Wal-Mart

Wal-Mart is a company shaped by its supply chain and the efficiency of its supply chain has made it a leader in the markets it serves. Sam Walton decided to build a company that would serve a mass market and compete on the basis of price.  He did this by creating one of the world’s most efficiency supply chains.  The structure and operations of this company have been defined by the need to lower its costs and increase it productivity so that it could pass these savings onto its customers in the form of lower prices.  The techniques that Walt-Mart pioneered are now being widely adopted by its competitors and by other companies serving entirely different markets. Wal-Mart introduced concepts that are now industry standards.  Many of These concepts come directly from the way the company builds and operates its supply chain.

The four concepts are:

1. The strategy of expanding around distribution centres (DCs)
2. Using Electronic Data Inter-change (EDI) with suppliers
3. The “Big Box” store format
4. “Everyday low prices”

Taken individually, these four concepts are each useful, but their real power comes from being used in connection with each other. They combine to form a supply chain that drives a self-reinforcing business process.  Each concept builds on the strengths of the others to create a powerful business model for a company that has grown to become a dominant player in its markets.

Questions

1. Expound on the FOUR concepts introduced by Wal-Mart.
2. “Sam Walton decided to build a company that would serve a mass market and compete on the basis of price”.   Explain.
3. Discuss the challenges that are likely to be faced on the choice of targeting the market.