Walmart Case Study

Issues in Market Logistics

Logistics Cycle in Walmart

Input to Vendors Using CPRF and VMI programs Inventory Tracking through RFID Walmart headquarters Back Haul revenue (unsold merchandise) Inputs from Vendors through Retail Link Inputs given by associates

Sale of Goods at the Retail Store

Products picked up from suppliers warehouse

Shipment of products from distribution centers to stores

Shipment of these products to WALMARTS distribution centre

Comparison in the trend of net sales, cost of goods and operating, selling and Admin costs
350000 300000 250000 200000 150000 Cost of Sales Operating, selling and admin expenses Net Sales

100000
50000 0 2000 2001 2002 2003 2004 2005 2006

Share of market logistics costs as a percentage of net sales of Walmart

100%

90%
80% 70% 60% 50% 40% 30% operating, admin and selling expenses cost of sales Income generated

20%
10% 0%

2000

2001

2002

2003

2004

2005

2006

Comparison of competitors in various parameters

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

net income Selling, mkttg and logistics expenses Cost of Goods

Market Logistics in India

Transportation=35% Warehouse and handling=9% Inventory=25% Packaging=11% Transit Losses=14% Technology Losses=<1%

Lessons To be learned by Indian Marketers

Introduction of Retail Link software in India 1.Historical Sales of Product 2. Performance by Brand Report 3. Purchase Frequency Chart 4. Product Sales by Hour-Weekday v/s Weekend

Lessons to be Learned by Indian Marketers-contd

Use of CPFR and VMI programs with vendors for efficient supply chain management. Transportation costs minimized through self sustained transportation system(Walmart-3% of total costs on transportation. Accelerated delivery system- Replenishment within a days time Associates should have Magic Wand- hand held computer to track inventory in stores