Wal-Mart Inventory Management System

1. Conduct research on Wal-Mart Inventory Management System

Wal-Mart serves customers and members more than 200 million times per week at more than 9005 retail units under 60 different banners in 15 countries. With fiscal year 2010 sales of $405 billion, Wal-Mart employs 2.1 million associates worldwide. (Walmartstores.com, n.d.)

A leader in sustainability, corporate philanthropy and employment opportunity, Walmart ranked first among retailers in Fortune Magazine’s 2010 Most Admired Companies survey. (Walmartstores.com, n.d.)

Inventory management is the active control program which allows the management of sales, purchases and payments. (IM, 2003-2011)

Inventory management software helps create invoices, purchase orders, receiving lists, and payment receipts and can print bar code labels. An inventory management software system configured to your warehouse, retail or product line will help to create revenue for your company. The Inventory Management will control operating costs and provide better understanding. We are your source for inventory management information, inventory management software and tools. (IM, 2003-2011)

Wal-Mart 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. (Chandran P.M, 2003)

Instead of cutting inventory across the board, Wal-Mart 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 management.(Chandran P.M, 2003)

Wal-Mart also networked its suppliers through computers. The Company entered into collaboration with P&G for maintaining the inventory in its stores and built an automated re-ordering system, which linked all computers between P&G factory through a satellite communication system. P&G then delivered the item either to Wal-Mart distribution centre or directly to the concerned stores. (Chandran P.M, 2003)

Benefits from that are Wal-Mart could monitor its stock levels in the stores constantly and also identify the items that were moving fast. P&G could also lower its costs and pass on some of the savings to Wal-Mart due to better coordination. (Chandran P.M, 2003)

Employees at the stores had the “Magic Wand”, a hand-held computer which was linked to in-store terminals through a radio frequency network. Benefits from that these helped them to keep track of the inventory in stores, deliveries, and back up merchandise in stock at the distribution centres. (Chandran P.M, 2003)

The order management and store replenishment of goods were entirely executed with the help computers through 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. (Chandran P.M, 2003)

Wal-Mart also made use of the sophisticated algorithm system which enabled it to forecast the exact quantities of each item to be delivered, based on inventories in each store. It benefits by providing accurate data that even bulk items could be broken and supplied to the stores. (Chandran P.M, 2003)

Wal-Mart also used a centralized inventory data system using which the personnel at the stores could find out the level of inventories and the location of each product at any given time. It is also showed whether a product was being loaded in the distribution centre or was in transit on a truck. Once the goods were unloaded at the store, the store was furnished with full stocks of inventories on a particular item and the inventory data system was immediately updated. (Chandran P.M, 2003)

Wal-Mart also is using bar code technology and radio frequency technology to manage its inventories and enabled accurate distribution of goods.Using bar codes and fixed optical readers, the goods could be directed to the appropriate dock, from where they were loaded on to the trucks for shipment. (Chandran P.M, 2003)

Wal-Mart owned the largest and most sophisticated computer system in private sector. The company used Massively Parallel Processor (MPP) computer system to track the movement of goods and stock levels. (Chandran P.M, 2003)

Wal-Mart used Cross-Docking system. In a cross-docking system, pallets of material are received on one dock, broken down into customer specified loads while still on the dock and transferred to outbound trucks. Items are not placed in slots for storage.  (Osha.gov, n.d)

Benefits:

By making effective use of computers in all its company’s operations, Wal-Mart was successful in providing uninterrupted service to its customers, suppliers, stockholders and trading partners. (Chandran P.M, 2003)

2. Evaluate on how the system is benefiting Wal-Mart

•  Improve performance and value for customers

• Made efforts to capitalize on every cost saving opportunity

• The savings on cost were always passed on to the customers, thereby adding value at every stage and process

• Faster inventory turnover, accurate forecasting of inventory levels, increased warehouse space, reduction in safety stock and better working capital utilization.

•  Better customer services by increasing efficiency in operations

•  Reduce inventory storage costs by using cross-docking and cut down the labor and other handling costs involved in the loading and unloading of goods.

References

Walmartstores.com, n.d., Wal-Mart Corporate [online], Available from http://walmartstores.com/AboutUs/, [Accessed at 26^th April]

IM, 2003-2011, what is Inventory Management [online], Available from http://www.inventorymanagement.com/, [Accessed at 26^th April]

Chandran P.M, 2003, Wal-Mart Supply chain management practices [online], Available from http://mohanchandran.files.wordpress.com/2008/01/wal-mart.pdf, [Accessed at 26^th April]

Osha.gov, n.d., Cross-Docking System [online], Available from http://www.osha.gov/SLTC/etools/grocerywarehousing/crossdockingsystem.html, [Accessed at 26^th April]