Question

Case Study on Walmart using IT

A major reason for Wal-Mart’s success over the year was its constant emphasis on installing the most modern IT systems, which helped it achieve better economy of scale, distribution efficiency and pass on the benefits of the same to the customers. By offering low price to customers, Wal-Mart was able to generate more sales and minimize the promotional expenditure of the company.

By using IT, Wal-Mart was able to establish proper communication links with its suppliers, distribution centers and individual stores. Wal-Mart employed Electronic Data Interchange (EDI) that linked the computers at the stores, its distribution center and even key suppliers like P&G. In order to make its distribution system more efficient and to establish stronger links with its suppliers, Wal-Mart installed the satellite communication system at an estimated cost of $700 million. The system connected all the operating units of company and the general office with two way voice, data and video communication. Wal-Mart could keep a constant track of the movement of inventory from the manufacturing to the distribution centers and finally, to the stores. Its thousands of suppliers could obtain daily sales reports. The system also helped Wal-Mart to automate the inventory replenishment process.

Wal-Mart also used IT to improve its supply chain efficiency. Wal-Mart installed “Retail link” system that connected EDI networks to an extranet accessed and used by Wal-Mart’s business customers and its thousands of suppliers to obtain data relating to sales and stock levels at every Wal-Mart stores. The data enabled Wal-Mart’s suppliers to analyze market trends, undertake the necessary stock replenishment and plan out their production schedules to cater to Wal-Mart’s needs.

Apart from investing in building advance IT system Wal-Mart simultaneously built massive database of point of sales data at each of its stores. Using data mining Wal-Mart was able to determine the needs and preferences of its customers up to an individual store level and customize its merchandise according.

Q1. What are the benefits Wal-Mart obtained by using modern IT systems for its business and customers?

Q2. Briefly explain the benefit of using EDI over manual systems. Also explain all the benefits discussed in this case that is obtained by Wal-Mart by using EDI and satellites.

Q3. How can Wal-Mart customize merchandise for each store?                           

Q4. How Retail-link system helped the suppliers of Wal-Mart?   

Answer 1

1. Walmart obtained easy facilitating and easy tracking of goods and integrated logistics with supply chain efficientcy amd realntime report generation and leveraged IT to bring cost synergies and collaboration with vendors and suppliers for stock replenishment.
2. EDI and Satellites help real time tracking amd video graphy to ontain stock sales and data points which could then be analysed for stock replacement and order fulfillment and integrate all supply chain stakeholders onto one platforms.
3. Walmart can customise its stores for merchandise using strong data research and understanding customer preferences aand touch points and how they react to different layout and turnaround time for shopping.
4. Retail link system helpedbin demand forecasting and stock management's and inventory planning in advance to minimise losses and optimisation of resources. It helped unleash cost savings and data analysis of each transaction in real time and make modifications as per demand and supply dyanmic.

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