Wal-Mart's Supply Chain Practices

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Supply Chain Management – Case Analysis

Ivey Case Study

Supply Chain Management at WalMart

For: Dr. Chirag Surti BUSI 2604U Prepared By: Jeremy Abbaterusso 100217118

Supply Chain Management – Case Analysis

TABLE OF CONTENTS

Introduction and Summary…………………………………………………………………. . 3 Supply Chain……………………………………………………………………….. ……… .4 Logistics…………………………………………………………………………….. .4 Purchasing and Operations…………………………………………………………...6 CPFR and the Bullwhip Effect……………………………………………………….7 Information Technology……………………………………………………………………. .8 Future Initiatives……………………………………………………………………. .9 REMIX……………………………………………………………………….9 RFID……………………………………………………………………….....9 Performance………………………………………………………………………………..... 11 Other Information Recent Failures……………………………………………………………………………….15 Conclusion……………………………………………………………………………………17

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Supply Chain Management – Case Analysis

Introduction and Summary
Research opens many windows into the thinking of various types of business throughout the world. In researching Wal-Mart and analyzing this case it has opened the window to the ability of a small town business man of Bentonville, Arkansas. This man is the legendary Sam Walton. Who, in 1962, created his “Wal-Mart Discount City”, however before coming to the opportunity of Wal-Mart; Sam Walton owned a number of Ben Franklin Store Chains. In having this prior experience of owning smaller variety stores and dealing with its franchised supply chain, this allowed Mr. Walton to learn various business concepts and also was able to selectively purchase merchandise in bulk from new suppliers and then transport these goods to his stores directly. This is when the realization and opportunity of “discount retailing” first evolved and was set to become a major influence in future business. This is, in my opinion, the spark of the “Everyday Low Price” (EDLP) strategy developed for the Wal-Mart chain. A quote which best shows and illustrates this evolved prediction talks about the overall sales achievement by Wal-Mart, it is as follows, “Wal-Mart does not like to get it wrong, not that in retailing terms it often has. After all, Wal-Mart reached the landmark of $1 billion annual sales in 1979, then achieved $1 billion sales in a week in 1993 before making $1 billion in sales in a day in 2001.”1

Other then the initial concept of EDLP Wal-Mart owes a lot of its success to its strategies and efforts in purchasing, distribution, retail, and information systems. In the early years the companies’ competitive advantage was its supply chain. In fact, as taken from the case, “WalMart was voted “Retailer of the Decade” in 1989; its distribution costs were estimated at 1.7 per 1

Brun, S.D., “Wal-Mart World: The World’s Biggest Corporation in the Global Economy,” 2006, pp. 27.

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Supply Chain Management – Case Analysis

cent of its cost of sales, comparing favorably with competitors such as Kmart (3.5 percent of total sales) and Sears (five percent of total sales).”2 Current issues facing Wal-Mart’s supply chain is duplicating its success in the United States into foreign markets. As of now they have largely developed in Canada and Mexico, however when it comes to international markets something is holding back the success found on North American soil. Other constraints currently effecting Wal-Mart’s supply chain is having the competition borrowing ideas that have worked so well for them, making the gap smaller and smaller each year in overall market share.

Supply Chain
As mentioned above the initial competitive advantage for Wal-Mart was its supply chain management. This would only improve during the 1960’s to 1980’s from improved road infrastructure and the inability of its competitors to keep up to changes in legislation. The main change would be the removal of “resale price maintenance,” which had prevented retailers from discounting merchandise. A strong and efficient supply chain is the key to distribution and keeping their...
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