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I would now like to discuss some of the key aspects that makes Walmart the retail logistics
expert. First of all, Walmart monitors the "Turn" rate of their inventory very carefully.
"Turn" is short for turnover, which is a phrase typically used by intermediaries to describe
how long it takes a sku to be sold after being received. The word "sku" is short for stockkeeping
unit. This is used to describe a particular configuration of a product. For instance,
a black bookshelf, as shown here is one sku, while the same bookshelf in white is a different
sku. Walmart knows that the faster a piece of inventory turns, the lower its overall
carrying costs, which was discussed in class. These cost savings can be crucial in providing
a consumer product for a low cost. It also leads to a better product offering by knowing
which products move quickly and which do not. Walmart drops the products that do not turnover
quickly enough and buys more of those products that do. Finally, it also leads to the ability
to analyze the marketing mix of those products not moving quickly to see if something can
be changed to increase its turn rate. If a product is not moving quickly enough, the
retailer may consider including it in its weekly circular with special deals, or changing
its placement in the store to a more visible place as discussed here: http://www.nytimes.com/interactive/2011/04/08/business/20110408-clutter.html?ref=business
Pay attention to the upper left hand quadrant where the voice will discuss "action alley"
an area of Walmart that is used to give some products more visibility. That part of the
store is called "action alley" and the idea there is that shoppers who shop Walmart are
absolutely trained to know that down the middle of these big, wide isles are where the best
values can be found. And they're meant to go in and go out really fast so they're priced
to sell and they're packed in pallets, no fancy display, they are all mostly corrugated
in cardboard boxes and stacked really high product on top of product, mostly just meant
to be the value item of the day or the week at Walmart. Walmart also uses Extranets. These
are also called "Virtual Private Networks". What this is, is the use of the Internet to
connect Walmart's internal systems with those of their suppliers. Basically, when a product
that is being purchased is scanned at checkout, the data is sent to the Internet through Walmart's
firewall. The data "tunnels" through the Internet, which simply means it is encrypted top prevent
hacking, and passes through the firewalls of their suppliers and into their systems.
By sharing such data instantaneously, Walmart is able to help their suppliers know what
is being purchased, and when, from each store location. The supplier can then plan their
production of the product more accurately to reflect current demand and arrange transportation
of goods to meet each Walmart locations' needs better. The downside to this setup is that
Extranets are not as secure as the use of EDI, or Electronic Data Interchange, which
uses a dedicated phone line. However, EDI is MUCH more expensive to operate and maintain
than the use of an extranet. Another technology Walmart has been at the forefront in implementing
has been the use of Radio Frequency Identification (RFID) Chips. RFID chips store information
and can be attached to products, packages of products and/or pallets of products to
described what they are, when they were produced and where. As seen on this graph here, products
on the shelf can tell the store's database that they are still in inventory. When the
product is sold, the chip is removed and the product is taken out of the store's database.
These chips data can also be combined with GPS data to determine where they are at all
times during transportation. This allows us to monitor movement of goods throughout the
supply chain and increase inventory flexibility and enhance sales forecasting! Here's a short
video on how Walmart uses EPC barcoding, another newer technology that helps Walmart reduce
their inventory costs: At Walmart, it is important to us that we
have the products you want to buy in stock. Meet the next generation barcode, EPC. We
use EPC or electronic product code on some items in the store. Look for the EPC logo,
EPC lets us know exactly what merchandise is on the shelf. Helping us make sure we have
your size and favorite color in stock. For more information visit Walmart stores. Recently,
Walmart has upped their game in the use of smart phone and tablet applications, or Apps.
Since Walmart customers have been adopting smart phones at about the pace of the general
U.S. population, they have made significant efforts to prepare for the influx of mobile
marketing opportunities. One application has list-generation capability that will give
it access to something many shopper-card programs don't have -- data on what shoppers are considering
for purchase and the ability to make recommendations based on what's already on the shopping list.
The mobile apps also will allow for the creation of "favorites" lists based either on past
online purchases or prior lists. The updated iPhone app adds a wide range of tools aimed
at shopping in stores, including the option of using home bar-code scanning or Apple's
Siri voice command system to create lists. It will integrate those lists with coupons
served by Coupons.com and Walmart's inventory systems to show whether desired items are
available in individual stores. The updated iPhone app also includes a budgeting tool
that keeps a running tally of items added to the shopping list, product information
that includes reviews, and the ability to share lists with family or friends. The third
pillar of Walmart's mobile strategy is to bridge the gap between online and offline
shopping. The iPad app, a more "touch optimized" version of Walmart.com, includes a "Browse
My Store" feature for checking product availability and detailed information on specific stores.
It's also designed so shoppers can easily find sizes or varieties not carried in their
store either while shopping at home or in the store, and order them online. All of this
information is designed to not only make the in-store shopping experience more pleasant,
but to obtain more customer data that will allow them to forecast product demand and
carry the right mixture of quantities of goods at all times at all locations.