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Walmart is able to get low pricing from suppliers through bulk purchasing power, eliminating middlemen, technology investments, and collaborative partnerships. They share sales data with suppliers and use vendor-managed inventory so suppliers know what needs to be replenished. Walmart's network of distribution centers and use of cross-docking allows them to efficiently replenish stores and keep costs low to support their everyday low pricing strategy.

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Anandh
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66 views

SCPM PDF 2

Walmart is able to get low pricing from suppliers through bulk purchasing power, eliminating middlemen, technology investments, and collaborative partnerships. They share sales data with suppliers and use vendor-managed inventory so suppliers know what needs to be replenished. Walmart's network of distribution centers and use of cross-docking allows them to efficiently replenish stores and keep costs low to support their everyday low pricing strategy.

Uploaded by

Anandh
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 6

POST GRADUATE PROGRAM IN E-COMMERCE & SUPPLY

CHAIN MANAGEMENT

SUPPLY CHAIN PLANNING & MANAGEMENT ASSIGNMENT 2

--BY ANANDHA KEERTHANAN S


1.How Walmart get low pricing from suppliers?

The most important reasons for Walmart getting low price from
suppliers are as follows:

• A pricing and procurement strategy based on bulk buying


• Sharing knowledge and Creating partnerships with
suppliers
• Collaboration with suppliers leads to fewer link in the chain
• Technology investment payoff

A pricing and procurement strategy based on bulk ordering:

Walmart dominant purchasing power and bulk buying power


enables to leverage large discounts, negotiate long term contracts and
leapfrog distributors to deal directly with manufacturers or suppliers.
The enormous size of Walmart organization which gives power to
keeps the suppliers from offering low prices to other retailers while
Walmart can pressure suppliers to tramp down increases.

Another important strategy of Walmart eliminating the middle-men in


the process by having its own fleet of trucks that eliminates paying
supplier for transportation.

Sharing knowledge and creating partnership with suppliers:

Walmart helps the customers by offering the products at low price in


their stores which helps to increase their sales in each store because of
buying at low price from the suppliers.

The most innovation of Walmart was its mutually beneficial


approach to partnering with suppliers. The Walmart company give
authority and access to get its sales data and technology which gave
suppliers the opportunity to plan more efficiently, resulting in lower
costs. Supplier in turn become more transparent with their own
information. Procter & Gamble set up an inventory system with
Walmart that included an automatic re-ordering process linking the

PAGE 1
supplier and retailer that alerted P&G when a product was running low
at store.

Collaboration with Supplier lead to fewer links in the chain:

Walmart used another technique of Vendor Managed Inventory by


partnering with its suppliers to eliminate middle-men in its supply chain
and further reduce costs. By using the concept of Electronic point of
sale, vendors are responsible to manage their own products inventories
in Walmart’s warehouses. Each Walmart uses software to track a point
of sale data so suppliers know exactly products that sold in stores at
which time and location. By using this technology, the suppliers no need
to ask Walmart to send purchase orders. Instead of that Walmart buyers
use the web-based system to track sales and ship products
automatically, saving time and money.

Technology Investment Payoff:

The company expand its horizon and invested in most sophisticated


technology, including its satellite network in late 1980’s which links
the headquarters, retail stores, suppliers and distribution centers and
real time exchange of data. It avoids overstocking and understocking
of goods by utilizing satellite network instant data transfer, two-way
voice transmission, lower telephone expenses and quick checkout
services – all of which contribute to cost saving and low prices services.

2. What is Walmart Forecasting and logistics management in this


case?

CPFR:

Collaborative Planning Forecasting and Replenishment is a set of


actions taken by supply chain partners to plan and communicate task to
meet customer demand while reducing cost. It includes a business
planning, sales forecasting, and replenishment of raw materials and
finished goods.

PAGE 2
Walmart and Warner Lambert incepted the CFPR model in the 1990’s.
The model comprising of four types:

• Strategy planning
• Demand and supply management
• Execution
• Analysis

CPFR Process:

• Develop an agreement between supply chain partners


• Create one business plan
• Forecast the sales
• Identify exceptions/deviations in the sale forecast
• Resolve exceptions/deviations in the sales forecast
• Create the order forecast
• Identify exceptions/deviations in the order forecast
• Resolve exceptions/deviations in the order forecast
• Generate the orders

CPFR reduces forecasting errors, turnaround time, short


stockages and transportation cost, while improving customer
service, inventory turnover and revenue.

Logistics management:

Walmart has a tremendous and successful logistics management than


any other retail company in the grocery industry. Through this,
Walmart has managed the distribution of inventories produced more
than 70 countries to its numerous stores that operates in twenty eight
countries across the world.

Walmart has used cross docking as its primary logistics strategy to


replenish inventory efficiently.

PAGE 3
Walmart has 158 distributions centers across the country, from
Bentonville, Arkansas to Johnstown, New York anywhere in between.
The distribution center network ships everything from general
merchandise to perishable groceries to its Walmart and sam club store.
Each distribution center is more than 1 million square feet in size.

WALMART REGIONAL DISTRIBUTION CENTERS:

Facility type Currently active Active square


facilities feet

Regional distribution center 42 50,114,745


Food distribution center 46 36,375,923
Fashion distribution center 7 8,015,160
E-commerce fulfillment center 35 27,267,844
Sam’s dark club store 6 827,411
Specially distribution center 23 4,001,487
Import distribution center 15 18,779,135
Consolidation distribution center 0 0
Center point 11 1,650,072
Sam’s distribution center 23 3,177,745

3.How distribution centers and warehousing strategy help


Walmart for EDLP?

Walmart give direct access of their data from data ware house to
suppliers:

Walmart maintains a large area for data ware house that is centralized,
accessible to copy of all the data necessary to run Walmart. Which gives

PAGE 4
direct access to suppliers to access sales data for two years on their own
products. Because of this methodology, suppliers get an idea about
quantity of product they need to ship to specified location or area.
Ultimately, Walmart suppliers send less than 30% of their production to
Walmart. Advantages of selling huge volume of goods to Walmart
including keeping the manufacturing facilities running without
staging and the brand awareness that comes occupying shape on
a Walmart shelf.

Company web distribution centers:

Instead of shipping directly to stores, most of walmart’s suppliers


transfer goods to the company web of distribution centers which allows
the company to ship about 85% of its merchandise from the centers with
the balanced shipped directly from the suppliers. Walmart store is
located within one day drive of distribution center to reduce cost and
time and increase efficiency.

Cross docking:

The most effective method of supply chain is cross docking, which


means products from the manufacturers or suppliers directly picked up
directly by Walmart trucks and delivered to the distribution centers
where they are repackaged for delivery to stores.

Well Experienced drivers:

Walmart used efficient and effective methods for hiring, training and
supervising drivers. Walmart private fleet driver handbook spells out
the rules for following pre-planned routes, unloading safely at stores and
docking at the distribution center. Walmart hires only professional
drivers with at least 300,00 miles of accidentfree experience and knack
for customer service.

PAGE 5

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