Through the business model, the company has established contacts with multinational as well as local companies the likes of Nestle, Unilever and Proctor & Gamble on which the company encourages its suppliers to provide the products to its franchises and outlets just and when the goods are required in the store. The only storage that is conducted is in the form of shelving in the display stores and outlets for Wal-Mart. The rest of the inventory is kept mobile on the roads scheduled to be transferred to the nearest outlet as and when demanded by the super markets and hypermarket style stores.
“The key is integrating POS data with modern demand-planning tools, which are just now coming together for the enterprise. Wal-Mart has led the way, providing its suppliers POS data per store, updated several times a day, allowing suppliers to adjust their distribution, manufacturing, and marketing efforts based on what’s actually selling and where. Other major retailers, such as Best Buy, Home Depot, Kmart, Lowe’s, Rite-Aid, and Target, are following suit.” (Gruman, 2005) This has greatly reduces the costs associated with keeping, handling and managing the large amount of inventory on a periodic basis and also removes the need for buffer stock to be present at the outlets. Moreover the costs associated with renting and maintaining large warehouses is also eliminated, enabling the company to grow and increase its operations in a networked fashion.
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