Wallmart Resources and Capabilities

1361 Words May 12th, 2012 6 Pages
MBA 591 – Summer 2011 Faculty of Business Administration Bilkent University July 5, 2011

Resources and Capabilities of Wal-Mart

Wal-Mart had enough financial resources to make capital investments to improve its operations and labor productivity. Most important investments were technological investments such as the UPC (Uniform Product Code) infrastructure, the computerized system within stores and the satellite network that enabled almost real-time communication among the stores, the distribution centers and vendors. These technological resources can also be classified as equipment related
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In addition to that, electronic scanning of the UPC at the point of sale enabled higher speeds in checkouts, eliminated the paperwork, and simplified the inventory management, reorders and postaudits of the merchandising programs. This infrastructure also improved the labor productivity in the stores.

Using also its financial resources, Wal-Mart established a superior distribution network using its distribution resources. It established a two-step hub-and-spoke distribution network using its 400-plus truck-tractor fleet. Only 20% of the inbound merchandise was shipped directly from suppliers. The rest was supplied using “cross-docking” that is delivering the merchandise over this network using only trucks without ever sitting in the inventory like warehouses. Thanks to this distribution network, each distribution center could serve up to 175 stores within 150-to-300 mile radius. By the end of 1985, that was meant 3.9 million square feet of distribution space in 5 locations, delivery within 48 hours with 60% full on backhauls. As a result, the cost of inbound logistics in early 1980s was in average 2% of sales which was the half of the industry average. Furthermore, due to increase efficiency in inventory management, the store management was easier and there was more space available in the store for sales providing increase in productive space in the stores.

As an intangible