods directly picked up from the manufacturing plant, sorted out and
then directly supplied to the customers

Distributor
Flow-Through
Manufacturer delivered the goods
There was a constant inflow and
directly to the retailer. No
outflow of goods from the distribution
intermediaries involved
center. Most suitable for perishable
goods
Opportunistic
Exact info where the required goods
was to be shipped and from where it
has to be procured and the exact
quantity to be shipped was needed
Pre-Allocated
Manufacturing
Goods are already packed and labeled
Cross docking facilities served the
by the manufacturer and it is ready for
factories and acted as temporary
shipment to the distribution center
mini warehouses.
from where it is sent to the store

Inventory Management
Invested heavily in It systems
to track sales and merchandise
inventory in stores
Stores allowed to manage their
own stocks, reducing pack
sizes
and
timely
price
markdowns
Installed
a
centralized
inventory data system using
which real time information
about inventory levels and
location were made available
Multiple delivery plans that
could be chosen by individual
stores

Wal-Mart
Store

Command
Centre

Distribution
9
Centre

 Attract
the
price
conscious customers
Accurately forecast the
product
sales
and
smoothes out demand
swings

Way to enter a new

geographical market
It does it at a very low
cost

Everyday
low prices

Expanding
around DCs

Big Box

Electronic
Data
Interchange
with
suppliers

Large amount of inventory

like a warehouse
Located at same place
where
customer
buys
goods

Decrease the transaction cost

with ordering and payment of
goods
High degree of control with
Wal-Mart
in
scheduling
of
product

10

Builds a
distribution
center (DC)
at a central
location in
the new area
Looks for
areas that
can support
a group of
new stores

Looks for
areas that
can support
a group of
new stores

Locati
on
Strate
gy

DC acts as
bridgehead
of the supply
chain in the
new territory

New stores
can be
opened at
very low
marginal cost
11

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14

Thank You

15