SUPPLY CHAIN FLEXIBILITY IS WAL-MART'S GROWTH KEY

LINDA PURPURA

INDIAN WELLS, Calif. -- Wal-Mart Stores supports its global retailing business, which spans eight countries and includes 3,400 stores, by combining centralized information systems with a flexible approach to supply chain issues worldwide.

"One of the things we need to have, and which has been critical to the businesses we've built, is extreme integration in terms of the whole supply chain, yet extreme flexibility," said Randy Mott, senior vice president and chief information officer of Wal-Mart Stores, Bentonville, Ark.

"It's a contradiction we manage on a day in and day out basis," Mott added. "But it's that fine line that makes the difference between being able to execute very well or making it very tough to move into different markets."

Mott spoke at the Information Systems and Logistics/Distribution Conference here last week, sponsored by the Grocery Manufacturers of America, Washington.

Wal-Mart's worldwide operations, in locations including Puerto Rico, Mexico, Canada, Brazil, Germany and China, produce an annual sales volume of $117.96 billion. Approximately 120 million merchandising decisions are made daily in Wal-Mart operations worldwide.

Challenges facing Wal-Mart as it expands into the global marketplace include supply chain issues such as distribution.

"The whole transportation network is a different market, depending on what you're talking about," Mott said. "It's all new concepts. It's not been put together in the way we think of efficient supply."

One way the retailer deals with such challenges is by centralizing its information systems at its Bentonville headquarters. For example, by 5:00 a.m. every morning, Wal-Mart executives know sales volume around the world, by store, by department or by item, if they want to drill down to that level.

"From a business standpoint, there are no limits to communications right now," he said, reflecting on advances in technology that allow Wal-Mart to manage a worldwide operation.

IS centralization is part of Wal-Mart's 'technology store' concept, he added. "For all our different business units, there are elements of technology that we put together to make up the business units, the business formats and the replenishment systems. This applies to different formats within the United States, or different operations we're running in a global market," he explained.

Wal-Mart's store systems, for example, can be common among different departments but also offer the flexibility for specialization as needed.

Along with flexibility, empowering its 835,000 associates worldwide is essential for a global business. "One of our goals early on was to make that store manager the CEO of his store," Mott said. Each manager "has a lot more information than a typical retail store has," which helps in making good business decisions.

For example, Wal-Mart shares its daily sales information with associates and department managers. "That's whether you're talking about a store in Brazil or one across the street in Bentonville, Ark.," he added.

Profit-and-loss statements are available at the store level on a monthly basis, and are placed "in the hands of people all over the company, for all stores, for all countries, all departments. That kind of sharing and empowerment is what we mean when we talk about putting information in the hands of Wal-Mart associates and their involvement in the business," Mott said.

Everyday low pricing is a key concept the retailer is developing in overseas markets. "This is not something that comes automatically, and we're certainly finding that out in some of the international markets," Mott said, noting that the retailer is working on building a reputation with new customers. "We do very little advertising, although we've had to modify that a little bit in some of the countries just to get the knowledge of who we are out there."

The world marketplace also has a number of tough competitors. "As good as retailing has become in the United States and efficient as it has become here, a lot of the best retailers are in the international marketplace. We're certainly going head-to-head with them and learning a lot from them. But [we've] not always had the best success in competing with them," he added.