Wal-mart's ILP

3 Pages 696 Words

Wal-mart’s Integrated Logistic Planning
The integrated logistics planning at Wal-mart focuses on the customer. The customer service levels are set so high at Wal-mart that unless the logistics planning is well – coordinated between the inventory, transport, and location functions, the logistics costs could lower profit margins. There is a misperception that the reason prices are low at Wal-mart is because of the purchasing power of this company, but the main reason that prices are so low at Wal-mart is because of the cost savings associated with the logistic planning. Cross docking has enabled Wal-Mart to achieve economies of scale which reduces its costs of sales. With this system, goods are continuously delivered to stores within 48 hours and often without having to inventory them. Lower prices also eliminate the expense of frequent sales promotions and sales are more predictable. Cross docking gives the individual managers more control at the store level. About 85 percent of all the merchandise that Wal-Mart sell is shipped through its 105 distribution centers. Wal-Mart has used a "saturation" strategy for store expansion. The standard is to be able to drive to a store within a day from a distribution center. A distribution center is strategically placed so that it could eventually serve between 150 and 200 Wal-Mart stores within a day. Stores are first built as far away as possible but still within a day’s drive of the distribution center; then the area are filled in back to the distribution center. The distribution centers operates 24 hours a day using laser-guided conveyer belts and cross-docking techniques that receives goods on one side while simultaneously filling orders on the other. The distribution centers also can contain warehouses that stores inventory. The company owns a fleet of more than 6,000 trucks and 14,000 trailers which allows for easier routing and scheduling. This allows Wal-Mart to replenish th...