VALUE CHAIN ANALYSIS

OF

PRESENTED
BY:
ARPAN,
BISHNU
MONICA
SUBHASHRE
KALYAN
 "People think we got big by putting big
stores in small towns. Really, we got big by
replacing inventory with information."

Sam Walton, Founder of Wal-Mart

 PORTERS VALUE CHAIN
ANALYSIS
The value chain as the internal processes or activities
a company performs to design, produce, market,
deliver and support its product.
PRIMARY ACTIVITIES
Inbound logistics
Operations
Outbound logistics
Marketing and sales
Service
SUPPORT ACTIVITIES:-
Procurement
Technology development
Human resource management
Firm infrastructure
 VALUE CHAIN ANALYSIS OF
WAL-MART
Firm infrastructure
M
Human recourse management
Support A
activities
Technology development
R

Procurement G

Inbound Outbound Marketing N

Primary
Logistics Operations Logistics and Service
Activities sales
 FIRM INFRASTRUCTURE

2485 Wal-Mart stores

682 Supercentres, 457 Sams Clubs, 5 Wal-
Mart Neighbourhood Markets and 1007 units
of Wal-Mart International.
It serves over 100 million customers weekly
worldwide.
There are 1035000 associates, and the company
is Americas largest private employer.
 HUMAN RESOURCES
MANAGEMENT
Almost 60% of all managers in Wal-Mart stores
started as hourly associates.
The employees are encouraged to communicate
openly, offer new ideas, take risks, strive for
excellence and have fun. Employees are getting
competitive wages and comprehensive benefits.
In recruiting new associates the company begins
a comprehensive recruitment program in the
community where the store is to identify
candidates.
 Recruitment programs are well publicised
and convenient, providing an opportunity
for job applicants and the company to
start getting acquainted
When new employees start at Wal-Mart
they are presented to the two basic rules
of Wal-Mart. These are:
Rule 1: The customer is always right
Rule 2: If the customer happens to be
wrong, refer rule 1.
 TECHNOLOGY DEVELOPMENT

Wal-Mart set up its own satellite communication

system in 1983
Wal-mart uses Bar-coding & RFID technologies,
different processes like efficient picking,
receiving & proper inventory control of the
products along with easy packing and counting of
the inventories was ensured.
Electronic data interchange (EDI)
a computer-to-computer exchange of business
documents
 PROCUREMENT

Wal-Marts process of procurement

involves
reducing its purchasing costs as far as
possible so that it can offer best price to
its customers. The company procures
goods directly from the manufacturers,
bypassing all intermediaries.
 FLOW-TIME ANALYSIS

Point-of-sale Data is Orders are Merchandise is

Customer Merchandise The store will re-
system transmitted to generated from loaded onto
made a is delivered to stock the shelves
captures data warehouses previous-day trucks using
purchase the store with merchandise
in real-time for Inv. Mgmt. sales cross-docking

Retail Link Merchandise is

Merchandise
transmits manufactured
is shipped to
data to based on historical
warehouses
supplier and real-time data
 LOGISTICS
The drivers are tracked regularly through Private
Fleet Driver handbook Mart uses a logistics
technique called Cross Docking
Wal-Mart today about 60% inbound freight (closer
to 80% for - their grocery segment) is managed by
suppliers.
The important of Wal-Mart's logistics
infrastructure was its fast and responsive
transportation system.
The distribution centres were serviced by more
than 3,500 company owned trucks.
WAL*MART'S BUSINESS LOGIC

Everyday low prices

Lower prices More customers

from suppliers

More goods sold

Lower operating
Costs
 OPERATIONS
:Wal-Mart operations are comprised of three
business segments
WAL-MART STORES
Super- centres
Discount Stores
Neighbourhood Markets
SAMS CLUB-SAMS CLUB

WAL-MART INTERNATIONAL
 MARKETING AND SALES

Employees wore blue vests to identify themselves

Aisles were wide
Apparel departments were carpeted in warm
colours
A store employee followed customers to their cars
to pick up their shopping carts
Customer was welcomed at the door by a people
greeter, who gave directions and struck up
conversations
 SERVICE
Opening hours at Wal-Mart generally range from 7.00
a.m. to 11.00 p.m. six days a week, and from 10.00 a.m.
to 8.00 p.m. on Sunday.
All Wal-Mart stores maintain uniform prices, except
where lower prices are necessary to meet local
competition. Sales are primarily on a self-service, cash-
and-carry basis with the objective of maximizing sales
volume and inventory turnover while minimizing
expenses.
 Bank credit card programs, operates without
recourse to the Company, is available in all
stores.
The replenishment system also helps the store
adjust to customers demands. The stores are
organised the same way all over the world, so the
customers will recognise the stores wherever they
go.
WAL*MARTS VALUE CHAIN
Wal-Mart Wal-Mart Wal-Mart
Suppliers
Suppliers
Distribution
Store Shopper
Center

Vendors are Wal-

Mart's suppliers. Once the products After products are Customers can
They deliver are delivered to the delivered to the purchase products
products to Wal- distribution center, stores, they are at very low prices
Mart's distribution they are sorted and placed on the and have the ability
center or directly to placed on trucks to appropriate shelf to return any item.
one of the stores. be delivered to location for
Wal-Mart is able to stores. This allows customers to view.
bargain for the for less than 48 Store locations are
lowest possible hour deliveries to located throughout
price because of stores and the U.S. in rural and
the high volume of increased efficiency urban towns.
sales. Therefore, on trucks with
Wal-Mart passes backhauls.
this savings to its
customers.
Wal-Mart Supply Chain

Source: Adapted from Garrison Wieland for Wal-Marts Supply Chain,

Harvard Business Review 70(2; MarchApril 1992), pp. 6071.
 Walmart Value Chain

The World of Walmart Map Growth of Walmart