Business Driven Technology 6th Edition by Paige Baltzan

Exercise 32

Finding Shelf Space at Walmart
Walmart's business strategy of being a low-cost provider by managing its supply chain down to the minutiae has paid off greatly. Each week, approximately 100 million customers, or one-third of the U.S. population, visit Walmart's U.S. stores. Walmart is currently the world's largest retailer and the second largest corporation behind ExxonMobil. It was founded by Sam Walton in 1962 and is the largest private employer in the United States and Mexico. Walmart is also the largest grocery retailer in the United States, with an estimated 20 percent of the retail grocery and consumables business, and the largest toy seller in the United States, with an estimated 45 percent of the retail toy business, having surpassed Toys "R" Us in the late 1990s.
Walmart's business model is based on selling a wide variety of general merchandise at "always low prices." The reason Walmart can offer such low prices is due to its innovative use of information technology tools to create its highly sophisticated supply chain. Over the past decade, Walmart has famously invited its major suppliers to jointly develop powerful supply chain partnerships. These are designed to increase product flow efficiency and, consequently, Walmart's profitability.
Many companies have stepped up to the challenge, starting with the well-known Walmart/Procter Gamble alliance, which incorporated vendor-managed inventory, category management, and other intercompany innovations. Walmart's CFO became a key customer as P G's objective became maximizing Walmart's internal profitability. Unlike many other retailers, Walmart does not charge a slotting fee to suppliers for their products to appear in the store. Alternatively, Walmart focuses on selling more popular products and often pressures store managers to drop unpopular products in favor of more popular ones, as well as pressuring manufacturers to supply more popular products.
Project Focus
You are the owner of a high-end collectible toy company. You create everything from authentic sports figure replicas to famous musicians and movie characters including Babe Ruth, Hulk Hogan, Mick Jagger, Ozzy Osbourne, Alien, and the Terminator. It would be a huge win for your company if you could get your collectibles into Walmart. Compile a strategic plan highlighting the steps required to approach Walmart as your supply chain partner. Be sure to address the pros and cons of partnering with Walmart, including the cost to revamp your current supply chain to meet Walmart's tough supply chain requirements.