Wal-Mart Case Study
Distribution and logistic systems of Wal-Mart allowed to build the huge international chain of stores and gained the leading position among retailers by financial revenues.
Huge transportation system reduces transportation costs and 40 distribution centers in the USA allowed to reduce the place of Wal-Mart’s own warehouses and to ensure the possibility of fast replenishment. Usage of barcodes technology provides quick flow of the goods, as well as a strict order of delivering and unloading of the goods in the stores.
Development of the IT technologies provide Wal-Mart with the possibility to use “cross-docking” technology when the goods are moved directly from manufacturers to the stores, it reduces the transportation costs and ensures effective tracking of the goods that allowed predicting the movement of the inventories (with the stable linkage between supplier and stores).
The structure of supply chain should allow quick provision with the goods at the lowest prices due to the low transportation costs. Tracking of the goods, possibility to forecast necessary quantities of the goods, and direct link with manufacturers and stores prove that quality service can be not so expensive. Purchasers can find in Wal-Mart what they want, and at price they are ready to pay, and that fact makes Wal-Mart’s management processes effective.
Efficient supply chain allowed decreasing the transportation cost that could increase the part of additional value of goods, and the speed and flexibility of the logistic processes allowed increasing of the sales volume, thus multiplying revenues. It was a crucial factor for the fast spreading of Wal-Mart stores in the USA and all over the world.
Wal-Mart uses the PULL strategy trying to meet the customers’ demand. Customers’ desires pull the specified goods into the stores (with the help of cross-docking technology) being the main factors of the order placement, it is contrary to the situation when goods are moved by a seller (who placed an order) and then pushed into the stores.
These measures provide fast international growth of the Wal-Mart and the high level of the financial revenues.