Case Analysis: Supply Chain Management at Wal-Mart
CASE ANALYSIS: SUPPLY CHAIN MANAGEMENT AT WAL-MART
INTRODUCTION
Wal-mart Stores Inc was the world’s largest retailer and was started by Sam Walton in 1962 who named it as “Wal-Mart Discount City”. However before Wal-mart; Sam Walton owned a number of Ben Franklin Store Chains. Due to this prior experience of owning smaller variety stores and dealing with its franchised supply chain, he learnt various business concepts and also was able to selectively purchase merchandise in bulk from new suppliers and then transport these goods to his stores directly. And then he realized a new trend of discount retailing which was based on driving high volumes of product through low cost retail outlets. He also started a new concept of “Everyday Low Price” (EDLP) strategy which meant that the products were displayed at a steady price and not discounted on a regular basis due to which the demand was smoothed and also Wal-mart did not need to advertise as frequently as the competitors and hence helped in price reductions.
In year 2005, the net sales of Wal-mart was 285.222 billion U.S dollars which was 7.7% of total retail sales in U.S that was 3.7 trillion U.S dollars
CHANGES IN SALES AND INVENTORY
(Figures in US$ mn) | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | Net Sales | 1,56,249 | 1,80,787 | 2,04,011 | 2,29,616 | 2,56,329 | 2,85,222 | 3,12,427 | Growth % (Y-O-Y) | - | 15.70% | 12.85% | 12.55% | 11.63% | 11.27% | 9.54% | Inventories | 19,296 | 20,987 | 22,053 | 24,401 | 26,612 | 29,762 | 32,191 | Growth % (Y-O-Y) | - | 8.76% | 5.08% | 10.65% | 9.06% | 11.84% | 8.16% |
From the year 2000 to 2006 net sales have increased 99.95%. In 2001 to 2002 inventory levels grew at only 5.53% and then more than doubled to an increase of 10.65 % in between 2002 and 2003.
(Figures in US$ mn) | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | Gross profit (in millions) | 34,424 | 40,067 | 44,914 | 51,317 | 57,582 | 65,429 | 72,036 | Gross profit return on
INTRODUCTION
Wal-mart Stores Inc was the world’s largest retailer and was started by Sam Walton in 1962 who named it as “Wal-Mart Discount City”. However before Wal-mart; Sam Walton owned a number of Ben Franklin Store Chains. Due to this prior experience of owning smaller variety stores and dealing with its franchised supply chain, he learnt various business concepts and also was able to selectively purchase merchandise in bulk from new suppliers and then transport these goods to his stores directly. And then he realized a new trend of discount retailing which was based on driving high volumes of product through low cost retail outlets. He also started a new concept of “Everyday Low Price” (EDLP) strategy which meant that the products were displayed at a steady price and not discounted on a regular basis due to which the demand was smoothed and also Wal-mart did not need to advertise as frequently as the competitors and hence helped in price reductions.
In year 2005, the net sales of Wal-mart was 285.222 billion U.S dollars which was 7.7% of total retail sales in U.S that was 3.7 trillion U.S dollars
CHANGES IN SALES AND INVENTORY
(Figures in US$ mn) | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | Net Sales | 1,56,249 | 1,80,787 | 2,04,011 | 2,29,616 | 2,56,329 | 2,85,222 | 3,12,427 | Growth % (Y-O-Y) | - | 15.70% | 12.85% | 12.55% | 11.63% | 11.27% | 9.54% | Inventories | 19,296 | 20,987 | 22,053 | 24,401 | 26,612 | 29,762 | 32,191 | Growth % (Y-O-Y) | - | 8.76% | 5.08% | 10.65% | 9.06% | 11.84% | 8.16% |
From the year 2000 to 2006 net sales have increased 99.95%. In 2001 to 2002 inventory levels grew at only 5.53% and then more than doubled to an increase of 10.65 % in between 2002 and 2003.
(Figures in US$ mn) | 2000 | 2001 | 2002 | 2003 | 2004 | 2005 | 2006 | Gross profit (in millions) | 34,424 | 40,067 | 44,914 | 51,317 | 57,582 | 65,429 | 72,036 | Gross profit return on