Professional Documents
Culture Documents
Manufacturer
Manufacturer
Radio, headphone
Retail Store
Distribution center
Bar code, RFID
Retail Store
Point of sale terminal
Manufacturer
Retail Store
Satellite system
Company Headquarter
Lower inventories
Higher productivity
Greater agility
Shorter lead times
Higher profits
Greater customer loyalty
Logistics Management
Cross Docking
Hub and Spoke
Flow-Time Analysis
Wal-Marts merchandise replenishment cycle is no more than 48 hrs.
Customer
made a
purchase
Point-of-sale
system
captures data
in real-time
Data is
transmitted to
warehouses
for Inv. Mgmt.
Orders are
generated from
previous-day
sales
Merchandise is
loaded onto
trucks using
cross-docking
Retail Link
transmits
data to
supplier
Merchandise is
manufactured
based on historical
and real-time data
Merchandise
is shipped to
warehouses
Merchandise
is delivered to
the store
Cross docking
Cross-docking means to take a finished good from
the Manufacturing plant and deliver it directly to the
customer with little or no handling in the process.
In purest form this is done directly, with minimal or
no warehousing.
Cross Docking:
Wal-Mart has invested heavily in its unique crossdocking inventory system.
Cross docking has enabled Wal-Mart to achieve
economies of scale, which reduces its costs of sales.
With this system, goods are continuously delivered to
stores within 48 hours and often without having to
inventory them.
$287 Million
Increased productivity
Reduction of paperwork
Lead time and inventory reduction
Electronic transfer of funds
Improved control of operations
Reduction in clerical labor
Increased accuracy
GPS
GPS system in communication in trucks
Any truck can be located
Drivers could activate system by voice and interact with
staff
Barriers to CPFR
Barriers to CPFR
Lack of discipline to execute primary phases
Promotions and new items events are not jointly planned
Ineffective replenishment in response to demand
fluctuations
Trading partners focus on traditional supply chain steps
Scalability and critical mass
No licensing fees
July 2003 Asked suppliers to place RFID tags on goods, packed in pallets and
crates
VAN-EDI = Value Added Network-EDI
RFID = Radio Frequency Identification
Strategy Employed
Identify generic products
Enhance product quality
reduce cost by collaborating
2001- copy paper increased sales
[ 46% in UK, 94% in Federal Republic of Germany, 38% in
Canada, 25% in US]
Problems
An estimated cost of $20 million to suppliers
50% of this is integration of system with software and
modification in soft wares
Not a proven technology
Not compatible with liquids and metal packaging
What we learned
so far.
TO BE NOTED
One of the keys to Wal-Mart's effective logistical system is the flexibility that it has when choosing suppliers.
When Wal-Mart negotiates with suppliers and the suppliers know that Wal-Mart will only pay the most
competitive prices. This is because it is very easy for them to find another supplier of that particular material with
a lower price and very few logistical problems
Another reason that Wal-Mart's prices are so competitive is because they buy in such large quantities that
transportation from one end of the supply chain to another is not as costly for additional units.
This aspect of the logistical system does not come from skill or expertise it simply comes from the sheer size of
the company, but this is still a factor.
TO BE NOTED
Wal-Mart buys so many supplies from different places throughout the world, that they have the
luxury of using bigger trucks and using less fuel to go back and forth.
Also if by chance they have to use shipping services to transport material from one location to
another, Wal-Mart will give them so much business that they will get huge discounts.
2010 - Walmart created new unit Global.com to establish its online presence - E-commerce. The
major advantage that Walmart has over Amazon is the strong association of the ecommerce/website with actual Walmart stores.
RECENT NEWS
RFID
Wal-Mart has mandated the use of these tags by certain suppliers and will penalize suppliers
who do not use RFID tags $2 per pallet. It is also estimated that up to 15,000 suppliers have
still not met Wal-Marts mandate. Furthermore, Wal-Marts stated objective is to have productlevel RFID tagging for all of its 22 US distribution centers by the year 2010 (Logistics Today,
2008, p.4). As the technology improves, RFID transponder unit cost goes down but it has not
reached the point ($0.05) where item-level implementation is viable (Barut et al, 2006, p.292).
Suppliers also do not share equally in the cost/benefit of using the technology. According to
researchers at the University of Arkansas, there was a 16% reduction in out-of-stocks since
Wal-Mart introduced RFID technology into its supply chain (HealthCare Purchasing News,
2005, p. 6). The researchers also pointed out that the products using an electronic product code
were replenished three times as fast as items that only used bar code technology. Other than
being able to retain Wal-Marts business, suppliers find little value in RFID but must bear
much of the costs. While Wal-Mart is able to accrue most of the benefits (improved inventory
management), suppliers are faced with the cost of purchasing the technology and training staff
to use it properly.