Wal-Mart's Supply Chain Management Practices (B): Using IT/Internet to
Manage the Supply Chain
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Case Details:
Case Code : OPER028
Case Length : 17 Pages
Period : 1992 - 2003
Organization : Wal - Mart
Pub Date : 2004
Teaching Note :Not Available
Countries : USA
Retail
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Excerpts
Using IT in Supply Chain Management
Wal-Mart employed the most advanced IT tools and applications
in all supply chain functions, starting from demand forecasting, procurement,
logistics, distribution and inventory management. The company focused on
bringing efficiency to every function of the supply chain so as to offer its
customers products at the lowest possible prices.
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Mike Duke (Duke), senior VP of logistics, explained, "The way we look at it is,
'What is the total cost of a product when it is all the way through the supply
chain and on the shelf at the store?' We don't just focus on distribution-center
expense. Our real focus is on reducing the total supply-chain cost and not
necessarily focusing on only one area of that.
By looking at the grand total supply-chain cost and trying to reduce the total
to lower the cost of the product for the customer, you end up looking at it a
different way. You end up sometimes increasing cost in distribution if it will
help more in some other area of the business."...
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Using The Internet In Supply Chain Management
The Retail Link System - Implementing CPFR
In CPFR, Wal-Mart worked together with its key suppliers on a real-time
basis by using the Internet to jointly determine product-wise demand
forecast (Refer Exhibit III for a note on CPFR). Wal-Mart also shared with
its suppliers, the actual sales data in each store for the past two years,
demographic details of customers and product-wise stock positions at its
stores and distribution centers...
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Recent Supply Chain Initiatives
In 2000, Wal-Mart made further up gradations in the Retail Link system
in its efforts to pursue global sourcing. In 2001, Wal-Mart launched a
global sourcing initiative to achieve higher economies of scale in
procuring goods. The company established a global procurement division
to co-ordinate all procurement activities across the world. Empowered by
Retail Link, sales and inventory data could be exchanged between
Wal-Mart and suppliers in a matter of seconds through the Internet... |
Exhibits
Exhibit I: Top Ten Retailers Worldwide (2002)
Exhibit Ii: The Strength of Walmart (2003)
Exhibit Iii: A Note on CPFR
Exhibit Iv: A Note on RFID
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