Wal-Mart/Vlasic Case Study
Supply chain management and logistics play a huge role in the way that Wal-Mart conducts it’s business. Wal-Mart does not accept orders that are late or out of stocks in their stores. That may sound unreasonable but Wal-Mart provides it’s suppliers with powerful tools to ensure that these things do not occur. Wal-Mart has established a database called Retail Link that it’s suppliers can gain access to and view real-time sales data that is linked to the point of sales at most Wal-Mart stores. Wal-Mart wants to be serviced with speed and care. The system not only helps Wal-Mart stay in stock but it also saves the suppliers time and processing costs. It also helps to avoid warehouse pile-up of merchandise that isn’t moving off of the shelves. Wal-Mart attempts to maximize the efficiency of it’s supply chain and it expect the suppliers to do the same.
The one gallon deal threw the supply chain off balance because Vlasic was running into shortages of the grocery sized pickles because the one gallon jar was flying off the shelves at a ridiculous rate. The gallon jar was a loss leader and in the beginning it was great. Vlasic and Wal-Mart were making only a tiny profit on each jar, but Vlasic’s sales revenues were up and Wal-Mart had it’s “customer stopper.” As time went on, though, Vlasic stopped making a tiny profit and started selling each jar at a loss. The gallon jar also caused problems with manufacturing the grocery sized jars because they were having to put the better looking pickles into the gallon sized jars instead of the less perfectly shaped pickles. Vlasic could not ship as many grocery sized jars because of this problem (the perfectly shaped pickles were used for sandwich slices and spears.) All of these problems were exacerbated by the non-Wal-Mart stores cutting back their orders because people did not need to buy the grocery sized jars as often or as much as they used to. The consumer could...
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