Wal-Mart's Supply Chain Management Practices

            
 
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Case Details:

Case Code : OPER020
Case Length : 12 Pages
Period : 1998 - 2003
Organization : Wal-Mart
Pub Date : 2003
Teaching Note :Not Available
Countries : USA
Retail ing

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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

Managing the Supply Chain

Procurement and Distribution

Wal-Mart always emphasized the need to reduce its purchasing costs and offer the best price to its customers. The company procured goods directly from manufacturers, bypassing all intermediaries. Wal-Mart was a tough negotiator on prices and finalized a purchase deal only when it was fully confident that the products being bought were not available elsewhere at a lower price.

According to Claude Harris, one of the earliest employees, "Every buyer has to be tough. That is the job. I always told the buyers: 'You are negotiating for your customer. And your customer deserves the best prices that you can get.

Operations Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

Don't ever feel sorry for a vendor. He always knows what he can sell, and we want his bottom price. 'We would tell the vendors,' Don't leave in any room for a kickback because we don't do it here. And we don't want your advertising program or delivery program. Our truck will pick it up at your warehouse. Now what is your best price?". Wal-Mart spent a significant amount of time meeting vendors and understanding their cost structure....

The Benefits Reaped

Wal-Mart strongly believed and constantly emphasized on strengthening its relationships with its customers, suppliers and employees. The company was very vigilant and sensed the smallest of changes in store layouts and merchandising techniques to improve performance and value for customers. The company made efforts to capitalize on every cost saving opportunity. The savings on cost were always passed on to the consumers, thereby adding value at every stage and process. Wal-Mart also enjoyed the benefits of low transportation costs since it had its own transportation system which assisted Wal-Mart in delivering the goods to different stores within (or sometimes less than) 48 hours...

Exhibits

Exhibit I: World's 25 Largest Retail Companies by Sales (2002)
Exhibit II: The Strength of Walmart
Exhibit III: Private Fleet Driver Handbook
Exhibit IV: Types of Cross Docking


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