SUPPLY CHAIN MANAGEMENT

FABINA MANI A30101912154

ABOUT WALMART
Walmart was founded by Sam Walton in 1962 with the opening of the first Walmart store in Rogers, Ark. The company was incorporated as Wal-Mart Stores, Inc. in 1969. Walmart serves customers more than 200 million times per week at more than 10,900 retail units in 27 countries. For the fiscal year ended January 2013, Walmart increased net sales by 5% to $466.1 billion and returned $13 billion to shareholders through dividends and share repurchases. Walmart ranked second on the 2012 FORTUNE 500 list of the worlds largest companies by revenue. Today in the U.S., Walmart operates more than 4,600 retail facilities. For fiscal year 2013, Walmart U.S. net sales were more than $274 billion.

Supply Chain: The sequence of organizations - their facilities, functions, and activities - that are involved in producing and delivering a product or service. Sometimes referred to as value chains

Wal-Marts Procurement
Wal-Mart emphasized the need to reduce purchasing costs and offer the best price to the customer. The company directly procured from manufacturers, by passing all intermediaries. Wal-Mart finalizes a purchase deal only when it is fully confident that the products being bought is not available else where at a lower price.

Vendor-managed inventory systems

to replenish stocks Wal-Mart transmitted sales data, orders of products, delivery plan and reports of warehouse inventory status to them daily to plan inventory levels, generate purchase orders, and ship exactly what was needed both benefited from reduced inventory costs and increased sales

Using EDI (Electronic data interchange)for Procurement

The computer systems of Wal-Mart were connected to those of its suppliers.
EDI enabled the suppliers to download purchase orders along with store-to-store sales information relating to their products sold. On receiving information about the sales of various products, the suppliers shipped the required goods to Wal-Marts distribution centers.

Electronic Data Interchange

Increased productivity Reduction of paperwork Lead time and inventory reduction Electronic transfer of funds Improved control of operations Reduction in clerical labor Increased accuracy

Walmart Supply Chain Flow Chart

Radio, headphone
Retail Store

Manufacturer

Distribution Center
Bar code, RFID Manufacturer

Retail Store

Satellite System

Retail Store

Company Headquarter

Logistics Management
Walmart is able to move goods to and from distribution centers because they maintain a private fleet of trucks and a skilled staff of truck drivers. Company hired experienced drivers having more than 300,000 accident free miles with no major traffic violation. Every year they drive 700 million miles to make millions of deliveries to our stores and clubs. Each driver averages around 100,000 miles annually thats like driving around the world 4 times! Drivers follow the most efficient routes to their destinations, and work to minimize the number of empty miles they drive.

Hub and Spoke System

In the early 1970s, Wal-Mart became one of the first retailing companies in the world to centralize its distribution system, pioneering the retail huband-spoke system.

Cross-docking by Wal-mart
Requisitions received for different goods from a store are

converted into purchase or procurement orders. Purchase orders are then forwarded to the manufacturers who convey their ability or inability to supply the goods within a particular period of time. If manufacturer agrees, goods are directly forwarded to a place called the staging area. The goods are packed here according to the orders received from different stores and then directly sent to the respective customers. Wal-mart shifted the focus from supply chainto the demand chain, which meant that instead of the retailer pushing products into the system; customers could pull products, when and where they needed.

The Traditional Supply Chain Includes Inefficient and Unnecessary Steps

Wal-Mart Simplified Its Supply Chain

Cross-docking in distribution centers results in product flow from inbound to outbound shipping docks within 48 hours.

Flow-Time Analysis:
Customer made a purchase Point-of-sale system captures data in real-time Data is transmitted to warehouses for Inv. Mgmt. Orders are generated from previous-day sales Merchandise is loaded onto trucks using cross-docking Merchandise is delivered to the store The store will restock the shelves with merchandise

Retail Link transmits data to supplier

Merchandise is manufactured based on historical and real-time data

Merchandise is shipped to warehouses

Retail Link real-time point-of-sales (POS) data transmission Cross Docking Fleet of 7,000 trucks in US

Inventory Management
Wal-Mart invested heavily in IT and communication systems to effectively track sales and merchandise inventories in stores across the country. With the rapid expansion, it was essential to have a good communication system. Hence, Wal-Mart set up its own satellite communication system in 1983. Employees at the stores had the Magic Wand, a handheld computer which was linked to in-store terminals through a radio frequency network. These helped them to keep track of the inventory in stores, deliveries, and backup merchandise in stock at the distribution centers.

 The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system. Through this system, it was possible to monitor and track the sales and merchandise stock levels on the store shelves.

Inventory Management (quick replenishment)

Since the floor area of any Wal-Mart store varied between 40,000 to 200,000 square feet, movement of goods within the store was an important part of logistics operations. Wal-Mart made significant investments in IT to quickly locate and replenish goods at the stores.

Voice-based Order Filling (VOF)

In 1998, Wal-Mart installed a voice-based order filling (VOF) system in all its grocery distribution centers.
Each person responsible for order picking was provided with a microphone/speaker headset, connected to the portable (VOF) system that could be worn on waist belt. They were guided by the voice to item locations in the distribution centers.

Inventory Management (pretty darn quick displays)

The company asked its suppliers to ship goods in storeready displays called pretty darn quick (PDQ) displays.

Goods were packed in PDQ displays that arrived at the stores ready to be boarded on the racks.
Wal-Marts employees could directly replace the empty racks at the stores with fully packed racks, instead of refilling each and every item at the racks.

Distribution center Layout

Walmarts distribution centers are hubs of activity for their business. Their distribution operation is one of the largest in the world.
There are 9 disaster distribution centers, strategically located across the country and stocked to provide rapid response to struggling communities in the event of a natural disaster. Each distribution center is more than 1 million square feet in size, and uses more than 5 miles of conveyor belts to keep products moving to their stores 24 hours a day. Every distribution center supports 90 to 100 stores in a 200-mile radius.

Benefits
Able replenish stores within 48 hrs against 5 days for competitors. Shipping cost of walmart 3% against 5% for competitors Higher profits Shorter lead time

Working of Distribution Center

The distribution centers ensured steady flow & consistent flow of products. Large-scale use of sophisticated technology such as Bar code, hand held computer systems (Magic Wand) and now, RFID. Every employee had information regarding products at distribution center. They make 2 scans- one for identifying the pallet, and other to identify the location from where the stock had to be picked up. The hand held computers guide employee to the location of the specific product. The quantity of the product required from the center is entered in the hand held computer, which updates the information on the main central server. The computers also enabled the packaging department to get accurate information such as storage, packaging & shipping

Bar Code System

Standardized bar code system Applied by every supplier Helps facilitating large scale operation Pallets/Cases passed through conveyor belt are scanned automatically Product codes are transferred to centralized computer system Matching with the computer database and generate useful information What it is. What quantity it is. Which packing compartment and truck to go. Which store to go.

RFID
In efforts to implement new technologies to reduce costs and increase the efficiency, in July 2003, Wal-Mart asked its top 100 suppliers to be RFID compliant by January, 2005. Wal-Mart planned to replace bar-code technology with RFID technology. The company believed that this replacement would reduce its supply chain management costs and enhance efficiency.

Because of the implementation of RFID, employees were no longer required to physically scan the bar codes of goods entering the stores and distribution centers, saving labor cost and time.

RFID helps to locate where the pallet is and the condition of it

temperature Humidity

Automatic sensor avoid scanning codes one by one.