WAL-MARTSSUPPLYCHAINMANAGEMENTPRACTICESOPER-O200ONotICFAIICMR CASE COLLECTIONCenter for Management ResearchThis case was written by P. Mohan Chandran, under the direction of Vivek Gupta, ICFAI Center for ManagementResearch(lCMR).ltis intendedtobeusedasabasisforclassdiscussionratherthantoillustrateeithereffectiveonineffectivehandlingofamanagement situation.Thecasewascompiledfrompublishedsources2003,ICFA/CenterforManagementResearch.Allrightsreserved.Nopartofthispublicationmaybereproduced,stored inretrievalsystem,usedinaspreadsheet,ortransmittedinanyformorbyanymeans-electronicormechanical,withoulpermission.Toordercopies,call009/-40.2343-0462/63/64orwritetoICFA/CenterforManagementResearch,Plot#49.NagarjunaHils,Hyderabad500082, India or emailicmr@icfai.org.Website: www.icmrindia.org
Do Not Copy 2003, ICFAI Center for Management Research. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic or mechanical, without permission. To order copies, call 0091-40-2343-0462/63/64 or write to ICFAI Center for Management Research, Plot # 49, Nagarjuna Hills, Hyderabad 500 082, India or email icmr@icfai.org. Website: www.icmrindia.org This case was written by P. Mohan Chandran, under the direction of Vivek Gupta, ICFAI Center for Management Research (ICMR). It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources. WAL-MART'S SUPPLY CHAIN MANAGEMENT PRACTICES OPER - 020
ICFAIOPER/020prManagementReseaWAL-MART'S SUPPLY CHAIN MANAGEMENT PRACTICES"When you start to collapse the supply chain, accuracy in execution becomes critical. Any lack ofaccurate information and processes creates costlybottlenecks in theflowofgoodsand materials.--Bruce Richmond, Global head, Andersen Consulting.INTRODUCTIONTheUS-basedWal-MartrankedfirstintheglobalFortune500listinthefinancialyear2001-02earningrevenuesofs219.81billion(ReferTable1).Wal-MartwastheVargestretailingcompanyinthe world.Thecompanywas muchbiggerthan itscompetitersixtheUs-SearsRoebuck,K.Mart, JC Penney and Nordstrom combined (Refer Exhibit (I o02/Wal-Mart operated morethan 3,500 discount stores, Sam's Clubs and Supercenters in the 'S and more than 1,170 stores inall major countries across the world. The company (also sold)products on the Internet through itswebsite,walmart.com.TABLEIGLOBALFORTUNE500 LIST (2002)RankCompanyRevenues (in Smillions)A1Wal-Mart Stores219,812.02Exxon Mobil191,581.03GeneralMotors177,260.04Ford Motor162,412.05Enron138,718.0CSource:www.fertune.comWal-Mart was one of the largest private sector employers in the world, with employee strength ofapproximately 1.28 million.The company's founder, Sam Walton (Walton) had always focused onimproving sales, constantly reducing costs,adopting efficient distribution and logisticsmanagement systemsandusing innovativeinformationtechnology(IT)tools.According to analysts, Wal-Mart was able to achieve a leadership status (Refer Exhibit I) in theretail industrybecauseof its efficient supplychainmanagementpractices.CaptainVernonL.Beatty, aide-de-camp to the commander, Defense Supply Center, Columbus, Ohio said, “Supplychain management is moving the right items to the right customer at the right time by the mostefficientmeans.NoonedoesthatbetterthanWal-Mart."This case was written by P. Mohan Chandran, under the direction of Vivek Gupta, ICFAI Center for ManagementResearch (ICMR).2003CFACenteforManagemenResearchAllrighsreservedNoparfthispublicationmaybereproducedtorediretrievalsystem,usedinaspreadsheet,ortransmittedinanyformorbyanymeans-electronicormechanical,withoupermission.Toordercopies,call009/-40-2343-0462/63/64orwritetoICFA/CenterforManagementResearch,Plot#49.NagarjunaHills,Hyderabad500082,Indiaoremailicmr@icfai.org.Website:www.icmrindia.org
Do Not Copy This case was written by P. Mohan Chandran, under the direction of Vivek Gupta, ICFAI Center for Management Research (ICMR). 2003, ICFAI Center for Management Research. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic or mechanical, without permission. To order copies, call 0091-40-2343-0462/63/64 or write to ICFAI Center for Management Research, Plot # 49, Nagarjuna Hills, Hyderabad 500 082, India or email icmr@icfai.org. Website: www.icmrindia.org OPER/020 WAL-MART'S SUPPLY CHAIN MANAGEMENT PRACTICES “When you start to collapse the supply chain, accuracy in execution becomes critical. Any lack of accurate information and processes creates costly bottlenecks in the flow of goods and materials.” - Bruce Richmond, Global head, Andersen Consulting. INTRODUCTION The US-based Wal-Mart ranked first in the global Fortune 500 list in the financial year 2001-02 earning revenues of $219.81 billion (Refer Table I). Wal-Mart was the largest retailing company in the world. The company was much bigger than its competitors in the US – Sears Roebuck, KMart, JC Penney and Nordstrom combined (Refer Exhibit I). In 2002, Wal-Mart operated more than 3,500 discount stores, Sam’s Clubs and Supercenters in the US and more than 1,170 stores in all major countries across the world. The company also sold products on the Internet through its website, walmart.com. TABLE I GLOBAL FORTUNE 500 LIST (2002) Rank Company Revenues (in $ millions) 1 Wal-Mart Stores 219,812.0 2 Exxon Mobil 191,581.0 3 General Motors 177,260.0 4 Ford Motor 162,412.0 5 Enron 138,718.0 Source: www.fortune.com Wal-Mart was one of the largest private sector employers in the world, with employee strength of approximately 1.28 million. The company’s founder, Sam Walton (Walton) had always focused on improving sales, constantly reducing costs, adopting efficient distribution and logistics management systems and using innovative information technology (IT) tools. According to analysts, Wal-Mart was able to achieve a leadership status ((Refer Exhibit II)) in the retail industry because of its efficient supply chain management practices. Captain Vernon L. Beatty, aide-de-camp to the commander, Defense Supply Center, Columbus, Ohio said, “Supply chain management is moving the right items to the right customer at the right time by the most efficient means. No one does that better than Wal-Mart
ICFAIWal-Mart'sSupplyChainManagementPracticesBACKGROUNDNOTEWalton was born in 1918atKingfisher, Oklahoma,US.AftergraduatingfromtheUniversity ofMissouri in 194o, Walton worked for the famous retailer, JC Penney.In his first job, Walton haddisplayed the qualities of a good salesman.He realized the importance of building loyalty amongcustomers as well as employees. In the mid 1940s, Walton gave up his job and decided to set uphis own retail store.He purchased a store franchise from Ben Franklin in Newport, Arkansas. Itwas herethat he learnt his first lessons in retailing-offering significant discounts on productprices to expand volumes and increase overall profits.The business was successful and WaltonsoonacquiredasecondstorewithinthreevearsWalton not only looked for opportunities to open stores in other small towns but also explored thepossibility of introducing innovative practices such as self-service.As the need for people tomanagehis stores increased,Waltontriedto attracttalented and experienced people fromothestores. By 1969, Walton had established 18 Wal-Mart stores, reportigg an annual sale of $44million. In mid 1970s, Wal-Mart acquired 16 Mohr-Value stores in Michigan and Ilinois. By thelate 1970s, the retail chain had established a pharmacy, an auto servidgcenter, and severaljewellery divisions.In the 1980s, Wal-Mart continued to grow rapidly due to the hugesustomer demand in smalltowns,wheremost of its stores were located.Commehting on thegrowth of Wal-Mart, Waltonsaid:When wearrived inthese smalltowns offerinlow priceseveryday,customer satisfactionguaranteed, and hours that were realistic for the way peoplewanted to shop, we passed right bythat old variety store competition, with its 45percentmark ups, limited selection and limitedhours."Wal-Mart stores were located at a conkenjent place in a big warehouse-type building andtargeted customers who bought merchandise in bulk,Customers could buy goods at wholesalepricesbybecomingmembersandpayinganeminaPmembershipfee.By1984,therewere640Wal-Mart stores in the US, generating sales 6f about $4.5 bn and accruing profit of over $200 mn.Wal-Mart suffered a setback in 1992.when Walton died after a prolonged illness.But it continuedits impressive growth in the 1996s,Focusing more on establishing its stores overseas. In 1992,Wal-Mart expanded its operations in Mexveo by entering into a joint venturewith Cifra.Two yearslater, the company acquired 122 Woolco Stores from Woolworth,Canada.By1997,Wal-Mart hadbecome the largest volume disQunt retailer in Canada and Mexico. In 1997, Wal-Mart acquiredthe 21-store German hypermarket cbain, Wertkauf.Other international expansion efforts includedthe purchase of BraziKan retailer Lojas Americans'40 percent interest in their joint venture, andthe acquisition of fourstoresayd additional sites inSouthKoreafrom KoreaMakro.In January1999,Wal-Martexpandedits/Germanoperationsbybuying74storesofthehypermarketchainInterspar. The stores were acquired from Spar Handels AG, which owned multiple retail formatsandwholesaleoperations throughout Germany.By 2002, Wal-Mart had emerged as the largest company in the world in terms of revenuesAnalysts felt that Wal-Mart had come a long way since1979,when the companygenerated annualrevenues of more than a billion dollar for the first time.By 1993, the company was doing a billiondollar business in a week and by 2001, it was crossing the billion dollar mark in every 1.5 daysAnalysts attributed thisphenomenal growthtoWal-Mart's continued focusoncustomerneeds andreducing costs through efficient supply chain managementpractices.The company was able toofferavast rangeof products atthelowest costs intheshortestpossibletime.Thiswaspossiblemainly due to two factors-Wal-Mart's highly automated distribution centers,which significantlyreduced shipping costs and time, and its computerized inventorysystem,which speeded upthecheckingout time and recordingof transactions.3
Do Not Copy Wal-Mart's Supply Chain Management Practices 3 BACKGROUND NOTE Walton was born in 1918 at Kingfisher, Oklahoma, US. After graduating from the University of Missouri in 1940, Walton worked for the famous retailer, J C Penney. In his first job, Walton had displayed the qualities of a good salesman. He realized the importance of building loyalty among customers as well as employees. In the mid 1940s, Walton gave up his job and decided to set up his own retail store. He purchased a store franchise from Ben Franklin in Newport, Arkansas. It was here that he learnt his first lessons in retailing – offering significant discounts on product prices to expand volumes and increase overall profits. The business was successful and Walton soon acquired a second store within three years. Walton not only looked for opportunities to open stores in other small towns but also explored the possibility of introducing innovative practices such as self-service. As the need for people to manage his stores increased, Walton tried to attract talented and experienced people from other stores. By 1969, Walton had established 18 Wal-Mart stores, reporting an annual sale of $44 million. In mid 1970s, Wal-Mart acquired 16 Mohr-Value stores in Michigan and Illinois. By the late 1970s, the retail chain had established a pharmacy, an auto service center, and several jewellery divisions. In the 1980s, Wal-Mart continued to grow rapidly due to the huge customer demand in small towns, where most of its stores were located. Commenting on the growth of Wal-Mart, Walton said: “When we arrived in these small towns offering low prices every day, customer satisfaction guaranteed, and hours that were realistic for the way people wanted to shop, we passed right by that old variety store competition, with its 45 percent mark ups, limited selection and limited hours.” Wal-Mart stores were located at a convenient place in a big warehouse-type building and targeted customers who bought merchandise in bulk. Customers could buy goods at wholesale prices by becoming members and paying a nominal membership fee. By 1984, there were 640 Wal-Mart stores in the US, generating sales of about $4.5 bn and accruing profit of over $200 mn. Wal-Mart suffered a setback in 1992, when Walton died after a prolonged illness. But it continued its impressive growth in the 1990s, focusing more on establishing its stores overseas. In 1992, Wal-Mart expanded its operations in Mexico by entering into a joint venture with Cifra. Two years later, the company acquired 122 Woolco stores from Woolworth, Canada. By 1997, Wal-Mart had become the largest volume discount retailer in Canada and Mexico. In 1997, Wal-Mart acquired the 21-store German hypermarket chain, Wertkauf. Other international expansion efforts included the purchase of Brazilian retailer Lojas Americans’ 40 percent interest in their joint venture, and the acquisition of four stores and additional sites in South Korea from Korea Makro. In January 1999, Wal-Mart expanded its German operations by buying 74 stores of the hypermarket chain, Interspar. The stores were acquired from Spar Handels AG, which owned multiple retail formats and wholesale operations throughout Germany. By 2002, Wal-Mart had emerged as the largest company in the world in terms of revenues. Analysts felt that Wal-Mart had come a long way since 1979, when the company generated annual revenues of more than a billion dollar for the first time. By 1993, the company was doing a billion dollar business in a week and by 2001, it was crossing the billion dollar mark in every 1.5 days. Analysts attributed this phenomenal growth to Wal-Mart’s continued focus on customer needs and reducing costs through efficient supply chain management practices. The company was able to offer a vast range of products at the lowest costs in the shortest possible time. This was possible mainly due to two factors – Wal-Mart’s highly automated distribution centers, which significantly reduced shipping costs and time, and its computerized inventory system, which speeded up the checking out time and recording of transactions
CFAWal-Mart's Supply Chain Management PracticesMANAGINGTHESUPPLYCHAINPROCUREMENTANDDISTRIBUTIONWal-Mart always emphasized theneed to reduce its purchasing costs and offer thebest price to itscustomers.The company procured goods directly from manufacturers, bypassing allintermediaries.Wal-Mart was a tough negotiator on prices and finalized a purchase deal only whenit wasfullyconfident thattheproducts beingboughtwerenotavailableelsewhere at a lowerpriceAccording to Claude Harris, one of the earliest employees,“Every buyer has to be tough.That isthe job.I always told the buyers:You are negotiating for your customer.And your customerdeserves the best prices that you can get.Don't ever feel sorry for a vendor. He always knowswhathecan sell,and wewanthis bottomprice.“Wewould tell thevendors,'Don't leaveinanyroom forakickback because wedon't do it here.And we don't want your advertisingprogram ordelivery program. Our truck will pick it up at your warehouse. Now what is your best price?"Wal-Mart spent a significant amount of time meeting vendors apd&nderstandingtheir coststructure.Bymaking theprocesstransparent,theretailer could beCertainthatthemanufacturerswere doing their best to cut down costs.Once satisfied, Wal-Mart(believedy establishing a long-term relationship with the vendor. In its attempt to drive hardbargains, Wal-Mart did not evensparebigmanufacturers likeProcter&Gamble(P&G).oweverthecompany,generally,preferred local and regional vendors and suppliers.In 1998, Wal-Mart had over 40 distribution centers(i&cated af different geographical locations inthe US.Over 80,o00 items were stocked in these centers.Wal-Mart's own warehouses directlysupplied 85 percent of the inventory,as compared to 50-65 percent for competitors.According torough estimates, Wal-Mart was able to provide roplenishments within two days (on an average)against at least five days for competitors. Shipping costs for Wal-Mart worked out to be roughly 3percent as against 5 percentfor competitorEach distribution center was divided intodifferent sections on thebasis of thequantity of goodsreceived and wasmanaged the sameway for both cases and palletized goods.The inventoryturnover rate was veryhigh.about onceeyery two weeks for most of the items.Goods meantfordistribution within the US usually arrived in pallets, while imported goods arrived in re-usableboxes or cases. In some cases( suppljiers delivered goods such as automotive and drug productsdirectlyto the stores.About 8s%of/thegoods which were available at the stores passed throughthedistributioncenters.The distribution centers ensyred a steady and consistent flow of products to support the supplyfunction. As Wal-Mart used sophisticated barcode technology and hand-held computer systems,managingthecenterbecameeasierandmoreeconomical.Everyemployeehadanaccesstoreal-time information regarding the inventory levels of all the products in the center. They had to justmaketwo scans-oneto identifythepallet,and the other to identifythe locationfrom wherethestock had to be picked up. Different barcodes were used to label different products, shelves andbins in a center. The hand-held computer guided an employee with regard to the location of aparticular product from a particular bin or shelf in the center.When the computer verified thebinand picked up a product, the employee confirmed whether it was theright product or not.Thequantity of the product required from the center was entered into the hand-held computer by theemployee and then the computer updated the information on themain server.The hand-held computer also enabled thepackaging department to get accurate information aboutthe products to bepacked.It displayed all information about the storage,packaging and shippingof a particular product thus, saving time on unnecessary paperwork. It also enabled the center
Do Not Copy Wal-Mart's Supply Chain Management Practices 4 MANAGING THE SUPPLY CHAIN PROCUREMENT AND DISTRIBUTION Wal-Mart always emphasized the need to reduce its purchasing costs and offer the best price to its customers. The company procured goods directly from manufacturers, bypassing all intermediaries. Wal-Mart was a tough negotiator on prices and finalized a purchase deal only when it was fully confident that the products being bought were not available elsewhere at a lower price. According to Claude Harris, one of the earliest employees, “Every buyer has to be tough. That is the job. I always told the buyers: ‘You are negotiating for your customer. And your customer deserves the best prices that you can get. Don’t ever feel sorry for a vendor. He always knows what he can sell, and we want his bottom price. ‘We would tell the vendors,’ Don’t leave in any room for a kickback because we don’t do it here. And we don’t want your advertising program or delivery program. Our truck will pick it up at your warehouse. Now what is your best price?” Wal-Mart spent a significant amount of time meeting vendors and understanding their cost structure. By making the process transparent, the retailer could be certain that the manufacturers were doing their best to cut down costs. Once satisfied, Wal-Mart believed in establishing a longterm relationship with the vendor. In its attempt to drive hard bargains, Wal-Mart did not even spare big manufacturers like Procter & Gamble (P&G). However, the company, generally, preferred local and regional vendors and suppliers. In 1998, Wal-Mart had over 40 distribution centers located at different geographical locations in the US. Over 80,000 items were stocked in these centers. Wal-Mart’s own warehouses directly supplied 85 percent of the inventory, as compared to 50-65 percent for competitors. According to rough estimates, Wal-Mart was able to provide replenishments within two days (on an average) against at least five days for competitors. Shipping costs for Wal-Mart worked out to be roughly 3 percent as against 5 percent for competitors. Each distribution center was divided into different sections on the basis of the quantity of goods received and was managed the same way for both cases and palletized goods. The inventory turnover rate was very high, about once every two weeks for most of the items. Goods meant for distribution within the US usually arrived in pallets, while imported goods arrived in re-usable boxes or cases. In some cases, suppliers delivered goods such as automotive and drug products directly to the stores. About 85% of the goods which were available at the stores passed through the distribution centers. The distribution centers ensured a steady and consistent flow of products to support the supply function. As Wal-Mart used sophisticated barcode technology and hand-held computer systems, managing the center became easier and more economical. Every employee had an access to realtime information regarding the inventory levels of all the products in the center. They had to just make two scans – one to identify the pallet, and the other to identify the location from where the stock had to be picked up. Different barcodes were used to label different products, shelves and bins in a center. The hand-held computer guided an employee with regard to the location of a particular product from a particular bin or shelf in the center. When the computer verified the bin and picked up a product, the employee confirmed whether it was the right product or not. The quantity of the product required from the center was entered into the hand-held computer by the employee and then the computer updated the information on the main server. The hand-held computer also enabled the packaging department to get accurate information about the products to be packed. It displayed all information about the storage, packaging and shipping of a particular product thus, saving time on unnecessary paperwork. It also enabled the center
Wal-Mart'sSupplyChainManagementPracticesCFAsupervisorstomonitortheir employees closelyenablingthemto givedirections and evenguidethem even on the move.This enabled the company to satisfy customer needs quickly and improvethelevel of efficiencyof thedistribution center managementoperations.Each distribution center had facilities for maintaining personal hygiene such as shower bath andfitness centers.It alsohad provisionforfood, sleep and personal business.The distribution centercould also be used for meetings and paperwork.Thetruckdrivers of Wal-Mart sometimes availedthese facilities.LOGISTICSMANAGEMENTAn important feature of Wal-Mart's logistics infrastructure was its fast and responsivetransportation system.The distribution centers were serviced bymore than 35o0 company ownedtrucks. These dedicated truck fleets allowed the company to ship goods from the distributioncenterstothestoreswithintwodavsandreplenishthestoreshelvestwiceaweek.Thetruckfleetwas the visible link between the stores and distribution centers. Wal-Mak believed that it neededdrivers who were committed and dedicated to customer serviceThecompany hired onlyexperienceddrivers whohaddrivenmorethan 300,000accident-freemiles,withnomajortrafficviolation.Wal-Mart truck drivers generally moved the merehandise-lQaded/trailers from Wal-Martdistribution centers to the retail stores serviced by eagh distribution center. These retail stores wereconsidered as customers bythedistributioncenters.Thedriveyshadtoreporttheirhours of serviceto a coordinatordaily.The coordinator scheduled all &ispatehes depending on the available drivingtimeandtheestimatedtimefortravel betweexthedistributioncentersandtheretail stores.Thecoordinator informed the driver of his dispatches. either on the driver's arrival at the distributioncenteroronhisreturntothedistributioncenterfromtheretail store.Thedriver wasusuallyexpectedtotakealoadedtrucktrailer/frorhthedistributioncentertotheretailstoreandreturnback with an emptytrailer.Hehadtodispatchaloaded trucktrailerattheretail storeand spend thenight there.A driverhad to bringthetrailer at the dock of a store only at its scheduled unloadingtime,no matter when he arrived at thestore. The drivers delivered the trailers in the afternoon andeveninghours and theywould beunloaded at the store at nights.Therewas agap of two hoursbetweenunloading of each trailerFor instanceif a storereceivedthree trailersthefirst onewould be unloaded at midnight 2AM),the second one would beunloaded at2AM and the thirdone at 4 AM.Although, the trailers were lgft unattended, they were secured by the drivers, until the storepersonnel took charge of thep at night. Wal-Mart received more trailers than they had docks, dueto their large volume of business.Wal-Mart maintained a strict vigil over its drivers bykeeping a record of their activities throughthe “Private Fleet Driver Handbook" (Refer Exhibit Ill). The purpose of the book was to educatethedriverswithregardtothecodeofconduct.Italsoincludedthetermsand conditionsregardingthe safe exchange of trailers with the storepersonnel and the safety of Wal-Mart's property.Thisbook also contained a list of other activities, the non-compliance of which would result in theterminationofthedriver.To make its distribution process more efficient, Wal-Mart also made use of a logistics techniqueknown as“cross-docking.In this system,thefinished goodswere directlypicked upfrom themanufacturing plant of a supplier, sorted out and then directly supplied to the customers.Thesystem reduced thehandling and storage of finished goods,virtually eliminating the roleof thedistribution centers and stores. There were five types of cross-docking (Refer Exhibit IV).5
Do Not Copy Wal-Mart's Supply Chain Management Practices 5 supervisors to monitor their employees closely enabling them to give directions and even guide them even on the move. This enabled the company to satisfy customer needs quickly and improve the level of efficiency of the distribution center management operations. Each distribution center had facilities for maintaining personal hygiene such as shower bath and fitness centers. It also had provision for food, sleep and personal business. The distribution center could also be used for meetings and paperwork. The truck drivers of Wal-Mart sometimes availed these facilities. LOGISTICS MANAGEMENT An important feature of Wal-Mart’s logistics infrastructure was its fast and responsive transportation system. The distribution centers were serviced by more than 3,500 company owned trucks. These dedicated truck fleets allowed the company to ship goods from the distribution centers to the stores within two days and replenish the store shelves twice a week. The truck fleet was the visible link between the stores and distribution centers. Wal-Mart believed that it needed drivers who were committed and dedicated to customer service. The company hired only experienced drivers who had driven more than 300,000 accident-free miles, with no major traffic violation. Wal-Mart truck drivers generally moved the merchandise-loaded trailers from Wal-Mart distribution centers to the retail stores serviced by each distribution center. These retail stores were considered as customers by the distribution centers. The drivers had to report their hours of service to a coordinator daily. The coordinator scheduled all dispatches depending on the available driving time and the estimated time for travel between the distribution centers and the retail stores. The coordinator informed the driver of his dispatches, either on the driver’s arrival at the distribution center or on his return to the distribution center from the retail store. The driver was usually expected to take a loaded truck trailer from the distribution center to the retail store and return back with an empty trailer. He had to dispatch a loaded truck trailer at the retail store and spend the night there. A driver had to bring the trailer at the dock of a store only at its scheduled unloading time, no matter when he arrived at the store. The drivers delivered the trailers in the afternoon and evening hours and they would be unloaded at the store at nights. There was a gap of two hours between unloading of each trailer. For instance, if a store received three trailers, the first one would be unloaded at midnight (12 AM), the second one would be unloaded at 2 AM and the third one at 4 AM. Although, the trailers were left unattended, they were secured by the drivers, until the store personnel took charge of them at night. Wal-Mart received more trailers than they had docks, due to their large volume of business. Wal-Mart maintained a strict vigil over its drivers by keeping a record of their activities through the “Private Fleet Driver Handbook” (Refer Exhibit III). The purpose of the book was to educate the drivers with regard to the code of conduct. It also included the terms and conditions regarding the safe exchange of trailers with the store personnel and the safety of Wal-Mart’s property. This book also contained a list of other activities, the non-compliance of which would result in the termination of the driver. To make its distribution process more efficient, Wal-Mart also made use of a logistics technique known as ‘cross-docking.’ In this system, the finished goods were directly picked up from the manufacturing plant of a supplier, sorted out and then directly supplied to the customers. The system reduced the handling and storage of finished goods, virtually eliminating the role of the distribution centers and stores. There were five types of cross-docking (Refer Exhibit IV)