Wal-Mart is a Supply Chain Driven Company Obsessed With Lowering Costs . . . Is Yours?

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• Wal-Mart is a Supply Chain Driven Company
  Obsessed With Lowering Costs . . . Is Yours?

Michael Bergdahl, September 2011
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• Wal-Mart is a Supply Chain Driven Company
  Obsessed With Lowering Costs . . . Is Yours?

Low Profit Business Model In-Stock Spoke and Hub
Strategy IT Infrastructure Cross Docking
Distribution Centers Private Fleet Ownership
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• Wal-Mart is a Supply Chain Driven Company
  Obsessed With Lowering Costs . . . Is Yours?

Automated Replenishment Inventory Turnover Vendor
Partnership Cost Control Strategy Culture of Cost
Controllers
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Supply Chain drives Walmarts Low Margin
Profitability Model
2010 Sales US418 billion 2010 Net Profit
3.2 Total Profit US13.4 billion
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Supply Chain drives Walmarts Low Margin
Profitability Model
120,000 products 60,000 Suppliers 8900 Stores 120
Distribution Centers
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Supply Chain Goal In-Stock
Out of stock is out of business
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Spoke and Hub Strategy
Walmarts expansion strategy was controlled by
its distribution strategy.
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Largest privately owned IT systems in the world
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Cross-docking distribution centers No Warehouses
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7000 privately owned truck fleet largest in the
USA
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Automated Replenishment Just in Time
Inventory Wal-Marts inventory turnover goal
for suppliers is 100 every 60 days


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Walmart is Like a Bank . . .
High velocity inventory turnover allows Walmart
to make money on money!
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Vendor Partnership Wal-Mart cuts out the
middleman . . . Buys from the source!
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Power of low priced products Many small
retailers purchase inventory for their stores
from Walmarts shelves!
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Cost Control Strategy
Wal-Marts relentless pursuit of
low prices is one part controlling expenses and
one part buying at the lowest prices.
Walmart passes expense savings along to its
customers.
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The Wal-Mart Effect Wal-Marts low grocery
prices save USA families of four US3100 / yr
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You Can Save Your Way to
Prosperity Sam Walton was absolutely fanatical
about controlling expenses

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Culture of Cost Controllers Office
Supplies Paper usage Overtime Budget No
Headcount Increases Executive
Travel Technology Temperature of Stores
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The Sam Walton Way
Expense Control Standards Walmart gets
its employees to manage expenses like they are
writing the check from their personal checking
accounts.
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The Bottom Line
Every time Wal-Mart spends a dollar foolishly,
it comes out of our customers' pockets. Sam
Walton
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• Wal-Mart is a Supply Chain Driven Company that
  also has retail stores!

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