Inventory Accounting at Wal Mart Stores.

Wal-marts marketing strategy is to boast about having the cheapest prices out of their competitor’s and guarantees this, by implementing a price matching policy. Apparently, this has worked out for the best interest of the corporation, and their income statements can prove it. Wal-Mart’s income statement for the past three years reflects a positive growth pattern for every entry of the Income Statement. The Income tax-Current Domestic record is the only entry on this income statement that produces a stabile number. The indication for the income tax number to show a declining trend is probably that the Wal-mart accountants have located many tax loop holes to reduce the actual company income tax load owed.

Wal-Mart didn’t just get by with cost-saving methods. They were ahead of their competitor’s technology wise too. Even in the 1970’s, Wal-Mart was able to track inventories in their warehouses and link it with stores. They tracked their sales data for specific items and could increase or decrease their inventory accordingly, achieving a higher efficiency than other retail companies. Another aspect that Wal-Mart felt strongly about was expanding there reaches. In 1978, they introduced a Pharmacy, auto center and jewelry divisions.

Retail super-giant Wal-Mart has fought its way to becoming the world's largest company. Wal-Mart’s legendary supply chain technology has allowed them to break the three-day barrier that some economists in the eighties felt that it was unbreakable. In other words, Wal-Mart is often able to replenish items on the Wal-Mart shelf in less than three days – not from the central warehouse to the shelf, but from the manufacturer to the shelf. With quick and reliable 2-day turn around, Wal-Mart is able to maintain lower levels of inventory and still meet customer demand. These lower inventory levels result in either a reduced floor plan with lower carrying costs and lower interest expense – or a greater diversity of products on the store shelves.

When the ‘bricks and mortar’ store based retailing is considered, Walmart employs different methods of supply chain. Vendor management inventory is one of the methods run down by Walmart for an efficient

Wal Mart company strategy is to provide lower prices for their customers. In a small

Another thing Wal-Mart uses is many of their departments are cash wraps. Most of these cash wraps tended to be things like batteries, gum, candy, and soda. With Wal-Mart being such a large store, many departments also have their own checkout counters that allow customers who are only looking for certain items to be able to get in and out. Wal-Mart also uses end caps on almost every aisle in the store. These end caps are usually impulse buy items that are offering special promotional prices. Another thing that Wal-Mart does is that it shelves their items based on frequency. The most popular items or the items that most consumers buy will be located in the beginning of the aisle and at eye level, while other infrequent items are placed lower on the shelves and more towards the end of the aisle. To accurately keep track of what items need to be restocked or what items are selling the best, Wal-Mart uses a planogram. The planogram they use utilizes SKU’s and will allow for employees to figure out exactly where everything goes and when it needs to be restocked.

Office Depot uses multiple inventory strategies to order products. 90% to 95% of goods are ordered through automatic replenishment, manual replenishment, pull replenishment, and global sourcing are also used depending on channel, volume, velocity and cost. (Office Depot, 2015). The accuracy of the inventory from both a DC and store perspective is critical to the organizations success. Heizer and Render (2014) state that record accuracy is a prerequisite to inventory management, production scheduling, and sales. Accuracy is maintained by either periodic or perpetual systems (p.479). In Office Depot, the stores are required to cycle-count technology items such as laptops, desktops computers, and tablets five days a week. Discrepancies are entered in the system and bounced off the local DC’s on-hand inventory discrepancies. Office Depot is a “blind receive” organization meaning the stores receive pallets of products and simply unwrap and put them away. The only way a store knows if a product is missing is through the cycle-count program. This system was put into place to speed up the receiving process and eliminate unnecessary steps once the product was received at the store level. Office Depot conducts a full physical inventory once a year through a third party and trues up the inventory shrink at this time.

Schengen, is the third biggest busiest port of China in the whole world. There are 35 Walmart supercenters in China. Every year, China exports $15 billion valued products to Walmart and imports 90 percent to North America and Europe. Walmart is the main source of sales for America.

Wal-Mart recognizes revenues at the time the sale is made to the customer. Wal-Mart’s method of accounting for revenues differs from its competitor, Target in some instances. For example, Target does not include sales tax in total revenues; whereas Wal-Mart

“Over the course of [a few years after Wal-Mart entered a community], retailers' sales of men’s' and boys' apparel dropped 44% on average, hardware sales fell by 31%, and lawn and garden sales fell by 26%. In towns without Wal-Marts that are close to towns with Wal-Marts, sales in general merchandise declined immediately after Wal-Mart stores opened. After ten years, sales declined by a cumulative 34%.”

A few reasons as to why Wal-Mart became a leader in the retail industry is due to their practices in obtaining competitive advantage by offering the lowest prices for the market. Wal-Mart built their practices by giving suppliers transparency to meet the demand of customers and granting them long-term relationships by purchasing goods in bulks. In addition, their turn times on inventory are three-five days faster than regular competitors. The inventory shelves are similar to Honda since they only hold up to four hours of inventory in their manufacturing site. Also, Wal-Mart holds their own transportation which is why they can manage their costs efficiently for the company. Their transportations system constitutes links between suppliers, distribution centers and retail stores. They have restrictive criteria for drivers where in order for them to be hired they would have to be accident free for a consistency of minimum 300,000 miles accident free. The supply chain practice that they have gained since they began the business was strategically faster and cheaper than all competitors. 85% of Walmart’s inventory is taken care of by their own transportation system and only about fifteen percent is taken care of by the suppliers through cross-docking. Wal-Mart uses

In 1962, Wal-Mart was built sometime by Sam Walton in Roger, Arkansas. Wal-Mart has 5,100 stores and clubs all over the United States and a sum of 8,300 unit's global. The company was able to employ something like over 2 million associates from all over the world and about 2.4 million in the United States. Wal-Marts average annual total income rate was somewhat in excess of 10% for the three years from the fiscal year that is ending 2009 to the fiscal year ending 2011 (Blanchard, 2008). Research shows that they also had what was known as a stock split of 100 %; Wal-Mart was able to see this split 12 times all through the eras of 1973 through 2002. They have received many awards and were categorized 5th in Fortune magazine's "Global Most Well-regarded All-Stars" as the third most appreciated corporation in America (Wal-Mart, 2013)

Wal-Mart is arguably the most dynamic corporation in the last 50 years in the United States, if not the world. Arising from its beginnings in Bentonville, Arkansas, it has grown to over 4,400 discount stores, super centers and corner markets worldwide. Wal-Mart continues to expand despite public criticism of its labor practices as well as complaints about their treatment of competitors. The many strengths of Wal-Mart, like their low cost production and marketing practices, will aid Wal-Mart as it continues to grow in the retail

Inventory turnover (Net sales/ Inventory): Wal-Mart had reasonably high inventory turnover ratio of 11.5 which is significantly higher than their competitors namely Target Co, Amazon.com and Sears which had inventory turnover of 8.7, 6.2, and 4.7 respectively. However Kroger was the industry leader in inventory turnover attributed to their focus on highly perishable food items.

Moreover, it was possible to deliver several Wal-Marts on a single tour, because of the special store arrangements. Thus it was possible to save in-bound logistics costs. Vendors were not allowed to provide more than 2.4% of Wal-Marts purchases, making the discount retailer independent and dominating its suppliers. Nevertheless, working with Wal-Mart is very profitable; the purchase of Procter & Gamble's products equals about 10% of their annual revenue. Through developing electronic invoicing and annual strategic business planning packages for the communication with the vendors, it was possible to reduce the inventory costs and to increase sales.