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Supply Chain of Wal-mart. Members: Chan Man Ching Chan Mong Tik Chui Wai Ka Lam Fei Fei Man Ka Yu. Agenda. Background Information of Wal-mart Supply chain of Wal-mart Flow chat of the supply chain Technology used in various stage of SC Impact of Wal-mart. Wal-mart

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supply chain of wal mart
Supply Chain of Wal-mart


Chan Man Ching

Chan Mong Tik

Chui Wai Ka

Lam Fei Fei

Man Ka Yu

  • Background Information of Wal-mart
  • Supply chain of Wal-mart
    • Flow chat of the supply chain
    • Technology used in various stage of SC
  • Impact of Wal-mart




Supply Chain

Impact of


background of wal mart well known retailer with heavy investment in it
Background of Wal-mart~Well known retailer with heavy investment in IT
  • Types of industry: one stop shopping center
  • Founder: Sam Walton
  • Year of establishment: 1962
  • First store: in Arkansas

Sam Walton

no of stores 5311 units globally
No. of stores: 5311 units globally

Wal-Mart has expanded its business to 10 countries: U.S., Mexico, Brazil, Argentina,Germany,Puerto Rico,U.K. , South Korea, Canada and China.

rapid growth of wal mart
Rapid growth of Wal-mart

Revenues: $315,654,000, 000 in 2005

Stock value from Aug 1972 to May 2006:

why can wal mart be so successful
Why can Wal-mart be so successful?
  • Supply chain plays an important role
  • Supply chain:

a method of collaborating horizontally – among suppliers, retailers, and customers to create value

wal mart supply chain flow chat
Wal-mart Supply Chain Flow Chat

Radio, headphone

Retail Store


Retail Store

Distribution center


Bar code, RFID

Point of sale terminal

Retail Store


Satellite system

Company Headquarter

distribution center
Distribution Center
  • 108 centers in USA
  • Place that various goods are gathered, sorted and delivered to different store
  • About 80% of merchandises shipped from centers
  • 24 hours operation

Manufacturer 1

Retail store 1

Manufacturer 2

Retail store 2

Manufacturer 3

Manufacturer 3

Retail store 3

trucks outside wal mart
Trucks outside Wal-mart
  • Past----written instructions
  • Now----radio and headphone

English ? Spanish?

English ? Spanish?

trucks outside wal mart12
Trucks outside Wal-mart
  • Use both hands
  • Keep contact with the headquarter
  • Behind or ahead the expectation
  • Adjust to any sudden changes
  • Benefit: Cost
minilift trucks
Minilift Trucks
  • Inside distribution centers
  • equipped with headphone
  • Computer give direction to driver in voice
    • What merchandises to transport
    • Where the merchandises should be carried to
    • Which truck the merchandises be loaded
  • Report progress, ahead or behind schedule

Benefit: productivity and efficiency

bar code system
Bar Code System
  • Standardized bar code system
    • applied by every supplier
    • Helps facilitating large scale operation
  • Pallets passed through conveyor belt are scanned automatically
  • Product codes are transferred to centralized computer system
bar code system15
Bar Code 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
  • Processes take place simultaneously
  • Save time and labour sorting merchandises
  • Smooth logistic processes
  • Radio Frequency Identification System
  • Use radio waves to identify objects
  • Tags with microchip and antenna built in
    • Store data (type, quantity, manufacturer, expired date…)
    • Generate HF signal to transfer data
  • Allow Wal-mart to keep track of pallets at various stage of supply chain
  • Sensors in the distribution center detect and receive information from chips
  • Locate where the pallet is and the condition of it
    • temperature
    • Humidity
  • Automatic senser – avoid scanning codes one by one
  • Further improve logistics efficiency
  • Save time identifying merchandises
  • Convenience in checking inventory
  • Information pre-stored in the chips = convenience of data processing
point of sale terminals
Point-of-sale terminals
  • Invested in 1983
  • Simultaneously rang up sales and tracked inventory deductions for rapid re-supply.
  • Electronic scanning of Uniform Product Codes (UPC)

- to price-mark merchandise

- to ensure accurate pricing

  • Self-labeling system
  • The merchandise replenishment process
large scale satellite system
Large-scale satellite system
  • Installed in 1987
  • to improve communication between stores
  • Link all of the stores to headquarter, giving Wal-Mart’s central computer system real-time inventory data.
  • Allow sales data to be collected and analyzed daily, and enable managers to adjust immediately.
  • Daily information of individual store can be compared.
cpfr program
CPFR Program
  • A Collaborative Planning, Forecasting, and Replenishment program.
  • Just-in-time inventory program began.
  • Advantage:
    • To reduce carrying costs.
    • Less excess inventory.
    • Cost of goods is estimated to be 5 to 10 percent less.
tailored made store management
Tailored-made store management
  • Wal-Mart merchandise is tailored to individual markets and individual stores.
  • Store managers choose which products to display and allocate shelf space.
  • A store devote only 10% of its square footage to inventory.
  • Wal-Mart’s culture stress the key role of associates.
  • Information and ideas are shared at individual stores.
suppliers partners
Suppliers = Partners
  • As Wal-Mart grew, its relationships with some suppliers evolved into partnerships
  • Sharing information electronically to improve performance.
  • How do they share information?
information sharing
Information sharing
  • Open its databases
  • Retail Link private extranet system:

- to see exactly how its products are selling and when it might need to up its production

- to give more than 2000 suppliers computer access to point-of-sale data

  • Advantages:

- Gain more information about the customers.

- Shelves will always be stocked with the right items at the right time.

electronic data interchange edi
Electronic data interchange (EDI)
  • Enabled an estimated 3600 suppliers (about 90% of Wal-Mart’s dollar volume) to receive orders and interact with Wal-Mart electronically.
  • Later expanded to include forecasting, planning, replenishing, and shipping applications.
vendor managed inventory systems
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
business planning packets
Business planning packets
  • Each Wal-Mart department developed computerized, annual strategic business planning packets for its suppliers
  • including:
    • department’s sales, profitability, and inventory targets, macroeconomic and market trends, and Wal-Mart’s overall business focus
  • Wal-Mart’s expectations on them
  • Suppliers’ recommendations
how wal mart affects suppliers
How Wal-mart affects suppliers
  • Domestic Suppliers:
  • Wal-mart imported 18 billion worth of goods from 5,000 Chinese suppliers in 2004
  • Ranked as China’s 8 biggest trading partner ahead of Russia, Australia and Canada
  • Used power to squeeze domestic suppliers’ profit
how wal mart affects suppliers30
How Wal-mart affects suppliers
  • Wal-mart Defense :
  • If all of supplier were squeezed dry

Wal-mart no suppliers

  • Suppliers found ways to survive

 do better at what they did before

how wal mart affects suppliers31
How Wal-mart affects suppliers
  • Wal-mart not only selling foreign imported goods, also encourage the use of domestic American products
  • “ Buy American Program “
  • Retained over 1.7 billion in retail purchases that produced offshore.
how wal mart affects dometic workers
How Wal-mart affects dometic workers
  • Domestic workers :
  • Face keen competition from overseas markets,
  • offshore manufacturing
  • Close down of factories
  • Loss of jobs
  • Competition with Wal-mart
  • Competitors cut labor’s health care benefits and wages
how wal mart affects dometic workers33
How Wal-mart affects dometic workers
  • Wal-mart Defense:
  • Insist not responsible for the off-shoring of manufacturing
  • Example :
  • Sanyo ( TV sets producers ) planned to close the plant and move Mexico and Asia.
  • Wal-mart buys the TV sets from Sanyo if they don’t move
  • Eventually stay in US
how wal mart affects dometic workers34
How Wal-mart affects dometic workers
  • Destructive Creation
  • Shrinking of manufacturing and labor intensive sectors
  • Technical changes substitute unskilled labor
  • Create new jobs and expansion in services and technology sector
  • Estimation : 225,000 job loss by outsourcing in the next 15 years < 1.5% of the job available in 2002
how wal mart affects dometic workers35
How Wal-mart affects dometic workers
  • Unemployment is a structural problem ,rather than a cyclical problem
  • Mismatch of job skills with the market demand
  • Unskilled labors cannot match with increasing skilled labor demand
  • Not loss of job , but cannot find a job matches with their skills
how wal mart affects economy
How Wal-mart affects economy
  • Reallocation of capital and technology to the foreign markets
  • Less to employ domestic workers and invest in local economy
  • Decline in labor productivity and real incomes of the country
how wal mart affects economy37
How Wal-mart affects economy
  • may not necessarily imply a decrease in real income and productivity
  • For example,
  • Globalization and lower technology cost,
  • Lead to higher American productivity growth

 added $230 billion extra GDP between 1995 and 2002

  • Equivalent to extra 0.3% points of growth a year