Relationship with Suppliers
• To bring their customers the lowest prices and best products possible, Virtual Companies is the best supply chain strategy for them. Cost of sales worked out to be 2-3%(very low from
• Walmart generally starts out smaller suppliers in a local market, delivering goods to up to 50 stores, as a test run. If the supplier provides a high-selling product and proves
reliable, it might be considered for national distribution.
• Example: Wal-Mart and Proctor & Gamble built a software
system that hooked P&G up to Wal-Mart’s distribution
centers. This system would then monitor supply levels and
when products run low, automatic alerts are sent out to
require the shipment of more products to that distribution
• Wal-Mart known for innovative business practices. One of the first retailing companies to centralize distribution system. Always among the front runners in employing IT to manage its supply chain processes. • In 1977, Wal-Mart set up a computer terminal network to establish a communication link between its store and the company headquarters. • Wal-Mart use EDI for procurement. EDI would help store managers to place orders in the manufacturing division by using bar code scanners to analysis sales data.
• Wal-Mart has used RIFD tags, which use numerical codes that can be scanned from a distance to track pallets of merchandise moving along the supply chain. Even more recently the company has begun using smart tags, read by a handheld scanner, that allow employees to quickly learn which items need to be replaced so that shelves are consistently stocked and inventory is closely watched.
• The major disadvantage of RFID is privacy concern towards RFID devices. Some claim that Wal-Mart is infringing on natural rights by overseeing what customers buy.
To make its distribution process more efficient, Wal-Mart also made use of a logistics technique called...
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