Wal-Mart Value Chain Activities - Literature review Example

Lawless detailed that Wal-Mart has a satellite system connecting all stores linked directly to the suppliers so that the volume of stock replacements to the nearest distribution hubs is monitored. This strategy allows speedy inventory movement and operating cost cuts. For distribution technology, Wal-Mart established hub networks using cross-docking to accommodate just needed inventory so that trucks are utilized in inbound and outbound deliveries and minimize distribution center inventory pile up.

As an aggregator, distributor, and retailer of consumer goods, Wal-Mart’s suppliers take advantage of its innovative infrastructure and distribution technology system. After supplies are delivered by the trucks in distribution centers, they are sorted and placed to urban and rural outlets/stores immediately for stock replacement on sales (Fieman, 2009). The products are available for sale in stores at very low prices. Rebot (2009, p.11) summed up the value-creating activities of Wal-Mart as Inbound Logistics (3.4%), Building Rentals in Operations (1.9%), Licensing (0.2%), Marketing (1.1%), Shrinkage (1.3%), Salary/Wages (10.8%), and Cost of Goods Sold (74%).

Another Wal-Mart value chain activity is presented in a diagram form by Nick Gysberg (n.d., p.17) using Poter’s approach with primary and support activities that make up the value chain (see Figure 1).