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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


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supply chain of wal mart
Supply Chain of Wal-mart

Members:

Chan Man Ching

Chan Mong Tik

Chui Wai Ka

Lam Fei Fei

Man Ka Yu

agenda
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

Background

Wal-mart

Supply Chain

Impact of

Wal-mart

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

Manufacturer

Retail Store

Distribution center

Manufacturer

Bar code, RFID

Point of sale terminal

Retail Store

Manufacturer

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
slide10

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
slide16
RFID
  • 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
slide17
RFID
  • 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
slide19
RFID
  • 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