SCM 414 - Walmart Case Studyguide

What does the term EDLP stand for?

 

Everyday low pricing

What is a HI-LO pricing strategy?

 

Involves adjusting the retail price of items to optimize gross margins. (frequent promotions on selected items)

What pricing strategy is followed by Walmart?

 

Everyday Low Pricing

Where is Walmart's headquarters located?

 

Arkansas

What type of distribution center does Walmart use for high-turnover items like fresh food and other perishables?

 

Cross-Dock DC

Which inventory management approach does Walmart use?

 

Vendor Managed Inventory (VMI)

Why is RFID important for Walmart?

 

It increases stock visibility as stock moves in trucks through the distribution centers and on to the stores.

What is Walmart's small store format called?

 

Walmart Express

Which of the following is also known as continuous replenishment?

 

Vendor Managed Inventory (VMI)

What was the initiative called by Walmart that aimed to reduce out-of-stock merchandise in stores through a redesigned distribution network?

Remix

Who founded Walmart and when?

Sam Walton, in 1962.

Where is Walmart headquartered?

Bentonville, Arkansas. (now a museum)

What are the main Walmart store formats?

1. Supercenters

2. Discount Stores

3. Neighborhood Markets

4. Sam’s Club

5. Walmart on Campus

6. Convenience Stores.

How does Walmart differentiate itself from competitors?

through its highly efficient supply chain and its “Everyday Low Price (EDLP)” strategy, which keeps prices low by reducing operating and distribution costs.

What are the benefits of EDLP?

• Simplified decision making for customers

• Reduced customer search cost - no efforts to compare costs.

• Helps stores reduce demand fluctuations ("Bullwhip Effect")

• Reduced market expenditure (Consumers already know)

• Reduced staffing expenditure (Consumers already know)

• Reduced staffing efforts (no need to individually mark items)

What are the challenges of EDLP?

• Reduced profit on high-margin items.

• Complex inventory management.

How does Walmart maintain low prices?

Efficient supply chain + Vendor Managed Inventory (VMI) system.

What is the main goal of Walmart’s purchasing team?

Eliminate the middleman (wholesalers/distributors).

How does Walmart’s local/global buying office work with suppliers/manufacturers?

• Walmart's local buying office works closely with the suppliers - correct product mix is ordered.

• Walmart's global buying office works closely with the manufacturers - private labels

• Walmart's global offices work on store floor one/twice a week for field intelligence.

What advantages come from Walmart’s HIGH buying power?

Suppliers open offices in Arkansas, giving Walmart control and cost savings.

How is Walmart's relation with suppliers?

• Walmart is criticized for dictating suppliers?

• Insists on low-prices and does not pay for marketing

• Designates Category Captains. (know what category and style/type of product (aka shampoo) sells best, if they get their own shelf in the section of store)

• Eliminating middle-man, contract negotiations, and savings on marketing help achieve EDLP.

What are the benefits of Walmart’s global procurement?

• Reduced cost items - EDLP

• Access to new research , design and intellectual capital

• Access to new technology and capacity

What are the challenges of global procurement?

• IP risks.

• Cultural differences.

• High monitoring costs.

• Sustainability issues (e.g., child labor).

Why is Walmart’s workforce non-unionized?

To allow easier implementation of tech and operational standards.

gives flexibility, but also draws criticism and opposition from unions and some communities. Walmart promotes a philosophy of direct, open communication between associates and management, stating union is unnecessary bc employees can speak for themselves.

What is the “heart” of Walmart’s logistics?

Distribution Centers (DCs).

What is the network model used?

Hub-and-Spoke.

What types of DCs does Walmart operate?

REMIX!!

• Breakbulk DCs – for general merchandise.

• Cross-dock DCs – for perishables (short shelf life).

Inventory Replenishment Approach

Vendor Managed Inventory

• For perishable items:

  • Vendor Owned Inventory until sold out (Vendors retain ownership until products are sold — Walmart pays after sale.)

What are the benefits of VMI?

• More visibility for vendors.

• Reduced inventory costs and overstocks/sortages.

• Improved strategic communication.

• Less responsibility for Walmart

What are the challenges of VMI?

• Walmart looses control

• Data security issues

• Market trend challenges

What is Walmart’s backhaul program?

Trucks pick up inventory on their way back; Vendors save on transportation costs.

(filling trucks on the return trip/ a load of cargo picked up on the return trip after a truck has delivered its initial cargo) add revenue and cut empty miles

How do logistics support EDLP?

Owning fleet, non-union labor, VMI, and DC network reduce costs.

What type of market strategy does Walmart use?

Multi-channel strategy.

What are the advantages of a multi-channel strategy?

• Reaches more customers.

• Increases revenue.

• Meets customer preferences.

What are the disadvantages of a multi-channel strategy?

• Higher costs.

• Reduced control.

• Lower economies of scale.

How does Walmart adapt operations to local markets?

store network - Each store customizes inventory to meet local demand.

What kind of store environment does Walmart use?

Standardized materials, simple design, empowered employees.

What helps Walmart achieve EDLP operationally?

• Employee empowerment.

• Centralized controls (lights, temp).

• Price rollbacks.

• Low-cost materials.

What information system does Walmart use to share data with suppliers?

Retail Link – records every sale for supplier access.

What other technology supports Walmart operations?

RFID (Radio Frequency Identification) for inventory tracking.

Walmart - New SCM Initiatives - Intelligent Retail Lab

• Continuous improvement of processes at store level

• Incorporating AI into retail store (IRL)

• Cashier less stores

• Camera Operated Inventory

• Electronic Shelf labels

• Mobile Checkout

As EVP (executive vice president) what recommendation would you make to the CEO? Where. do you see the opportunities for Walmart in its global supply chain?

• Invest in automation and AI to enhance global supply chain efficiency.

• Expand e-commerce and small-format stores in growth markets.

• Strengthen supplier partnerships to cut costs and speed deliveries.

Saturday morning meetings

• constant best-practice sharing led fast execution

  • a way for store employees to review sales numbers and problem-solve for the coming week. keep employees informed, foster innovation. Reduced monthly

project one touch

• Deliver pallets organized by category/aisle to make stocking faster.

• Add location info to case labels and improve backroom processing

• Result reported: on-shelf availability rose to >90%: 2B in logistics savings reinvested in owner prices.

CPFR

 retailer and supplier plan demand and restocking together

saturation strategy

opening many stores close together around a DC to lower costs and dominate a region.

price rollback

a temporary cut to a reg. price, advertised as a "rolled back" lower price