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WHAT IS MARKETING?

Marketing is the process by which companies determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It generates the strategy that underlies sales techniques, business communication, and business developments. It is an integrated process through which companies build strong customer relationships and create value for their customers and for themselves. In short marketing include all the process from the time of research for that product to the end consumption of that product by the end user. WHAT IS LOGISTICS? Logistics is defined as a business planning framework for the management of material, service, information and capital flows. It includes the increasingly complex information, communication and control systems required in today's business environment. Source: Logistix Partners Oy, Helsinki, FI, 1996

Supply chain management system is one of the core operations, or we can say the most core operation of any business, and it becomes more core and crucial when it comes to retail sector or FMCG, Supply Chain Management is the discipline which encompasses the end to end business activities that are being carry out in any business sector. It is basically the collaboration of network of distribution options that performs procurement of materials.

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INTRODUCTION TO WALMART
Wal-Mart is one of the leading and biggest retail store chain, which comes in the top 500 fortune companies. It is spread all across the globe and perhaps the largest chain that holds the biggest supply chain network in the world dealing in everything from normal consumer household item to the food and cars even. It was funded by Sam Walton in the year 1962, when he opened up his first store in Rogers, Ark n October 31st 1969. The company initially was incorporated as Wal-Mart stores, under the guidance of Sam Walton, the business started to flourish. Although it is a retail store chain, but it competes with the leading fortune companies like GE and Microsoft, because of the amount of revenue generation they generate from their sales. Wal-mart has adopted the Every day low price strategy along with the aggressive marketing strategy that really pushes the consumer to shop from Wal-mart. The strong point that Wal-mart has, it directly serves the common man irrespective of social class. The business and operations of Wal-mart heavily relied on their extensive supply chain management system, and this is the key to their success. Supply chain management system has been the competitive advantage that they have gained over their competitors in the retail store industry. They have probably the best and most efficient supply chain and distribution network on the globe.

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FIGURE 1 GLOBAL MARKET SHARE:

Wal-mart store Inc has around 9230 retail outlet under 15 different banners and it is currently operating in 15 countries worldwide. Wal-mart has currently 2.1 million employees worldwide. The last year international net sales were almost close to US $405 billion that shows an increase of 11.9 percent.

FOUR Vs OF OPERATION MANAGEMENT


The four Vs of operation management is use to identify the volume of demand that the company is catering to, the variety of products the company they have to offer to the customer, the variation or fluctuation of demand in the market, and also the visibility of firms operations to the consumers. Source: Stack et al, 2004 VOLUME: Wal-Mart is the largest retailer of goods, which includes from electronic items to the consumers goods, serving in 15 countries with around 9230 outlets, so it can be perceived that the company deals with the large amount of volume. Because of the commitment they have made with their customers EVERYDAY LOW PRICES. They tend to focus on delivering the cheapest goods to the consumers, which really encourage the customers to shop more from the Wal-mart stores. 3|Page

VARIETY: According to me, Wal-mart has the same amount of variety as they have the volume. Because of the reason that they have goods from all over the world from different suppliers, vendors which includes the multi-national firms, local firms, regional farmers and so on. This has really increased the product line of Wal-mart stores and variety as well. VISIBILITY: Visibility is on the average side, because it is a retail store chain and customer cannot see the manufacturing process of most of the products they are buying from the store; however they can touch the product and have the demo of that product. Hence the distribution network and inventory management process which is the core function of Wal-mart is hidden from the consumer, they can only access to the ongoing operations like point of sales, customer service, bar code scanning of goods, placement of goods to the shelf and so on. VARIATION IN DEMAND: Demand is sometimes on the higher side, if we say most of the time it is on the higher side then it will be not be wrong. Statistics of sales over the past decades shows that with every passing year, sale of Wal-mart increased too. During the summer sales and in Christmas season, Walmart has so much more to offer to the consumer, so that automatically push the demand. Moreover, there demand forecasting system is very sophisticated supported by the technology. For e.g. Wal-mart has given access to P&G of their point of sale information, so P&G can provide the required amount of Pampers to the Wal-mart. Vendors demand forecasting also need to be in line with Wal-mart, because it is the retailer and dependant on their manufacturers.

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MARKETING CHANNELS OF DISTRIBUTION

The process of supply chain management at Wal-mart is pretty much effective as per their practice, organization procurement make sure that it push the vendor to reduce their cost so that it can offer the best prices to the customer. Wal-mart purchases the goods directly from the manufacturing, bypassing all intermediaries. Wal-mart has retail outlets and distribution center geographically distributed all over the world, Wal-marts own warehouses supplies the store about 80% of their require inventories. Different distribution center supplies different goods and products. The supply chain management administration ensures that the process is steady and the movement of goods from vendor to warehouses, distribution center to retail outlets is consistent. So much sophisticated technology being use in the centers including RFID, barcode technology and Magic Wand. Each employee has the hand held computer system through which they track information about the inventory control. 2 scans made by the employees, one for the identification of pallet, and one for the identification of the place from where the product has been picked. Magic wand helps the employees to the specific location of the product. The information is being updated on the main server in real time about the products. The distribution and transportation system is operated by more than 7000 companys owned trucks, which are dedicated to the distribution of goods from the distribution centers to the retail 5|Page

outlet within 2 days and fill the empty shelves of store twice a week. Wal-mart got the drivers which are very experienced, and being monitored by the management through their designed policies. Wal-mart has a unique technique called Cross Docking, which means that they sometimes directly pick these product from the supplier and transfer it to the distribution center, from manufacturing site they sort out the products and transfer it to the stores, this reduce the companys handling and storage cost and on the same time they are providing the customer with fresh products. Source: walmartstores.com

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WAL-MART PERFORMANCE OBJECTIVES:

SPEED: Wal-mart has their own distribution center which is really fast as compare to the other retail chains. Transportation system is quick which enables Wal-mart to moves the products from supplier to warehouses, distribution centers to the retail stores and customer. Online website is there for customer engagement as well, from where the customer can make online purchases of their favorite items in a shortest possible time. FLEXIBILITY: Wal-mart keeps record of inventory level and their sales in such a sophisticated and organized manner that it nearly eliminates the threat of their competitors. Minimize obsolete inventory due to centralized structure of their management which promotes the sharing of information in real time with the vendors as well as with their employees so that the management of each distribution center, retail outlets and warehouse can coordinate among each other regarding the ongoing operations. With so much advanced and innovative technology, Wal-mart can enjoy the handsome amount of flexibility with their supply chain system. DEPENDABILITY: Wal-mart has suitable amount of influence on their suppliers, and this is the reason why they never go out of stock with their any products, moreover they have the bargaining power with the suppliers that pushes the vendor to cut down the cost just to provide Wal-mart with cheaper products so that they can further provide the products with lesser rate to the general buyer, Wal8|Page

mart is such a big customer that every company find it very healthy for themselves to be on the Wal-mart business partner list and they can never dissatisfy Wal-mart for any reasons. Strong monitoring system and effective inventory management control system also plays an important role for the organization to smoothly run the daily operations. COST: This is the most powerful weapon of Wal-mart; they push the supplier to reduce their initial cost so that they can provide benefit to the buyer and add value to their experience of shopping at Wal-mart. The most famous strategy and quite encouraging as well Everyday low prices by Wal-mart has played a significant role in Wal-mart sales, because they promise that only Walmart provide that kind of experience the most cheapest goods other than competitors in the market. QUALITY: Wal-mart has implemented the Cross Docking technique in order to provide the customer with product in real time so that they can enjoy the products which are quite new and fresher in quality. Cross docking technique is pretty much handy, in providing the consumer with the experience of having fresher products at the same time it help the organization to maintain inventory and avoid obsolete products.

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WAL-MART INPUT-TRANSFORMATION-OUTPUT MODEL


Every firm makes a number of inputs in order to get the require output. There are certain resources that need to be injected in the transformation process, below is the inputtransformation-output model of Wal-mart according to my perception.

Input Transformation Resources


Materials Packaging paper, trolleys, paper, barcode readers, Optical readers, shelves Information Point of sale, Inventory management control, Radio Frequency network, Real time information Customers Customer order requirement, Online orders

Input Transforming Resources


Facilities Warehouses, RFID, Cross docking, Barcode technology, Hand-held computer systems, automated recording system, Magic wand Staff Technical employees record the sales and keep a track record of inventory. Procurement to be done by skilled employees, Managers to the ongoing operations, CRM

Transformation Process
Goods are packed and labeled Barcode stickers are placed on it Products are kept in their assigned shelves Availability of the products

Output: Finished goods


Hand-held computers called Magic Wand that monitors the level of inventory, sales of that particular item, barcode scanners are use to read the prices and make the bill for consumers 10 | P a g e

WAL-MART MARKETING AND LOGISTIC CHANNEL ANALYSIS


MANAGEMENT ACTION PLANNING: Managers need to plan how logistic activities, distribution and supply chain operations are carried out properly IMPLEMENTATION: By ensuring that all necessary activities are carried out effectively and in real time CONTROL: Tracking the record of inventory for e.g. which shelve is out of stock

Input into logistics


Natural resources (Procurement, Warehouses, Retail outlets, Distribution centers) Human Resources (Highly qualified work force, well informed managers, efficient supply chain personnel) Financial Resources The amount of money that Walmart needs to pay the employees, vendors, suppliers, overhead costs and running cost 11 | P a g e Raw Materials Machinery that will be use within and outside the store for carrying out of necessary operations In Process Inventory Required inventory to fill the shelves for the customers

Output into logistics


Marketing Orientation Wal-mart has competitive advantage over others Time and Place utility Effective distribution ensures the timely delivery of goods Gain customer satisfaction Wal-mart continuously making effort in order to satisfy their customers by delivering the require goods

LOGISTIC MODEL EXPLAINED:


Wal-mart has got one of the best and sophisticated logistic management systems of the world. Wal-mart purchase goods directly from the vendors and then store it in their warehouses, then it further been transferred to distribution center from where on the goods are move on to the retail outlets. Or in some cases, Wal-mart also practice a logistic technique named as Cross Docking. By cross docking they meant that they pick the items directly from manufacturing plant of supplier and then deliver it to the customer by eliminating the unnecessary time. Wal-mart use to share their point of sale information with the vendor just like they did with P&G in case of pampers. This technique helps the both organization to monitor and manage their inventory and demand forecasting. Source: Fundamentals of logistic management

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WAL-MART KEY LOGISTICAL ACTIVITIES AND CUSTOMER SERVICE STANDARDS


PRE-TRANSACTION ELEMENTS

CUSTOMER SERVICE

TRANSACTION ELEMENTS

POST TRANSACTION ELEMENTS

PRE-TRANSACTION CUSTOMER SERVICE: Wal-mart has their own website through they tell their customers about what they have in the store; what kind of deals currently the store is offering When the customer is physically present with in the retail store outlet, they have the proper price tag on their each item so that customer can experience an ease in shopping. Very accurate and safe delivery options for the customers Management makes sure that shelf is never out of stock

TRANSACTION CUSTOMER SERVICE: Customer can shop online according to their preferences; Wal-mart ensures that they only publish which are available for delivery. Customer orders are handled by customer support representative, and effective management work day and night to make the operations move smoothly. Cross docking techniques used by Wal-mart, so customer can enjoy first hand product and quality items. Fast transportation process and distribution system.

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POST TRANSACTION CUSTOMER SERVICE: Sophisticated barcode technology that pretty accurately develops the computer generated invoice for the consumers. Different products available for customers, around the world respective of their cultural and climatically needs Source: adapted from Fundamentals of Logistic Management

WALMART SRM AND CRM


Wal-mart has the strongest supply chain management system just because of the reason that they know how to build proper relationship with the suppliers. Earlier I have quoted the example of P&G, probably one of the giant FMCG manufacturer in the world has requested Wal-mart to share their point of sale information regarding their pampers so they can track the sales and forecast the future demand. By sharing this kind of information, Wal-mat created a win-win proposition for both for itself and the vendor too. I personally believe that CRM and SRM are highly interrelated because when the organization will not have proper relationship with their suppliers or any of their business partners, they will not be able to make their ongoing operation successful. If one supplier turned down any of their supplies, the whole supply chain will get collapse ending up with a dissatisfy customer which is not healthy for the brand image of company. So management take the strategic step just to ensure the timely delivery of products to the consumer, meet with the suppliers, share information and so on.

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MARKETING/LOGISTIC CONCEPT MANAGEMENT

CUSTOMER SATISFACTION Suppliers- getting products from the suppliers

Intermediate customers- Wal-mart's distribution centers are the intermediate customers and retail outlets
Final customers- General Public

INTEGRATED EFFORTS Product- Any goods (pampers) Price- Possible cheaper price Promotion- Marketing efforts to promote Place- Distribution centers, Retail outlets, Warehouses
COMPANY PROFIT - Long term profits driven by sale "Always Low prices" strategy to atrract the customers

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CONCLUSION
Sam Walton claims that Wal-Marts vision had always been to increase sales through lowering the costs through organized distribution system with the help of the Information Technology. It is said that Wal-Marts extreme success could be attributed to its effective supply chain management (Chandran, 2003). Since Walmart has this kind of excellence and effectiveness in their supply chain management system was due to the two reasons, automated distribution centers and the computerized inventory system. This has reduced their lot of time consuming tasks and in a nutshell they have maximized their overall efficiency level. Wal-marts focused has always been the low prices quality goods, for that they have bypassed all the intermediate channels between them and the suppliers and directly purchase the goods. Wal-mart has work with the low profile vendors and tried to make them big, however when they do business with a giant like P&G, they make decision that who make the best price that qualifies. Wal-mart focuses on making their supply chain system effective by working with the vendors. Wal-mart has state of the art distribution center, with the technical staff and labor that are quite well trained and equipped with the new technological devices which help them to make the ongoing process quick and much more accurate.

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REFERENCES:
What is marketing? http://en.wikipedia.org/wiki/Marketing [Date Accessed: 3rd March 2011] Ryerson (2007) Fundamentals of supply chain management. Mc-graw - Hill pvt Ltd. (Logistix Partners Oy, Helsinki, FI, 1996) [Date Accessed: 10th March 2011] Fundamentals of logistic management [Date Accessed: 17th April 2011] Kotler, S. Armstrong, G. Wong, V. Saunders, J. (2008). Principles of Marketing: Fifth European Edition [e-book] [Date Accessed: 17th April 2011] Wal-Mart Logistics Fact Sheet- www.walmartstores.com. Company Data Sheets, http://walmartstores.com/pressroom/news/ The wisdom of Wal-Mart's supply chain strategies, http://walmartstores.com/pressroom/news/9482.aspx

Walmart. (2010). Retrieved April 20, 2010, from Wal-Mart Stores Inc. - About
Us.: http://walmartstores.com/AboutUs/

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