Wal-Mart is a Supply Chain Driven Company Obsessed With Lowering Costs... Is Yours? Michael Bergdahl, September 2011

Wal-Mart is a Supply Chain Driven Company Obsessed With Lowering Costs... Is Yours? Low Profit Business Model In-Stock Spoke and Hub Strategy IT Infrastructure Cross Docking Distribution Centers Private Fleet Ownership

Wal-Mart is a Supply Chain Driven Company Obsessed With Lowering Costs... Is Yours? Automated Replenishment Inventory Turnover Vendor Partnership Cost Control Strategy Culture of Cost Controllers

2010 Sales = US418 billion 2010 Net Profit = 3.2% Total Profit = US$13.4 billion Supply Chain drives Walmart’s Low Margin Profitability Model

120,000 products 60,000 Suppliers 8900 Stores 120 Distribution Centers Supply Chain drives Walmart’s Low Margin Profitability Model

Out of stock is out of business Supply Chain Goal = In-Stock

Walmart’s expansion strategy was controlled by its distribution strategy. Spoke and Hub Strategy

Largest privately owned IT systems in the world

Cross-docking distribution centers No Warehouses

7000 privately owned truck fleet – largest in the USA

Automated Replenishment “Just in Time Inventory” Automated Replenishment “Just in Time Inventory” Wal-Mart’s inventory turnover goal for suppliers is 100% every 60 days

High velocity inventory turnover allows Walmart to make money on money! Walmart is Like a Bank...

Vendor Partnership Wal-Mart cuts out the middleman... Buys from the source!

Power of low priced products Many small retailers purchase inventory for their stores from Walmart’s shelves!

Wal-Mart’s relentless pursuit of low prices is: one part controlling expenses and one part buying at the lowest prices. Walmart passes expense savings along to its customers. Cost Control Strategy

The Wal-Mart Effect Wal-Mart’s low grocery prices save USA families of four US$3100 / yr

You Can Save Your Way to Prosperity Sam Walton was absolutely fanatical about controlling expenses

Culture of Cost Controllers Office Supplies Paper usage Overtime Budget No Headcount Increases Executive Travel Technology – Temperature of Stores

The Sam Walton Way Expense Control Standards Walmart gets its employees to manage expenses like they are writing the check from their personal checking accounts.

Every time Wal-Mart spends a dollar foolishly, it comes out of our customers' pockets. Sam Walton The Bottom Line:

Wal-Mart is a Supply Chain Driven Company that also has retail stores!

Questions ????????? Join My Walmart’s Best Practices LinkedIn