Distribution Management at Walmart

8/9/2019 Distribution Management at Walmart

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Table of Contents

Introduction:...............................................................................................................................2

From Suppliers to “Partners”:.......................................................................................................2

EDLP and Supporting Actiities across t!e "alue C!ain..................................................................2

#lobal Leader in Implementing IT$based Distribution %anagement S&stems:........................................2

'alance of Po(er as Displa&ed b& )almart......................................................................................3

T!e Final )ord:..........................................................................................................................3

E*!ibits:.....................................................................................................................................4

Exhibit 1 (Sam Walton’s Vision):...................................................................................................4

Exhibit 2 (Value Chain Analysis):...................................................................................................4

Exhibit 3 (Global Presene):.........................................................................................................4

Exhibit ! (An exam"le o# $hy they are unbeatable % role o# &' an exe"tion re"ortin):.............................4

Exhibit * (Stratei Chanes):.......................................................................................................5

+eferences..................................................................................................................................5


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Introduction:Whene+er the name Walmart omes u" #or isussion, the #irst $or that omes into our min is E-.P/ 0o$e+er,

historially, Walmart has brouht about stratei hanes in the omain o# Sales an -istribution that an be seen

as ritial "ush behin its stu"enous suess o+er the years/ 'his "a"er aims to:

.oo at i##erent istribution relate stratei im"lementations an hanes in the om"any o+er the years

Critially analyse eah o# the abo+e an state ho$ it has a##ete the om"any’s ro$th

'ry to ome u" $ith reommenations #or the roa ahea

From Suppliers to “Partners”:iht #rom the +ery onset, Sam Walton’s 4usiness 5oel $as i##erent (Exhibit 1):

- Gi+en that a lare "ortion o# their total earnins omes #rom the rural marets: they thereby nee a

istribution net$or that is robust enouh to reah the remotest o# loations

- T!e business encouraged partners!ips (it! suppliers as (ell as t!e emplo&ees- 'his le to "lenty o# #irst’s in the &' s"ae $ith rears to o"erations an #urther im"ro+e their

istribution

EDLP and Supporting Actiities across t!e "alue C!ain

E+ery ay lo$ "rie (E-.P) is a "riin stratey use by retail stores that "ro+ies lo$ "ries to the ustomerse+ery sinle ay $ithout any s"eial "riin isount, sale et/ 'he other "riin stratey that is use in the retail

inustry is the 0i.o stratey $hih #ouses on tem"orary "rie reutions to a+ertise their "routs an ra$

ustomers into the stores/ &m"lementin a lo$ ost stratey re6uires use o# e##iient tehnoloies, e##iient use o#

manu#aturin an human resoures, in short an e##iient istribution net$or/ With this Walmart oul im"ro+e

the e##iieny o# internal "roesses, reue o"eratin osts an et reliable sales #oreastin/

"alue c!ain anal&sis of )almart: e#er Exhibit 2 #or etails/ As "art o# its "rimary ati+ities Walmart has

e+elo"e se+eral om"etiti+e a+antaes/ Cross doc,ing, istribution manaement an e##iient trans"ortation

hel" reue time an eliminate ine##iienies/ Cross oin is a tehni6ue by $hih "reassemble orers #or

ini+iual stores #rom a su""lier’s tru o seamlessly #rom an unloain o at Wal5art’s -istribution Centre

iretly into a tru boun #or stores/ 'his rastially reues the storae osts assoiate $ith the o"erations anallo$s #or e+en less room #or "il#erae/ With stratei "artners lie P7G, "routs en u" on the shel+es o#

Walmart stores $ithin ! hours an are sol $ithin 2! hours % in a normal senario, the "routs en u" bein in the

$arehouse itsel# #or more than a #e$ ays/

Infrastructure: 'he ma" in Exhibit 3 sho$s the "resene o# Walmart aross i##erent loations in the $orl/ 'here

are o+er 11,289 Wal5art stores all aross the $orl/ T!e !ead-uarters !as t!e control oer t!e flo( of orders

and local stores are !eld responsible for catering to t!e local re-uirements / 'his stratey o# Gloali;ation<

has hel"e Walmart ex"an in the international marets ahie+in stanari;ation an simultaneously aterin to

the re6uirements o# the loal "o"ulation % respecting and utili.ing t!e E*pert Po(er of Local Support Teams/

/rdering: 'he national hea6uarter a""ly oos #or all Wal5art stores/ 'he bar oes o# eah item is sent to a

entral om"uter at the hea6uarters/ 'his om"uter ollets orers #rom all Wal5art stores an then transmits

them to su""liers/ )al$%art (or,s toget!er (it! suppliers to identif& (a&s to reduce costs and still reali.e a

reasonable profit0 As a result o# this team$or, "aain is reue an istribution systems are streamline to

lo$er the total ost o# the "rout/

#lobal Leader in Implementing IT$based Distribution %anagement S&stems:Wal5art uses =ust in time in+entory manaement tehnoloy/ As a "rout’s bar oe is s$i"e at the heout

aisle, in#ormation is instantaneously sent to Wal5art’s ata $arehouse/ 'he ata $arehouse "ro=ets $hen the

item nees to be re"lenishe an then "laes the orer iretly to the +enor or to a Wal5art -istribution Centre/

'his =ustintime< in+entory manaement reues o+erhea assoiate boxes o# unneee merhanise sittin in

$arehouses an sto rooms/

- #aining a competitie edge: With hunres o# 'erabytes o# Customer -ata to "lay $ith, Walmart $as one o#

the $orl’s #irst om"anies to ha+e a eiate Consumer &nsihts 'eam relyin hea+ily on the use o#

a+ane analytis to not only ee" a he on the "re+ailin buyin "atterns amonst its onsumers, but to

also "reit "ossible #uture senarios usin a+ane moellin tehni6ues/


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- +educing Pilferage: Another im"ortant as"et o# ha+in suh an in#rastruture $as ho$ easy it $as to

maintain reors o# items bein shi""e aross the +alue hain i+en that $ith a""ro"riate tain at all staes,

train anomalies aross the su""ly hain beame all the more easy #or the hiher assoiates/

- Timel& information a ,e& to ma*imi.ing sales and minimi.ing costs: 'he better your in#o about $hat’s

sellin an $hat’s not, the better you an a+oi the t$in "erils o# retailin % o+erstoin an unerstoin/

- E*ception %anagement: Problems at Walmart are terme as exe"tions< an #ollo$ the ae ol >anban

theory albeit in a ne$ a+atar (Exhibit !)/ Gi+en the robust ata $arehousin system in "lae, aily, $eely an

monthly re"orts all ha+e exe"tion re"ortin built in as an internal #eature $herein all the e"artment an

ateory heas et a storebystore +ie$ o# "roblems or exe"tions< in their line/ 'he em"hasis $ith suh

re"orts is to mo+e to the most ranular le+el to ensure that all eisions are mae ?ne Store at a 'ime


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E*!ibits:

Exhibit 1 (Sam Walton’s Vision):

T!ere3s no t(o (a&s about it: I3m c!eap0 )al$%art neer boug!t a 4et until (e !it 567' in sales and

e*panded as far a(a& as California and %aine8 and een t!en t!e& !ad to practicall& tie me up and !old me

do(n to do it0

A lot of (!at goes on t!ese da&s (it! !ig!$fl&ing companies and t!ese oerpaid CE/s8 (!o3re reall& 4ust

looting from t!e top and aren3t (atc!ing out for an&bod& but t!emseles8 reall& upsets me 9)!& s!ould (e sta& so c!eap (!en (e3re a 57;' compan&: 'ecause (e beliee in t!e alue of t!e dollar0

)e e*ist to proide alue to our customers8 (!ic! means t!at8 in addition to -ualit& and serice8 (e !ae to

sae t!em mone&0 Eer& time )al$%art spends one dollar foolis!l&8 it comes rig!t out of our customers3

poc,ets0”

- Same Walton (ouner, Walmart)

Exhibit 2 (Value Chain Analysis):

Figure 1: Value Chain Analysis of Walmart

Exhibit 3 (Global Presene):

Exhibit ! (An exam"le o# $hy they are unbeatable % role o# &' an exe"tion re"ortin):

Source – www.fastcompany.com

Why Walmart seem unbeatable An exam"le o# their a""roah:

- -isa""ointin sales on riay, @o+ 2F, 299! (the ay a#ter 'hansi+in),- 'raitionally the biest sho""in ay o# the year- Wal5art no$s it literally at the en o# the ay beause o# their stateo#theart in#ormation system

What o they o

Figure 2: Walmart's Global Presence


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- Within a ou"le o# hours, 5ihael -ue, the "resient o# Wal5art, ha otten messaes on his

4laberry that sales $ere o## at stores aroun the ountry/

- 0e brainstorme $ith exes an store manaers about $hih "routs to mar o$n/- A team met o+er the $eeen to #inali;e the list an ontat su""liers/- ?n 'uesay, stores nation$ie o##ere the ne$ "ries/- ?n 'hursay, Wal5art broaast a +ieo #or its stores suestin ne$ is"lays/- 'he next ay, the is"lays $ere u", an a ne$ a am"ain $as uner$ay/

- ?n Saturay, the om"any onute a meetin $ith *99 em"loyees asin #or more ieas an ate on21 o# their reommenations/

'he esult:

T!e retailer e*pects December sales to be up t!ree percent0 Alt!oug! it

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Distribution Management at Walmart