Wal-Mart Stores, Inc., is the largest retailer in the world, with sales of $259 billion in 2003, 1.5 million employees, and 4,300 facilities. Each week, over 100 million customers visit a Wal-Mart store. Sam Walton founded the company in 1962 with a simple goal: Offer low prices to everyone. His notions of hard work and thrift continue to permeate Wal-Mart today, although he died in 1992. Employees see their jobs as a mission “to lower the world’s cost of living.” Wal-Mart’s philosophy is to enable people of average means to buy more of the same products that were previously available only to rich folds. The company works hard at being efficient and using its buying clout to extract lower prices from suppliers, and then passes those savings on to customers.
Wal-Mart succeeds in the competitive American retail market for several reasons. First, its low prices, vast selection, and superior service keep the customers coming in the door. But one of Wal-Mart’s biggest strengths is not even inside the store. Its unrivaled logistics ensure that it can keep prices low while keeping the right goods on the shelves. As the biggest retailer in the United States, Wal-Mart’s logistics demands are considerable. The company must coordinate with more than 85,000 suppliers, manage billions inventory in its warehouses, and bring that inventory to its retail shelves.
To streamline these tasks, Wal-Mart set up a “hub-and-spoke” network of 103 massive distribution centers (DC). Strategically spaced across the country, no store location is more than a day’s drive away from DC. Wal-Mart is known as “the king of store logistics” for its ability to effectively manage such a vast network.
Sam Walton was something of a visionary when it came to logistics. He had the fore ...