2. The use of innovative information technology tools had benefited Wal-Mart’s supply chain management. In the light of the above statement, briefly explain how IT benefited Wal-Mart’s logistics and inventory management.
3. What were the supply chain management processes adopted by Wal-Mart and how far were they effective? Discuss.
4. What was the nature of benefits derived by Wal-Mart from the efficient supply chain management practices and how far it has contributed to its sustainable competitive advantage? Explain.
“When you start to collapse the supply chain, accuracy in execution becomes critical. Any lack of accurate information and processes creates costly bottlenecks in the flow of goods and materials.” -- Bruce Richmond, Global head, Andersen Consulting.
The US-based Wal-Mart ranked first in the global Fortune 500 list in the financial year 2001-02 earning revenues of $219.81 billion (Refer Table I). Wal-Mart was the largest retailing company in the world. The company was much bigger than its competitors in the US – Sears Roebuck, K- Mart, JC Penney and Nordstrom combined (Refer Exhibit I). In 2002, Wal-Mart operated more than 3,500 discount stores, Sam’s Clubs and Supercenters in the US and more than 1,170 stores in all major countries across the world. The company also sold products on the Internet through its website, walmart.com.
GLOBAL FORTUNE 500 LIST (2002)
Wal-Mart was one of the largest private sector employers in the world, with employee strength of approximately 1.28 million. The company’s founder, Sam Walton (Walton) had always focused on improving sales, constantly reducing costs, adopting efficient distribution and logistics management systems and using innovative information technology (IT) tools. According to analysts, Wal-Mart was able to achieve a leadership status ((Refer Exhibit II)) in the retail industry because of its efficient supply chain management practices. Captain Vernon L. Beatty, aide-de-camp to the commander, Defense Supply Center, Columbus, Ohio said, “Supply chain management is moving the right items to the right customer at the right time by the most efficient means. No one does that better than Wal-Mart.”
This case was written by P. Mohan Chandran, under the direction of Vivek Gupta, ICFAI Center for Management Research (ICMR).
2003, ICFAI Center for Management Research. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic or mechanical, without permission.
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Revenues (in $ millions)
Wal-Mart's Supply Chain Management Practices
Walton was born in 1918 at Kingfisher, Oklahoma, US. After graduating from the University of Missouri in 1940, Walton worked for the famous retailer, J C Penney. In his first job, Walton had displayed the qualities of a good salesman. He realized the importance of building loyalty among customers as well as employees. In the mid 1940s, Walton gave up his job and decided to set up his own retail store. He purchased a store franchise from Ben Franklin in Newport, Arkansas. It was here that he learnt his first lessons in retailing – offering significant discounts on product prices to expand volumes and increase overall profits. The business was...