Wal-Mart's Supply Chain Management Practices (B): Using IT/Internet to Manage the Supply Chain

Using IT in Supply Chain Management

Wal-Mart employed the most advanced IT tools and applications in all supply chain functions, starting from demand forecasting, procurement, logistics, distribution and inventory management. The company focused on bringing efficiency to every function of the supply chain so as to offer its customers products at the lowest possible prices.

Mike Duke (Duke), senior VP of logistics, explained, "The way we look at it is, 'What is the total cost of a product when it is all the way through the supply chain and on the shelf at the store?' We don't just focus on distribution-center expense. Our real focus is on reducing the total supply-chain cost and not necessarily focusing on only one area of that.

By looking at the grand total supply-chain cost and trying to reduce the total to lower the cost of the product for the customer, you end up looking at it a different way. You end up sometimes increasing cost in distribution if it will help more in some other area of the business."...

Using The Internet In Supply Chain Management

The Retail Link System - Implementing CPFR

In CPFR, Wal-Mart worked together with its key suppliers on a real-time basis by using the Internet to jointly determine product-wise demand forecast (Refer Exhibit III for a note on CPFR). Wal-Mart also shared with its suppliers, the actual sales data in each store for the past two years, demographic details of customers and product-wise stock positions at its stores and distribution centers.

Recent Supply Chain Initiatives

In 2000, Wal-Mart made further up gradations in the Retail Link system in its efforts to pursue global sourcing. In 2001, Wal-Mart launched a global sourcing initiative to achieve higher economies of scale in procuring goods. The company established a global procurement division to co-ordinate all procurement activities across the world. Empowered by Retail Link, sales and inventory data could be exchanged between Wal-Mart and suppliers in a matter of seconds through the Internet.


POSTED BY :-
SHWETA RANI
PGDM-3 rd SEM