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MIS in

HISTORY OF WALMART

Sam Walton, a businessman from


Arkansas, began his retail career
when he started work on June 3,
1940.
On July 2, 1962, Walton opened the
first Walmart Discount City store
located at 719 Walnut Ave inRogers
Arkansas.
Since, then it has undergone several
changes in its information system

The phenomenal growth of Walmart


is attributed to its continued focus on
customer needs and reducing cost
through efficient SCM and MIS
practices

HUB AND SPOKE SYSTEM

In the early 1970s, Walmart became


one of the first retailing companies in
the world to centralize its distribution
system, pioneering the retail huband-spoke system
Goods were centrally ordered,
assembled at a massive warehouse,
known as distribution center (hub),
then dispatched to the individual
stores (spoke).

The hub and spoke system enabled


Walmart 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 U.S.

USING EDI FOR PROCUREMENT

The company directly procured from


manufacturers, by passing all
intermediaries.
The computer systems of Walmart were
connected to those of 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 Walmarts

INVENTORY MANAGEMENT

Walmart invested heavily in IT and


communication systems to
effectively track sales and
merchandise inventories in stores
across the country.
With the rapid expansion, it was
essential to have a good
communication system.
Hence, Walmart set up its own
satellite communication system in

Walmart was able to reduce unproductive


inventory by allowing stores to manage
their own stocks, reducing pack sizes
across many product categories, and timely
price markdowns.

Instead of cutting the inventory across the


board, Walmart made full use of its IT
capabilities to make more inventories
available in the case of items that
customers wanted most, while reducing
the overall inventory levels.

Employees at the stores had the


Magic Wand, a hand-held
computer which was linked to instore terminals through a radio
frequency network.

These helped them to keep track of


the inventory in stores, deliveries,
and backup merchandise in stock at
the distribution centers.

Order management and store


replenishment of goods were entirely
executed with the help of computers
through the Point-of-Sales (POS)
system.

Through this system, it was possible


to monitor and track the sales and
merchandise stock levels on the
store shelves.

RETAIL LINK SYSTEM

In 1991, Walmart had invested


approximately $4 billion to build a
retail link system.
More than 10,000 Walmart 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 Walmarts EDI


network with an extranet, accessible
to Wal-Marts thousands of suppliers.

The suppliers could find out how their


product was performing against
competitors products in a particular
product category.

Walmart 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 was passed on through an
advanced satellite communication system.

COLLABORATIVE PLANNING, FORECASTING


AND REPLENISHMENT (CPFR)

By the mid 1990s, Retail Link had


emerged into an Internet-enabled
SCM system whose functions were
not confined to inventory
management alone

It also covered collaborative


planning, forecasting and
replenishment (CPFR).

In CPFR, Walmart worked together with its


key suppliers on a real-time basis by using
the Internet to jointly determine productwise demand forecast.

CPFR is defined as a business practice for


business partners to share forecasts and
results data through the Internet, in order
to reduce inventory costs while at the
same time, enhancing product availability
across the supply chain.

CPFR: HARD TO IMPLEMENT

Though CPFR was a promising supply


chain initiative aimed at a mutually
beneficial collaboration between
Walmart and its suppliers , its actual
implementation required huge
investments in time and money

A few suppliers with whom Walmart tried


to implement CPFR complained that a
significant amount of time had to be
spent on developing forecasts and

VOICE-BASED ORDER FILLING


(VOF)

In 1998, Walmart installed a voicebased 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

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, Walmart


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

QUICK REPLENISHMENT

Since the floor area of any Walmart


store varied between 40,000 to
200,000 square feet, movement of
goods within the store was an
important part of logistics operations.

Walmart made significant


investments in IT to quickly locate
and replenish goods at the stores.

PRETTY DARN QUICK DISPLAYS

The company asked its suppliers to ship goods


in store-ready displays called pretty darn quick
(PDQ) displays.
Goods were packed in PDQ displays that arrived
at the stores ready to be boarded on the racks.
Walmarts employees could directly replace the
empty racks at the stores with fully packed
racks, instead of refilling each and every item at
the racks.

VAN EDI VS WEB-EDI

In October 2002, Walmart 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

By implementing web-EDI, Walmart can


save millions of dollars in the form of
license fees to the private VANs

VAN

WEB EDI

EDI
Transactions between the
business partners are routed and
managed through Private Value
Added Networks.

Transactions between the


business partners are routed
through the internet.

It takes time for the messages to


be communicated between the
trading partners.

Direct online communication


between the trading partners.

Transactions are not totally


Security of transactions is
secure as they are routed through relatively high as the transactions
private players.
are routed through a secured web
server with a 128 bit end-end
security.
Charge transaction fees from
those who utilize the service.
Transaction costs are high.

As internet is accessible to all ,no


transaction fee is charged.

RFID TECHNOLOGY
(RADIO FREQUENCY
IDENTIFICATION)

In efforts to implement new technologies


to reduce costs and increase the
efficiency, in July 2003, Walmart asked its
top 100 suppliers to be RFID compliant
and planned to replace bar-code
technology with RFID technology.
This replacement has reduced its supply
chain management costs and enhance its
efficiency.

Because of the implementation of


RFID, employees were no longer
required to physically scan the bar
codes of goods entering the stores
and distribution centers, saving labor
cost and time.

RFID has reduced the instances of


stock-outs at the stores.

CONCLUSION

Walmart has been able to efficiently


USE and UPGRADE its IT tools,
namely:

EDI
VOF
CPFR
RFID

Achieved EFFICIENCY and COST


MINIMIZATION

THANK YOU