A Business Success

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 emphasized the need to reduce purchasing
costs and offer the best price to the
customer.

 directly procured from manufacturers, by

passing all intermediaries.

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 finalize a purchase deal only when it is fully
confident that the products being bought is
not available else where at a lower price.

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 spend a significant amount of time meeting
vendors and understanding their cost
structure.

 By making the process transparent, the

retailer can be certain that the manufacturers
are doing their best to cut down costs.

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 The computer systems of Wal-Mart were
connected to those of its suppliers.
 EDI enabled the suppliers to download
purchase orders along with store-to-store
sales information relating to their products
sold.
 On receiving information about the sales of
various products, the suppliers shipped the
required goods to Wal-Mart’s distribution
centers.

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 An important feature of Retail logistics
infrastructure was its fast and responsive
transportation system.

 The distribution centers were serviced by

company owned trucks.

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 believe that it needed drivers who were
committed and dedicated to customer
service.

 Hire only experienced drivers accident-free

miles, with no major traffic violation.

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 To make its distribution process more
efficient, also make use of a logistics
technique called “cross-docking.”

 In this system, the finished goods were

directly picked up from the manufacturing
plant, sorted out and then directly supplied
to the customers.

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 The system reduced the handling and
storage of finished goods, virtually
eliminating the role of the distribution
centers and stores.
 The manufacturer directly forwarded the
goods to a place called the “staging area.”
 The goods were packed here according to
the orders received from different stores
and then directly sent to the respective
customers.

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 Retail invested heavily in IT and
communication systems to effectively track
sales and merchandise inventories in stores
across the country.

 With the rapid expansion, it was essential to

have a good communication system.

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 Retail was able to reduce unproductive
inventory by allowing stores to manage
their own stocks, reducing pack sizes
across many product categories, and timely
price markdowns.
 Instead of cutting the inventory across the
board, Retail made full use of its IT
capabilities to make more inventories
available in the case of items that
customers wanted most, while reducing the
overall inventory levels.

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 Employees at the stores had the “Magic
Wand,” a hand-held computer which was
linked to in-store terminals through a radio
frequency network.

 These helped them to keep track of the

inventory in stores, deliveries, and backup
merchandise in stock at the distribution
centers.

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 The order management and store
replenishment of goods were entirely
executed with the help of computers
through the Point-of-Sales (POS) system.

 Through this system, it was possible to

monitor and track the sales and
merchandise stock levels on the store
shelves.

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 install a voice-based order filling (VOF)
system in all its grocery distribution
centers.
 Each person responsible for order picking
was provided with a microphone/speaker
headset, connected to the portable (VOF)
system that could be worn on waist belt.
 They were guided by the voice to item
locations in the distribution centers.

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 The VOF system also verified quantities
picked, and could respond to a variety of
requests such as providing product detail
(type, price, barcode number, etc.)

 By installing the VOF system, Wal-Mart

eliminated mispicks and product labeling
costs since the system did not require paper
lists and labels to be affixed on the goods.

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 Since the floor area of any retail store varied
between 40,000 to 200,000 square feet,
movement of goods within the store was an
important part of logistics operations.

 Retail should make significant investments

in IT to quickly locate and replenish goods
at the stores.

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 ask its suppliers to ship goods in store-
ready displays called pretty darn quick
(PDQ) displays.
 Goods were packed in PDQ displays that
arrived at the stores ready to be boarded on
the racks.
 Retail employees could directly replace the
empty racks at the stores with fully packed
racks, instead of refilling each and every
item at the racks.

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 By the mid 1990s, Retail Link had emerged
into an Internet-enabled SCM system whose
functions were not confined to inventory
management alone, but also covered
collaborative planning, forecasting and
replenishment (CPFR).

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 In CPFR, retail should work together with its
key suppliers on a real-time basis by using
the Internet to jointly determine product-
wise demand forecast.

 CPFR is defined as a business practice for

business partners to share forecasts and
results data through the Internet, in order
to reduce inventory costs while at the same
time, enhancing product availability across
the supply chain.

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 Though CPFR was a promising supply chain
initiative aimed at a mutually beneficial
collaboration between Wal-Mart and its
suppliers, its actual implementation
required huge investments in time and
money.
 A few suppliers with whom Wal-Mart tried
to implement CPFR complained that a
significant amount of time had to be spent
on developing forecasts and analyzing sales
data.

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 Because of the implementation of RFID,
employees were no longer required to
physically scan the bar codes of goods
entering the stores and distribution centers,
saving labor cost and time.

 RFID would reduce the instances of stock-

outs at the stores.

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