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    Wal-Mart: A Symbol of Success N' Innovation

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    Kaushal Agarwal
    Wal-Mart pioneered the retail hub-and-spoke distribution system in the 1970s, centralizing ordering and distribution through warehouses. It introduced point-of-sale systems in the 1980s for inventory management. In the 1990s, Wal-Mart invested $600 million in centralized telecommunications linking stores to suppliers for direct reordering.

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    Wal-Mart: A Symbol of Success N' Innovation

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    Kaushal Agarwal
    99 views43 pages
    Wal-Mart pioneered the retail hub-and-spoke distribution system in the 1970s, centralizing ordering and distribution through warehouses. It introduced point-of-sale systems in the 1980s for inventory management. In the 1990s, Wal-Mart invested $600 million in centralized telecommunications linking stores to suppliers for direct reordering.

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    Wal-Mart pioneered the retail hub-and-spoke distribution system in the 1970s, centralizing ordering and distribution through warehouses. It introduced point-of-sale systems in the 1980s for inventory management. In the 1990s, Wal-Mart invested $600 million in centralized telecommunications linking stores to suppliers for direct reordering.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    99 views43 pages

    Wal-Mart: A Symbol of Success N' Innovation

    Uploaded by

    Kaushal Agarwal
    Wal-Mart pioneered the retail hub-and-spoke distribution system in the 1970s, centralizing ordering and distribution through warehouses. It introduced point-of-sale systems in the 1980s for inventory management. In the 1990s, Wal-Mart invested $600 million in centralized telecommunications linking stores to suppliers for direct reordering.

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    Download as pptx, pdf, or txt
    of 43

    Wal-Mart

    A Symbol of Success
    ‘n’
    Innovation
    Group Members

    • Tauseef Ahmed Roll No. 16


    • Rajesh Roll No. 30
    • Chandan Kumar Roll No. 46
    • Ajay Singh Roll No. 47
    • Satyesh Kumar Singh Roll No. 48
    Introduction
     Founder: Sam Walton (Applied 10ft rule)
     Year Founded: 1962
     Primary Products: Softgoods, Hardgoods,
    Electronics, Groceries.
     Revenue: $404.16 Billion (2009)
     No. of Employees: 2.1 million (2009) approx
     Major Competitors: Costco Wholesale, Kmart,
    Target
     Headquarters: Bentonville, Arkansas
     India Operation: Begun from May, 2009
    Retailing Formats

    Mom-and-Pop Stores
    Mass Discounters
    Warehouse Stores
    Category Killers
    Departmental Stores
    Boutiques
     Catalog Retailers
     Franchise
     Convenience Store
     Vending
    Wal-Mart Figures
     Market Capitalization: US $ 228 billion*
     Revenue: US $ 387 billion*
     Operating Income: US $ 22 billion*
     Net Income: US $ 12.7 billion*
     Total Assets: US $ 163.54 billion*
     Total Equity: US $ 64.6 billion*
     Employees: More than 2,100,000+
    Information Technology @ Wal-Mart
    Technology Innovations
    Introduced POS system in 80s:

    A computerized system for item identification, price


    determination, sales receipt and sales data
    maintenance.

    Benefits:
     Handles data efficiently
     Avoids overstocking
     Better inventory management
    Technology Innovations (contd.)
    Centralized Communications in 90s:

     $600 million telecommunications link


     First stage - Stores to Central computer system
     Second stage - Central computer system to supplier’s

    Benefits:
     Direct reordering and coordination
     Lesser money in inventory
     Lower manufacturing costs
    Technology Innovations (contd.)
    Bar Code History & RFID

    Bar Code came into being in 70s


    Development of Universal Product Code (UPC)
    RFID – radio frequency identification devices
    Incoming shipments with RFID tags

    Benefits:
    One stop information
    Control on physical movement
    Lesser time to find
    Technology Innovations (contd.)
    UCCnet
     Non profit subsidiary of Uniform Code Council (UCC)
     Provides data registry service for SCM
     Collaboration between suppliers and marketers
     Came into being to counter lack of data synchronization
     Suppliers need to be UCCnet compliant

    Benefits:
     Product details made available electronically
     Reduces product data-entry time
    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 hub-and-spoke
    system.

    Under the system, goods were centrally


    ordered, assembled at a massive
    warehouse, known as ‘distribution center’
    (hub), from where they were dispatched
    to the individual stores (spoke).
    12
    The hub and spoke system enabled Wal-Mart to achieve
    significant cost advantages by the centralized purchasing of
    goods in huge quantities and distributing them through its
    own logistics infrastructure to the retail stores spread
    across the US

    Retail
    stores

    Retail Distribu Retail


    tion
    stores center stores

    Retail
    stores
    POINT OF
    SALE
    Introduced POS system in 80’s

    A Computerized system for item identification, price


    determination, sales receipt and sales data
    maintenance.

    Benefits:-
    -Handles data efficiently
    -Avoids overstocking
    -Better inventory management
    OICE-BASED ORDER FILLIN
    (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.
    The VOF system also verified
    quantities picked, and could respond
    to a variety of requests such as
    providing product detail (type, price,
    barcode number, etc.)

    By installing the VOF system, Wal-Mart


    eliminated mis picks and product
    labeling costs since the system did not
    require paper lists and labels to be
    affixed on the goods.

    19
    VOF Model
    Flow-Time Analysis: Wal-Mart
     Wal-Mart’s merchandise replenishment cycle is no more than
    48 hrs.
    Point-of-sale Data is Orders are Merchandise is
    Customer Merchandise The store will re-
    system transmitted to generated from loaded onto
    made a is delivered to stock the shelves
    captures data warehouses previous-day trucks using
    purchase the store with merchandise
    in real-time for Inv. Mgmt. sales cross-docking

    Retail Link Merchandise is


    Merchandise
    transmits manufactured
    is shipped to
    data to based on historical
    warehouses
    supplier and real-time data

     Retail Link – real-time point-of-sales (POS) data transmission

     Cross Docking

     Fleet of 7,000 trucks in US


    Flow-Time Analysis: Wal-Mart
    W a lm a rt’s C e n tra lize d H u b -a n d -
    S p o k e S y s te m o f W a re h o u s e s a n d
    D is trib u tio n C e n te rs

    2 5 0 m ile
    ra d iu s
    Flow-Time Analysis: Advantages of
    Cross Docking
     Reduces operating costs.

     Increases throughput.

     Reduces inventory levels.

     Helps in increase of sales space.

     Eliminates unnecessary handling and storage of product.

     Reduces product damages and product obsolescence.


    Supplier Management: Retail Link
     Retail Link is a decision support system

     It is a bridge between Wal-Mart and its suppliers

     It is an address you can visit via Internet to retrieve


    the sales data, inventory data, information on its
    development
    Inventory Management
    Point-of-sale Data is Orders are Merchandise is
    Customer Merchandise The store will re-
    system transmitted to generated from loaded onto
    made a is delivered to stock the shelves
    captures data warehouses previous-day trucks using
    purchase the store with merchandise
    in real-time for Inv. Mgmt. sales cross-docking

    Retail Link Merchandise is


    Merchandise
    transmits manufactured
    is shipped to
    data to based on historical
    warehouses
    supplier and real-time data

    • Inventory Management:
     Reducing critical activity times
     Eliminating non-value-adding activities
     Moving work from critical to non critical activities
     Redesigning the process to replace sequential with parallel processing
    RFID
    Radio Frequency Identification
     Automated Data collection
    based on an electronics –
    not a barcode
     Tag can be imbedded in the
    product or stuck on the
    exterior case or pallet
     Reader instead of a barcode
    scanner
     Allows fully automated data
    collection with the use of
    portals
     Can read many ID tags at a
    time
    How does an RFID work?
    Inventory Management: RFID
     Wal-Mart is the most famous retailer implementing
    RFID in its supply chain management system in
    2005.

     It required its top 100 suppliers to use RFID


    technology at the pallet and case level by January
    2005, 200 by January 2006, 300 by January 2007,
    and so on…
    RFID Read Points

    WAL-MART STORE READ POINTS


    Application of RFID
    In
    Wal-Mart
    Why RFID?
    • Reduce the possibility of inventory shrinkage and out-of-stock situation.

    • Improve fulfillment rates.

    • Improve the customer service.

    • Reduce inventory and labor cost.

    • Eliminate many manual process and improve the operation efficiency.

    • Give suppliers visibility into shipments.


    RFID Study?
    Reducing out of stock?

    • 8% of all items are out of stock (at any point of


    time)
    • Estimated potential lost sales:
    » Retailers: 3.4%
    » Suppliers: 2.6%
    • 26% improvement from no RFID to full RFID
    CENTRALIZED
    COMMUNICATION
    Centralized Communications in 90s

    $600 million telecommunications link

    First stage - Stores to Central computer system

    Second stage - Central computer system to supplier’s

    Benefits:
    Direct reordering and coordination
    Lesser money in inventory
    Lower manufacturing costs
    RETAIL LINK SYSTEM
    In 1991, Wal-Mart had invested approximately $4
    billion to build a retail link system.

    More than 10,000 Wal-Mart retail suppliers used the


    retail link system to monitor the sales of their goods
    at stores and replenish inventories.

    Details of daily transactions (~10 million per day)


    were processed through this system.

    Retail Link connected Wal-Mart’s EDI network with an


    extranet, accessible to Wal-Mart’s thousands of
    suppliers.

    36
    The suppliers could find out how their product was
    performing vis-a-vis competitors’ products in a
    particular product category.

    Wal-Mart owned the largest and most sophisticated


    computer system in the private sector.

    The company used Massively Parallel Processor (MPP)


    computer system to track the movement of goods and
    stock levels.
    All information related to sales and inventories are
    passed on through an advanced satellite communication
    system.

    37
    Electronic
    Data
    Interchange
    EDI allows Wal-Mart to exchange business critical
    information, such as purchase orders, invoices,
    advance ship notices, etc with 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-Mart’s distribution centers.

    39
    In October 2002, Wal-Mart asked its 14,000 suppliers to
    switch over from the existing Value Added Networks (VAN)
    EDI to web enabled EDI

    VANs route and manage EDI messages for their customers

    This increased efficiency in turn allows Wal-Mart to improve


    customer services, lower expenses and increase
    productivity

    By implementing web-EDI, Wal-Mart can save millions of


    dollars in the form of license fees to the private VANs

    40
    Bibliography
    • www.cio.com
    • www.walmart.com
    • www.wikipedia.org
    • www.stanford.edu
    Thank you for Your Patience &
    Support

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