The Secret of Walmart's Unprecedented Success
Some Resources on the founder of Wall Mart
Forbes List
If you are trying hard to be rich, am sure you know
that Billy Gates has done it again. Am sure you also know that Zuckerberger has
gained considerable ranking and is now in the coveted position of top 20 of America’s
richest people. You may have also
noticed the Forbes commentary that even though everybody seems to be losing in
profit margins owing to the hard economic times, the rich have somehow kept
growing richer…
There are many fascinating facts in this year’s list but
what really caught my eye was the Walton’s.
Yes, the Wal-Mart Walton’s. Three Waltons in the top ten list - that
made me want to investigate more on Wal-Mart. The only company that has managed
to position three people on the top ten list of the richest men/women in the
world. So what is the Wal-Mart secret?
How Sam Walton Began Wal-Mart
Wal-Mart's unprecedented success
can be traced back to the founder.
Sam Walton opened the first Wal-Mart store on September 1, 1945. Those
were hard times. It was the period of the Second World War. Sam Walton knew that the biggest challenge
for people was money. So he came into business with one major goal, help people
to “save money” so that they could “live better”.
He had four major guidelines
that still dictate day to day operations at Wal-Mart. He wanted to cut down on
expenditure, to increase the sale volume, to embrace technology and to apply
the most efficient logistics management. It is this culture that has been the
biggest hinge on which Wal-Mart operates. The company is always looking for
ways of saving money by cutting down on expenditure so as to give consumers the
best prices. Again, this was modeled by the founder. Even after the company had
begun bringing in billions, Sam Walton still drove a pickup (Honestly, it’s a lesson i would rather skip). This legacy has remained in the company to date. The managers
for instance always stay at economy hotels when on business trips.
Supply Chain
Perhaps the most important contributor to the success of Wal-Mart is the supply
chain management. Wal-Mart has successfully established one of the most
efficient systems of logistics movement that has made it to be a reliable and
efficient company. The most significant part of the supply chain is the
distribution centers that the store has at different vantage points. The goal
of this distribution centers is to feed the supply chain to make sure the
demand and supply curve is maintained and kept at normal. Close to 85% of the
goods supplied to Wal-Mart go through these centers. Some manufacturers even
delivered goods to these centers directly
Transportation
Another notable feature of Wal-Mart logistics is the fast responsive fleet
team. A good logistics management is key in the success of any organization.
The distribution centers of Wal-Mart are usually serviced by at-least 3500 company
trucks. These trucks are responsible for transporting cargo from the centers into
the stores. This team ensures that the shelves of Wal-Mart are replenished at
last twice a week to make sure customers get all they need when they come
shopping. To make sure the system is efficient the company only employs drivers
who have enough experience and who have a clean driving license record. These
drivers usually report to a co-coordinator who will dispatch them to the store
that needs supplies.
The
distributing process is simplified even further by employing a transportation
system referred to as cross docking. This is a system where the company picks
the finished goods direct from the manufacturers. The goods are then sorted out
and then they are delivered to the customers. The idea is to reduce on the need
of warehousing and avoid middle men hence cutting down greatly on costs. Let’s take
a hypothetical case of a customer that sends Wal-Mart a requisition. On
receiving it, Wal-Mart immediately converts it into a purchase order. This is
then sent out to different manufacturers to find out which one is able and
willing to deliver the goods. Once a supplier has been established, the goods are packed on site as per the customers’ needs and directly sent to the
different customers.
Cross-docking
is the most efficient way of transportation in the logistics management of the
company. It means that the goods don’t have to go to the distribution centers
before they are taken to the stores and finally sold. This ensures that Wal-Mart
will end up selling the goods at a much cheaper price than it would have. This
system of transportation is a blatant shift from the traditional structured way
of logistics management. Cross docking removes the power of controlling of the
transportation from the board room and makes it a practical and more efficient
exercise
The company has managed to maintain its legacy of cutting on cost of production in order to reach to the wider market over the years. This must be the principle reason why it continues to be a favorite for many shoppers. And the sales of volumes has made the three Waltons smile all the way to the top ten list-Literally.