Management Information System for Gloria Garza, Tracy Li, Wesley Thomas, Brianna Vela, Destiny Zavala

History and Overview Created in 1964 by Sam Walton Public corporation that runs large discount department stores and warehouses Is the world’s largest and most profitable retailer Wal-Mart operates so well that many companies like General Electric look up to its business model Competitors include: Target, K-mart Biggest competitor is Dollar General

World wide influence

Why Wal-mart? Their success The efficiency of its business process They’re pioneers in computer systems IT has been a very important factor in Wal-Mart’s growth One of the best inventory systems

Business Model Key activities Value Proposition Key Resources Key Partnership Customer segment Revenue streams Cost structure Distribution channel Customer Relationship

The core of the business model is: Their business model is based on cost leadership. Value proposition

Key Resources 3 categories: 1.Physical resources 2.Human resources 3.Company Culture: Continuous self-improvement, discipline and loyalty Close buyer-supplier relationship Wal-mart has a strong negotiation power Key Partnership

Wal-Mart's Business Process

What is a Business process?  Tasks or activities companies use to produce goods or services.  There are 3 fundamental processes: 1.Procurement 2.Production 3.Fulfillment  Wal-mart has : Procurement and fulfillment process.

Procurement Process Steps taken to acquire necessary materials For Wal-Mart these materials are already finished products that they will retail 6 steps in the procurement process: 1.Purchase requisition 2.Purchase order 3.Packing List 4.Goods receipt document 5.Vendor Invoice 6.Vendor Payment

Purchase requisition Wal-mart uses Vendor Managed inventory. What is it?  A type of business model.  It is the vendor who monitors the inventory and decides when inventory is running low. Customer trusts the vendor to manage the inventory Supplier has control over the size and the time of the deliveries

How it works… Vendor I. Monitors customers’ inventory:  Customers call/fax/  Remote telemetry units  Set levels to trigger call-in II. Controls inventory replenishment & decides:  When to deliver  How much to deliver  How to deliver

Fulfillment process Supplier to Wal-Mart SALES 1.Receive customer inquiry 2.Create & send quotation 3.Receive customer purchase order 4.Create sales order Warehouse 5.Prepare shipment 6.Send Shipment Accounting 7.Create & send invoice 8.Receive Payment

Vendor Inventory Management Continuous Replenishment Process (CRP)

History Between Wal-Mart and P&G, CRP is best-known as the vendor- managed inventory program. In 1987, P&G and Wal-Mart pioneered in Continuous Replenishment Process (CRP). P&G makes the main inventory replenishment decisions for Wal-Mart. P&G monitors Wal-Mart’s inventory levels (physically or via electronic messaging) and makes periodic resupply decisions regarding order quantities, shipping, and timing. Transactions customarily initiated by Wal-Mart (like purchase orders) are initiated by P&G instead.

Consignment “The process of a supplier placing goods at a customer location without receiving payment until after the goods are used or sold”. Traditional practice: a customer pays for goods within a set time period after receiving them (often 30 days). The supplier receives nothing until it is used or sold. This could result in a serious cash flow problem for the supplier if goods continue to be produced but money is not collected.

Advantages of VMI Customer  Less resource for inventory management  Assurance that product will be available when required Vendor  More freedom in when & how to manufacture product and make deliveries  More uniform utilization of resources  Better coordination of inventory levels at different customer  Better coordination of deliveries to decrease transportation cost

Pitfalls of Vendor Managed Inventory 1. EDI problems: Extensive EDI testing should be done to validate the data being sent. Is the distributor sending all the data that should be sent? Is each field populated with the correct data? 2. Acceptance: It's not enough to just sell the concept to senior management; all employees who are involved must be willing participants and fully understand this new way of doing business. 3. Promotions/Events: Lots communication need to be involved. Anything that adds or takes away from the normal ordering pattern must be properly communicated.

4. Customer Base: communication between large customers and manufacturers. Any large customers, either gained or lost, must be communicated to the manufacturer. The distributor must guide the manufacturer on how this will affect sales. 5. Over/Obsolete Stock: An agreement must exist between the manufacturer and the distributor on what to do if an overstock does occur (or in the case of an ordering error). Also, both parties must agree on how to handle obsolete stock. 6. Time: Both parties involved must understand that this is a learning process. Errors will occur. You will probably not have a perfect process in place from day 1

Applications of VMI Chemical Industry  Air products distribution  Carbon black distribution Petrochemical industry  Gas stations Automotive Industry  Parts distribution Consumer Products  Department and grocery stores

Inputs and Outputs in the Retail Link System

Retail Link system Introduced in Wal-Mart in 1991 It is a system that keeps track of and stores all of Walmart's sales data in order to more effeciently run their business The RLS is connected to each store and warehouse to keep track of inventory.  Input information from barcodes, registers, and warehouse managers  Output response in form of shipping out more inventory or holding inventory in store

RLS continued… Walmart also allows other companies to register for access to their RLS in order to see how their product is selling in Walmart stores  Input info from barcodes, registers, and warehouse managers to 3 rd party companies  Output response from the companies (if they should keep selling through Walmart, how they should adjust prices, etc.)

Wal-Mart barcode transaction/RDFI transaction

Barcode transaction/RFID transaction What is it?  A systematic way of handling the flow of material in Wal-mart’s inventory.  Uses RFID (radio frequency identification) What does it do?  The barcode scanning allows Wal-mart employees to know how much inventory is in their store.  Barcodes allow employees to known when materials are needed and how many more of each item they need.

Bar code process When you purchase something at Wal-Mart the barcode is checked at the checkout counter:  Network passes the scanned information to the database.  Subtracts purchase from the total inventory in the supply chain.  Automatically directs store replenishment and supplier purchase transaction.  Barcode label printed at the distribution center tells the order clerk to pull that product from the storage bin and replace it on the conveyor.  Barcode reader automatically routes product along the conveyor to a truck that will deliver it to the appropriate.

Questions