Value Chain Analysis

Of Walmart

Submitted to: Prof. Rushi Anandan

On 20/02/2017

Submitted By:
Nisha Buch (05)
Nithin Cherian (09)
Shantanu Mukhopadhyay (27)
Subh Kumar Sharma (45)
 Value Chain Of Walmart

Value chain analysis allows the firms to understand the parts of its
operations that create value and those that do not. Understanding these
issues is important because the firm earns above-average returns only
when the value it creates is greater than the costs incurred to create the
value

Inbound logistics:

Wal-Mart has their own warehouses to store the goods.

They bought in volume at attractive prices. They are buying
branded products.
80% of purchases were shipped from its own 27 distribution centers.
Applied cross docking- the direct transfer of products from inbound
or outbound truck trailers without extra storage.
Highly automated distribution centres, designed to serve the
distribution needs of approximately 150 stores within an average
radius of 200 miles.
They had an Electronic Data Interchange system(EDI) to integrate
the supply of goods with sales. The EDI system would provide the
information about the type and amount of goods the customers
purchased frequently and amount, size, type of goods suppliers had
to produce to meet the demands of the customers at Walmart.
Operations:

Wal-Mart uses handheld units scan bar code to mark up the price of
goods.
 Ensured accurate pricing and improved efficiency
The company leased about 70 % of the stores and owned the rest.
In 1993, Wal*Marts rental expense was 3% of its discount stores
sales, compared to 3.3% of its competitors.
Store has only 10% of warehousing compared to 25% of industrial
standard.
Outbound logistics:

The goods replenishment process originated at the point of sale

information transmitted via satellite.

A 2- stage hub and spoke distribution network was created, in which

a Wal*Mart truck bringing the merchandise to a distribution center,
was sorted for delivery to a Wal*Mart storeusually within 48 hours
of the original request

Its distribution network is comprised of two steps: concentrate and

distribute.

Its fleet of freight transportation is composed of more than 2,000

trucks.

Stores could choose one of four options for the frequency and
scheduling of shipments.

Marketing and Sales:

Walmart had maintained the promotional strategy of everyday low

prices.

Walmart invested less in advertisements compared to its

competitors. They made very few promotions.

Wal*mart offered to all its customers a satisfaction guarantee policy.

They can return products to any Walmart store, no questions asked
As a part of marketing, the local store manager, using its inventory
and sales data, chose which products to display based on customer
preferences, and allocated shelf space for a product category
according to the demand at his or her store.

Pricing was not centralized, store manager can decide the pricing
according to the demands of his store.
 They adopted competitive pricing. Their prices were lower than the
competitors and depends on the proximity of competitor store.

Services:
Sales were primarily on a self-service, cash-and-carry basis.
Super centers offered limited package sizes, to keep costs. They
implanted a super flexible schedule. Most shops were open from 9
am to 9 pm six days a week and from 12.30 pm to 5.30 pm on
Sundays. The supermarkets were open 24 hours.

Infrastructure:
Consolidation has been the way for WALMART. It has ensured
presence through superstores, hypermarkets etc. and has ensured
the chunk of the market share.
Glass President and CEO spoke to all employees via satellite from
the company since it was impossible to visit all the stores in the
year.
It was thought that the fact that Wal-Mart does not operate in
regional offices it saved the company about 2% of sales each year

Human Resource Management:

Wal-Mart associates employed 528,000 full or part time.

Ideas and information is shared.

Management seminars offered at the distribution centers. All new

partners received training.

Introduction of senior manager with background outside retailing

Higher sales volume per employee

Technology:
Benchmarking competitors successful measures
They installed a satellite system to collect sales data across its
stores.
Helped in gathering the sales data and its analysis. More accurate
forecasting can be done.
Procurement:
 High bargaining power with suppliers.
Partnerships with major brands (eg: P&G). Shared sales data for the
brand to better understand its position.

The campaign called: Buy American helped Walmart use the

strategy of high volume and low cost of operation, by saving on the
goods that could have been produced off shore.