Wal Mart Globalization Case ~2012

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Wal-Mart Case

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MGT 3660

November 4, 2015

Group 7

1. If you were in the position of Jonnie C. Dobbs, what is your analysis of Wal-Mart’s supply chain?

Wal-Mart’s supply chain is very through in all aspects of receiving goods, to transporting goods to Wal-Mart locations. Wal-Mart’s greatest strategy for distribution was the concept of the “hub-and-spoke”. Walton created the “hub-and-spoke” due to distributors not shipping to the rural areas where Wal-Mart’s were located. This concept means there is a distribution center within driving distance to every store. Allowing stores to receive shipments quite frequently.

With Wal-Mart’s strategy of being located in rural areas, primarily long highways, makes it easier to receive deliveries from warehouses. Also, the rural areas typically had lower rent. Goods that were unsold in store were transported back to the warehouse, rather than taking up shelve space. This process is called “back haul”. Since Wal-Mart was becoming a massive chain, they had more control over their suppliers. Wal-Mart had worked with their suppliers to create a standard labeling system on their shipments, making the goods easier to transport. On shipments that came from over seas, all deliveries were sent to one distribution center to be broken down, and sent to other distribution centers throughout the country.

One smart move that Walton had made was going straight to the suppliers for purchasing their goods. This allowed Wal-Mart to remove the middleman, and gave Wal-Mart more purchasing power. It was easy for Walton to communicate with suppliers in New York, however, for suppliers overseas in China, Walton created an international office where they could work closely with the Chinese suppliers. One benefit of the close relationship with the suppliers was the suppliers were in charge of expenses such as advertising and...