Walmart 56x3b

INTRODUCTION Wal-Mart is one of the largest Fortune 500 companies, which is spread across the globe. It is an arguably the largest retail chain which deals with everything from food to consumer electronics. In of the revenue generated, it leads the fortune 500 companies like GE and Microsoft. Simply put, it has everything a homemaker can ever think of. Affordable price range coupled with aggressive online and market strategy has lead to wide acceptance for Wal-Mart in towns and cities alike. Wal-Mart is probably the only largest fortune 500 corporations in the world, which directly services the common man. Walmart helps people around the world save money and live better -- anytime and anywhere -- in retail stores, online and through their mobile devices. Each week, more than 245 million customers and visit our nearly 11,000 stores under 71 banners in 27 countries and e-commerce websites in 10 countries. With fiscal year 2014 sales of approximately $473 billion, Walmart employs 2.2 million associates worldwide.

Wal-Mart business strategies Wal-Mart applied several elegant tactics with what appears to be precision execution. Firstly, they reduced their inventory which contributed to the goal of reducing costs by 6%. Secondly, they recognized that their customers are facing deep income cuts of their own and identified which product discounts would be perceived as most helpful. They leveraged their world-class inventory data to identify specific products and discounted prices considerably. The result was an influx of new customers who compensated for lower sales per customer thereby producing profits that exceeded everyone‟s expectations. In the spirit of keeping it simple, the following lessons can be brought home to your organization:

1. Visualize, illustrate and understand your supply-chain 2. Negotiate discounts with your suppliers 3. Reduce your inventory and reduce inventory costs 4. Ask your customers what they believe will add value to their lives and modify your offering to reflect that demand…now 5. Let your prospects and customers know that you have satisfied their demands – promote yourself effectively 6. Establish clear and specific performance expectations including those for positive financial results 7. Measure and report results openly (even the bad news) It doesn‟t matter how big or small you are and it is frankly irrelevant which industry you hail from…you can apply all of these lessons and tactics. Major business initiative used in Wal-Mart and what software is used For wal-Mart major business initiative being used is supply chain management. A supply chain management system is an IT system that s activities by automating the tracking of inventory and information among business processes and across companies. Wal-Mart is to ensure that all their suppliers are using Electronic product Codes and for those who do not have the capabilities they work with them to find packages that are within their price range. This allows for a successful ensuring that customers get what they order in a timely manner. It allows for logistics, fulfillment, production,revenue and profit, cost and price efficiency. They rely on IT enabled tight supply chain management system to squeeze every penny possible out of the procurement, distribution,and warehousing of its products. They use business intelligence systems to predict what customers will want and when they will want it. Wal-Mart is currently using ERP,which incorporates, Customer Relationship Management system; they are

also in the process of implementing SAP to strengthen their business skill. Philosophical Approach could be the Matrix, where there is collaboration across the board to ensure customers‟ needs are satisfied. They are in-out flows, which is from computers to suppliers.

Value chain analysis Value chain analysis (VCA) is a process where a firm identifies its primary and activities that add value to its final product and then analyze these activities to reduce costs or increase differentiation.

Wal-Mart Value Chain

Primary Activities  Inbound and Outbound Logistic Management This involves fast & responsive transportation system. More than 7000 company owned trucks services the distribution centers. These dedicated truck fleets enables shipping of goods from distribution centers to the stores within 2 days and replenish the store shelves

twice a week. The drivers hired are all very experienced & their activities are tracked regularly through ―Private Fleet Driver handbook‖. This allows the drivers to be aware of the & conditions for safe exchange of Wal-Mart property, along with the general code of conduct. For more efficiency, Wal-Mart uses a logistics technique called ―Cross Docking‖. In this system, finished goods are directly picked up from the manufacturing site of supplier, sorted out and directly supplied to the customers. This system reduces handling & storage of finished goods, virtually eliminating role of distribution centers & stores. Because of ―crossdocking‖ the system shifted from ―supply chain‖ to ―demand chain‖ which meant, instead of retailers ‗pushing‘ the products into the system, the customers could ‗pull‘ the products, when & where they required.  operations Wal-Mart operations are comprised of three business segments: 1. Wal-Mart Stores 2. SAM‘S CLUB 3. Wal-Mart International Wal-Mart Stores segment is the largest segment, which ed for approximately 67.3% of their 2005 fiscal sales. This segment consists of three different retail formats, all of which are located in the United States. This includes the following sections: • Super-centers, which average approximately 187,000 square feet in size and offer a wide variety of products and a full-line supermarket; • Discount Stores, which average approximately 100,000 square feet in size and offer a wide variety of products and a limited stock of food products; and • Neighborhood Markets, which average approximately 43,000 square feet in size and offer a full-line supermarket and a limited variety of general merchandise. SAM‘S CLUB segment consists of hip warehouse clubs in the United States which ed for approximately 13.0% of 2005 fiscal sales. SAM‘S CLUBs in the United States average approximately 128,000 square feet in size. Wal-Mart International operations are located in Argentina, Canada, , South Korea, Puerto Rico and the United Kingdom, the operations of t ventures in China and operations of majorityowned subsidiaries in Brazil and Mexico. This segment generated approximately 19.7% of 2005 fiscal sales. Here, it operates several different formats of retail stores and restaurants, including Supercenters, Discount Stores and SAM‘S CLUBs.  Marketing and sales Sam Walton started his retail career in 1940, as a management trainee with the J.C. Penney Company. Later, He modeled the Wal-Mart chain on ―The Penney Idea‖ (strength in calling employee ―associates‖ rather than clerks). Sam walton became convinced in the late 1950s that discounting would transform retailing. He offer name brand ―Merchandise at low price‖. Wal-Mart prided itself on its ―everyday low price‖, prodide the customer with a clean, pleasant, and friendly shopping experience. 2.2.1.2 Activities 2.2.1.2.1 Procurement Wal-Mart‘s process of procurement involves reducing its purchasing costs as far as possible so that it can offer best price to its customers. The company procures goods directly from the manufacturers, bying all intermediaries. Wal-Mart has distribution centers in different geographical places in US. Wal-Mart‘s own warehouses supplies about 80% of the inventory. Each distribution centre is divided in different groups depending on the quantity of goods received. The inventory turnover rate is very high, about once every week for most of the items. The goods to be used internally in US arrive in pallets & imported goods arrive in re-usable boxes. The distribution centers ensured steady flow & consistent flow of products. Managing the center is economical with the large-scale use of sophisticated technology such as Bar code, hand held computer systems (Magic Wand) and now, RFID. Every employee has access to the required information regarding the inventory levels

of all the products in the center. They make 2 scans- one for identifying the pallet, and other to identify the location from where the stock had to be picked up. Bar codes & RFID are used to label different products, shelves & bins in the center. The hand held computers guide employee to the location of the specific product. The quantity of the product required from the center is entered in the hand held computer, which updates the information on the main central server. The computers also enabled the packaging department to get accurate information such as storage, packaging & shipping, thus saving time in unnecessary paperwork. It also enables supervisors to monitor their employees closely in order to guide them & give directions. This enables Wal-Mart to satisfy customer needs quickly & improve level of efficiency of distribution center management operations. 2.2.1.2.2 Wal-Mart Technologies Technology is inevitable in every sphere of life today; it has always made things easier. Wal-Mart works on the same strategy. Traditionally, technology has been upgraded in billing systems and for storage purposes. A new area where technology could be applied to, where many expenses could be saved was in inventory management and logistics. Wal-Mart being so huge, needed to keep track of men and material sent across different countries and had to maintain hundreds of warehouses across the world. Bar-codes have been initially identified as a suitable technology to meet the purpose. But due to the limitations of barcodes, a new emerging technology called RFID has been identified to meet the demands. RFID is low cost Radio Frequency Identification system which requires minimum human intervention to carry out tasks ranging from billing to materials tracking and supply chain management. It is a small wireless device which can store good amount of data and can virtually be tagged to anything. RFID is an electronic tagging technology that allows an object, place, or person to be automatically identified at a distance without a direct line-of-sight, using an electromagnetic challenge/response exchange. 2.2.1.2.3 Wal-Mart Human Resource Management In related to the Human resource development, Turner, Chief Executive Officer of Wal-Mart's subsidiary corporation, explained in his interview that in any development effort, our [IS] people are expected to get out and do the function before they do the system specification, design or change analysis. The key there is to do the function, not just observe it. So we actually insert them into the business roles. As a result, they come back with a lot more empathy and a whole lot better understanding and vision of where we need to go and how we need to proceed. We’ve learned some hard lessons in our stores, clubs and distribution centers when we developed something and people didn’t use it, and they chose to find other ways to get the job done. We are working hard to develop systems that are easy to use. That puts an awesome responsibility on that developer to get out and understand the business. That’s one of our key things: We’re merchant first, technologists second. We have a very clear set of critical success factors that every associate in our division has to live by, and they are generally conditions of employment. Some of them are complicated and some of them are very simple: excellent customer service, testing and validation before you roll it out, balance and controls, payback and ROI. All new [IS] associates are indoctrinated into that set of disciplines, and all associates review it at least on an annual basis. The disciplines are the same for everybody regardless of what team you’re on. 2.2.1.2.4 Wal-Mart Infrastructure Considering the rapid expansion of Wal-Mart stores, it was essential to have a very good communication system. For this, Wal-Mart set up its own satellite communication system in 1983. This allowed the management to monitor each and every activity going on in a particular store at any point of the day and analyze the course of action taken depending on how the things went. Wal-Mart ensures that unproductive inventory is as less as possible, by allowing the stores to manage their own stocks, thereby reducing pack sizes across many categories and timely price markdowns. Wal-Mart makes full use of its IT infrastructure to make more inventories available in case of items that customers wanted most, while reducing overall inventory. By making use of Bar-coding & RFID technologies, different processes like efficient picking, receiving & proper inventory control of the products along with easy packing and counting of the inventories was ensured.

Wal-Mart owns the “Massively Parallel Processor (MPP)”, largest & the most sophisticated computer system in private sector, which enables it to easily track movement of goods & stock levels across all distribution centers and stores. For emergency backup, it has an extensive contingency plan in place as well. Employees use “Magic Wand”, which is linked to in-store terminals through a Radio frequency network, to keep track of the inventory in stores, deliveries and backup merchandise in stock at the distribution centers. The order management and store replenishment of goods is entirely executed with the help of computers through Point of Sale (POS) system. Wal-Mart also makes use of sophisticated algorithm to forecast the quantities of each item to be delivered, based on inventories in the store. A Centralized inventory database allows the personnel at the store to find out the level of inventories and location of each product at a given time. It also shows the location of the product like distribution center or transit on the truck. When the goods are unloaded at the store, the inventory system is immediately updated. In November 19, 2001, Wal-Mart spends an estimated $40 million to upgrade its e-business infrastructure. Dan Phillips, vice president of technology and operations, said the new systems from IBM will give Wal-Mart "a faster processing time, greater availability of our systems and better systems operation without interruption." He added that the new systems have yielded a "significant improvement in our processing time, in some cases allowing us to cut our processing time for some jobs by more than half." Wal-Mart is replacing its old IBM mainframes with a dozen new IBM eServer z900 mainframes and its older storage systems with IBM's new Enterprise Storage Servers code-named Shark. The mainframes and the storage servers provide the backbone of Wal-Mart's data center infrastructure. Among other things, the data center is used for data processing, reconciliation, debit and credit transactions, as well as product replenishment.

Walmart IT implementatons RFID System in Wal-Mart Value Chain Figure-1 RFID System and How It Works

Fig: The Way Wal-Mart uses RFIDTechnology in Managing Its Inventory

Wal-Mart also networked its suppliers through computers. It entered into collaboration with P&G for maintaining the inventory in its stores and built an automated re-ordering system, which linked all computers between P&G factory through a satellite communication system. P&G then delivered the item either to Wal-Mart distribution centre or directly to the concerned stores.

Radio-frequency identification, or RFID, which transfers data stored on tags on a product or other object, facilitating identification and tracking. One use of RFID technology familiar to many people is in vehicle transponders for toll collections. Walmart has been using RFID technology for about a decade and cites numerous benefits, including more efficient inventory management. The company initially introduced RFID to track pallets of merchandise traveling along its supply chain, including at warehouses. In 2007, executives credited the technology with, among other things, cutting the volume of excess inventory in Walmart‘s massive supply chain and slashing out-of-stock occurrences by almost one-third. In 2010, the retailer announced the next phase of its RFID strategy::placing tags on individual garments. RFID tags offer a broader array of advantages compared with traditional barcodes. They store more data, provide real-time information, and can be scanned from a distance and without a clear line of sight. According to researchers at the University of Arkansas, there was a 16% reduction in out-ofstocks since Wal-Mart introduced RFID technology into its supply chain. 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.

Why RFID over Bar-Code? The ability to read without line-of-sight is the best advantage of RFID over bar-code systems. RFID readers can sense items even when the tagged items are hidden behind other tagged items. This enables automation. The challenging part of implementing RFID is that tagged items should not be missed by the reader due to interference, multipath fading, transient effects etc. Missed reads are an unfortunate reality with RFID systems. RFID uses a serialized numbering scheme such as EPC (Electronic Product Code). Each tag has a unique serial number. Serial number information is extremely powerful in understanding and controlling the supply chain and provides much more detailed behavior of the supply chain than can non-serialized bar codes such as UPC (Universal Product Codes) and EAN (European Article Numbering). Serial numbers have many advantages such as food freshness/expiration. This can tell how for how long an item has been in the supply chain where as such information is not captured in bar code system. Hence items can be reached the right place at the right time. Furthermore RFID implementation monitors theft too. For example if number of items reached at the retailer’s outlet is less than that was departed from supplier’s location, it can be easily tracked for. In all these ways, RFID systems have stronger sensor networking system or monitoring system than bar code systems. RFID Reduces Bullwhip Effect Bullwhip effect occurs as orders are placed from retailers, to wholesalers, to manufacturers, with fluctuations increasing at each step in the sequence. The “bullwhip” fluctuations in the supply chain increase the costs associated with inventory, transportation, shipping, and receiving while decreasing customer service and profitability. Bullwhip effect is the increasing in orders that often occurs as orders move through the supply chain. Wal-Mart succeeded in adopting RFID to boost its supply chain has caused reducing the bullwhip effect and improving opportunities in the supply chain.

CRM Walmart has been catering to its customers for some time now and has proven itself to

be one of the greatest businesses. Walmart at 6000 Ogeechee Rd, Savannah, Ga 31419 is known for its customer service and amenities that allow for its customers to continue receiving Customer Relationship Management and satisfaction.The first step in Customer Relationship Management (CRM) is ―relationship-building opportunities into the firm‘s routine operations, the framework to develop sustainable competitive advantages in the marketplace is reinforced‖ . ―CRM is not a tactic or gimmick; it is a long-term strategy for sustainable market leadership stemming from carefully cultivated and strong relationships with customers‖ . Critical elements of CRM strategy force the firm to identify, segment, and profile customers based on characteristics such as profitability, lifetime revenue potential,

cost to service, interests, buying habits, and service requirements. These activities encourage a laser-type focus on retaining the most valuable and profitable customers . According to Microsoft CRM 4.O Overview, Microsoft Dynamics CRM 4.0 is a fully integrated customer relationship management (CRM) system. Microsoft Dynamics CRM gives you the capability to easily create and maintain a clear view of customers from first through purchase and post-sales. With tools to enhance your company's sales, marketing, and customer service processes—along with native Microsoft Office Outlook integration—Microsoft Dynamics CRM delivers a fast, flexible, and affordable solution

In closing, customer information is essential for the use of Microsoft Dynamics CRM 4.0 for customer relationship management tracking for both Wal-Mart and the customer and can become a tool used as a strategic opportunity and advantage with a competitive edge outcome for Wal-Mart‘s stakeholders to analyze and make a decision as to whether or not repairing the self check-outs, allowing for negative publicity is good in the area of project feasibility.

Wal-Mart Used Technology to Become Supply Chain Leader

It is hard to talk about supply chain management without mentioning Wal-Mart. In its relentless pursuit of low consumer prices, Wal-Mart embraced technology to become an innovator in the way stores track inventory and restock their shelves, cutting costs and ing the savings along to customers. In the process the company became synonymous with the concept of successful supply chain management. “I don‟t believe there is a university in the world that doesn‟t talk about Wal-Mart and the supply chain,” said James Crowell, director of the Supply Chain Management Research Center at the Walton College of Business. “They are just so well respected

because they do it so well, and certainly I know a lot of peer institutions around our country … will bring a Wal-Mart guest to speak.” From ancient times through two world wars to today‟s global market, the logistics of supply chain management have challenged any enterprise that tries to move goods and materials a long way in a timely manner. A break in the supply chain leading to a dearth of food or ammunition could spell disaster for an army on the move. For consumers and businesses, a supply chain breakdown means empty shelves and a loss of revenue. Through a combination of distribution practices, truck fleet management and technological innovations, Wal-Mart not only became the model of supply chain efficiency and used it to become the largest retailer and private sector employer in the world. Even the U.S. military noticed. Army Col. Vernon L. Beatty, who commanded the Defense Distribution Depot in Kuwait, spent a year with Wal-Mart as part of the military‟s Training With Industry program. “Supply chain management is moving the right items to the right customer at the right time by the most efficient means,” Beatty said in article about his experience. “No one does that better than Wal-Mart.” Fewer Links Wal-Mart‟s supply chain innovation began with the company removing a few of the chain‟s links. In the 1980s Wal-Mart began working directly with manufacturers to cut costs and more efficiently manage the supply chain. From 1993 to 2001, Wal-Mart grew from doing $1 billion in business a week to $1 billion every 36 hours, growth that was attributed as much to supply chain management as to customer service. Last year, Wal-Mart sold $1.22 billion worth of merchandise every day. Under a Wal-Mart‟s supply chain initiative called VMI — vendor managed inventory — manufacturers became responsible for managing their products in Wal-Mart‟s warehouses. As a result, Wal-Mart could expect close to 100 percent order fulfillment on merchandise. Wal-Mart streamlined supply chain management by constructing communication and relationship networks with suppliers to improve material flow with lower inventories. The network of global suppliers, warehouses and retail stores has been described as behaving almost like a single firm.

“Wal-Mart‟s whole thing was collaboration,” Crowell said. “That‟s a big part of what made them so successful.” Even in its early years, Wal-Mart‟s supply chain management contributed to its success. Founder Sam Walton, who owned several Ben Franklin franchise stores before opening the first Wal-Mart in Rogers in 1962, selectively purchased bulk merchandise and transported it directly to his stores. In 1989 Wal-Mart was named Retailer of the Decade, with distribution costs estimated at a mere 1.7 percent of its cost of sales — far superior to competitors like Kmart (3.5 percent) and Sears (5 percent). The company‟s supply chain has only become more effective since then. Wal-Mart developed the concept of “cross docking,” or direct transfers from inbound or outbound truck trailers without extra storage. The company‟s truck fleet and corps of non-unionized drivers continuously deliver goods to distribution centers (located an average 130 miles from the store), where they are stored, repackaged and distributed without sitting in inventory. Goods will cross from one loading dock to another, usually in 24 hours or less, and company trucks that would otherwise return empty “back haul” unsold merchandise. Collaboration Companies within the supply chain synchronize their demand projections under a collaborative planning, forecasting and replenishment scheme, and every link in the chain is connected through technology that includes a central database, store-level pointof-sale systems and a satellite network. Wal-Mart implemented the first companywide use of Universal Product Code bar codes, in which store level information was immediately collected and analyzed, and the company devised Retail Link, a mammoth Bentonville database. Through a global satellite system, Retail Link is connected to analysts who forecast supplier demands to the supplier network, which displays real-time sales data from cash s and to WalMart‟s distribution centers. “The big piece of supply chain management is Wal-Mart has the retail link,” Crowell said, “the information from point-of-sale data, the cash , that they put into their system and share with all their partners. “What makes that so innovative is at one time a lot of companies weren‟t sharing that. In fact, they were using third parties where they had to pay for that information.”

Wal-Mart‟s approach meant frequent, informal cooperation among stores, distribution centers and suppliers and less centralized control. Furthermore, the company‟s supply chain, by tracking customer purchases and demand, allows consumers to effectively pull merchandise to stores rather than having the company push goods onto shelves. In recent years Wal-Mart has used radio frequency identification tags (RFID), which use numerical codes that can be scanned from a distance to track pallets of merchandise moving along the supply chain. Even more recently the company has begun using smart tags, read by a handheld scanner, that allow employees to quickly learn which items need to be replaced so that shelves are consistently stocked and inventory is closely watched. RFID and smart tags are just the next generation in supply chain innovation that dates back to the 1960s, when Sam Walton personally attended an IBM school in upstate New York with the intention of landing experts to computerize operations. Wal-Mart reaps the benefits of its supply chain management in time saved, faster inventory turnover, increased warehouse space and accurate forecasting of inventory levels. “They really understand that if I‟m going to build some stores and build some distribution centers, how am I going to service them?” Crowell said. “If you look at some of their competitors, sometimes they would put a store in and then think, „How am I going to service it?

Benefits of Efficient Supply Chain Management Wal-Mart’s supply chain management strategy has provided the company with several sustainable competitive advantages, including lower product costs, reduced inventory carrying costs, improved in-store variety and selection, and highly competitive pricing for the consumer. This strategy has helped Walmart become a dominant force in a competitive global market. As technology evolves, Walmart continues to focus on innovative processes and systems to improve its supply chain and achieve greater efficiency.