The History of Wal-Mart In 1945, Sam Walton purchased a branch of the Ben Franklin Stores from the Butler Brothers. His focus was on selling products at low prices to get higher volume sales at a lower profit margin. It was difficult at first because the lease price and branch purchase were unusually high, but he was able to find lower-cost suppliers than the ones used by other stores. The sales increased 45 percent in his first year of ownership to $105,000 in annual revenue, which increased to $140,000 the next year and $175,000 the year after that. Within the fifth year, the store was making $250,000 in revenue. After the lease for the location expired, Walton decided to open a new store in Bentonville, Arkansas called “Walton’s Five and Dime.” The store was very successful and as a result, he opened the first Walmart Discount City store in 1962, located in Rogers, Arkansas. The company was incorporated as Wal-Mart Stores, Inc. on October 31, 1969. In 1970, it opened its home office and first distribution center in Bentonville, Arkansas. Wal-Mart is in the retail-trade industry and the NAICS code is 44-45. Wal-Mart had 38
Inventory Management at Wal-Mart - Essay Example
Inventory management is one of the most important aspects in retail industry. Wal-Mart has been successful partly due to its excellent inventory management strategy. The retail giant has devised various delivery plans, which the individual stores can choose from in order to satisfy individual needs. For example, stores within a certain area can receive supplies within a day thanks to the retailers accelerated delivery plan.
The hallmark of effectively tracking sales and inventories across Wal-Mart’s countrywide branches is the application of information and communication technology systems. It was essential for Wal-Mart to implement good information and communication systems in order to manage the increasing number of stores. This allowed Wal-Mart to manage inventory in all its stores from a central place.
Another feature of Wal-Mart’s inventory management is the decision to allow individual stores to manage their own inventory, reducing process across a wide variety of goods, and timely price cuts. Using its information technology capabilities, Wal-Mart was able to make the fast-moving goods more available in stock rather than reducing stock across board. In addition, information technology enabled the linking of Wal-Mart to suppliers. Automated reordering systems between the suppliers and the stores and distribution centers were implemented. For example, the IT collaboration between Procter & Gamble and Wal-Mart where supplies could be re-ordered from Procter & Gamble through satellite communication system became the cornerstone of the retailer’s efficient maintenance of fast-moving goods and higher cost-savings.
Hand-held computers popularly known as the “Magic Wand” are linked to the inventory in the store via a Radio Frequency Identification (RFID) tracking system to track in-store inventory and deliveries at the distribution centers. Point-of-Sale (POS) systems also play an important role in inventory management and supplies. These systems have enabled Wal-Mart to project the inventories and the quantity to be replenished based on sales thereby providing uninterrupted customer service.