Case Analysis: Supply Chain Management at Wal-Mart

1394 words 6 pages
CASE ANALYSIS: SUPPLY CHAIN MANAGEMENT AT WAL-MART

INTRODUCTION
Wal-mart Stores Inc was the world’s largest retailer and was started by Sam Walton in 1962 who named it as “Wal-Mart Discount City”. However before Wal-mart; Sam Walton owned a number of Ben Franklin Store Chains. Due to this prior experience of owning smaller variety stores and dealing with its franchised supply chain, he learnt various business concepts and also was able to selectively purchase merchandise in bulk from new suppliers and then transport these goods to his stores directly. And then he realized a new trend of discount retailing which was based on driving high volumes of product through low cost retail outlets. He also started a new concept of “Everyday Low
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The companies’ stores were located in low-rent, suburban areas, close to major highways. This was for easy transportation and to also make the distribution of products more efficient and cost effective. The key attributes to Wal-Marts hugely developed logistics department is:

* Cross docking or direct transfers from inbound or outbound trailers without extra storage * Working with suppliers to standardize case sizes and labeling * The 7,800 drivers at Wal-Marts finger tips * Average distribution centre to store was approximately 130 miles * “back-haul” revenue – transportation of unsold merchandise on trucks that would be otherwise empty

Distribution costs (Figures in US$ million) | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | COGS | 1,21,825 | 1,40,720 | 1,59,097 | 1,78,299 | 1,98,747 | 2,19,793 | 2,40,391 | Distribution cost | 2071.03 | 2392.24 | 2704.65 | 3031.08 | 3378.7 | 3736.48 | 4086.65 |

INFORMATION TECHNOLOGY

Information technology played a vital role in the rise of his company. Even when Sam Watson had 20 stores under his name he attended an IBM school in upstate New York with the intent of hiring the smartest person in the class to computerize his operations. The key attributes to Wal-Mart’s information technology is: * Mr. Walton’s use of a personal airplane to visit store locations in the early years * In the mid 1980’s the investment in central

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