Wal-Mart and Mattel: Supply Chain Management Best Practices

Wal-Mart and Mattel: Supply Chain Management Best Practices Chapter 6 – Case 5 Page 216

Team Members • Elisabeth Cates • Yvonne Hildebrand • Jesse Janis • Mary Napier • Nina Wolf • Eric Young

Walmart www.walmart.com

CEO – John B. Menzer • Executive Vice President and President and Chief Executive Officer, Wal-Mart International Division since 1999 • 1995 – 1999 Executive Vice President and Chief Financial Officer for Wal-Mart Stores, Inc. • 1999 CFO Excellence Award from CFO Magazine • Prior to joining Wal-Mart, he was President of Ben Franklin Retail Stores, Inc Jessi Janis

History - Founder • Sam Walton in 1962 • On this picture in 1984 he does the hula at high noon on Wall Street, making good on promise to associates after company achieves pre-tax profit of 8 percent in 1983. Jessi Janis

History – some important dates • 1962: Company founded with opening of first Wal-Mart in Rogers, Ark. • 1967: Wal-Mart's 24 stores total $12.6 million in sales. • 1970: Wal-Mart opens first distribution center and home office in Bentonville, Ark. • 1977: Wal-Mart makes first acquisition, 16 Mohr-Value stores in Michigan and Illinois. • 1978: Hutcheson Shoe Company acquired • 1981: Wal-Mart makes its next acquisition with 92 Kuhn's Big K stores. • 1983: U.S. Woolco Stores acquired. • 1990: Wal-Mart becomes nation's No. 1 retailer.1990McLane Company of Temple, Texas acquired. • 1997: Wal-Mart replaces Woolworth on the Dow Jones Industrial Average. • 2003: Wal-Mart named by FORTUNE magazine as the most admired company in America. Jessi Janis

Product / Services • wide variety of general merchandise • 36 departments including family apparel, health & beauty aids, household needs, electronics, toys, fabrics & crafts, lawn & garden, jewelry and shoes • Pharmacy Department, Tire & Lube Express, garden center, snack bar or restaurant, Vision Center and One-Hour Photo Processing • Alaska Bush Shopper: “If you're in Alaska and far from a Wal-Mart store, order items and have them shipped to you through our Alaska Bush Department.” Jessi Janis

Stock Split History In 1970, Wal-Mart offered 300,000 shares of its common stock to the public at a price of $16.50 per share. Since that time, it has had eleven (11) two for one (2/1) stock splits. On a purchase of 100 shares at $16.50 per share on ist first offering, the number of shares has grown as follows:

Stock development Nina Wolf

Economic Impact for Year Ending Jan. 31, 2002 (USA) • WAL-MART Stores:1,636 • Supercenters: 1,093 • Neighborhood Markets: 31 • Sam‘s Clubs: 502 • Distribution Centers: 106 • Associates employed in U.S.: 1,043,970 • Community involvement: $196 million • Total amount spent with U.S. suppliers: $107 billion • Totoal federal, state and local taxes paid: $1.2 billion • Sales taxes collected and remitted: $8.5 billion Nina Wolf

Net Sales 2003 (in millions): $ 244,524 Nina Wolf

Mattel www.mattel.com

Robert A. Eckert, Mattel's chairman and chief executive officer • Robert A. Eckert is chairman of the board and chief executive officer of Mattel, Inc., the worldwide leader in the design, manufacture and marketing of toys with approximately $5 billion in annual sales. • Eckert joined Mattel in May 2000 from Kraft Foods, Inc., the largest U.S.-based packaged food company in the world. • He received a Bachelor of Science degree in business administration from the University of Arizona in 1976 and an M.B.A. in marketing and finance from Northwestern University in 1977. Eric Young

1945: Mattel is foundet by Ruth and Elliot Handler and Harold „Matt“ Matson • 1959: First Barbie • 1960: Mattel becomes apublic owned company • 1974: Mattels enters into in a Consent Decree with the Securities and Exchange Comission • 1986: Mattel acquires Hong-Kong based ARCO industries • 1986: Joint Venture with Bandai • 1988: Purchase of Corolle S.A. (France) • 1989: Acquisition of Corgi Toys Ltd. • 1992: Acquisition of International Games Inc. • 1994: Acquisistion of Kransco and J.W. Spear & Sons Eric Young

Products/ Partners Mary Napier

Net Sales in thousands Mary Napier

Summary Case 5

Mattel as a supplier of Wal-Mart Supply Chain Management Benchmark company Used cutting edge technology to build IT infrastructure that includes all aspects of the chain First to use Radio Frequency Identification (RFID) Implemented a collaborative planning, forecasting, and replenishment (CPFR) program, beginning a Just-In-Time Inventory Program Sharing of ideas and data is key to the just-in-time practices that are in place within Wal-Mart Data sharing from a retailers on a global basis allows suppliers to reduce their inventory costs, resulting in a lowering of overall costs Efficiency in supply chain is key for low-price leadership, resulting in far lower margins for suppliers and retailers Wal-Mart’s system can work well for all businesses and has been studied in-depth Summary Mary Napier

Question 1 Do you agree that Wal-Mart is “the best supply chain operator of all time”? Why or why not? in the workplace?

Question 1 • Wal-Mart is one of the “best supply chain operators at the moment” • Using a supply chain management system that is progressively against its competitors and they don’t even stop evolving. • Pushing the limits of supply chain management, searching for and supporting better technology that promises to make its IT infrastructure more efficient. Yvonne Hildebrand

Question 1 • Wal-Mart uses radio frequency identification (RFID) microchips that replace bar codes and security tags with a combination technology that costs less money. • Wal-Mart shares its data with its suppliers. • By implementing a collaborative planning, forecasting, and replenishment system (CPRF), Wal-Mart began a just-in-time delivery program that reduced costs for both the retailer and its suppliers. Yvonne Hildebrand

Question 1 • The system is still not perfected. • The system still is too expensive for low-budget products. • Signals can’t be send over a long distance. • Metal impedes the funk signals, so Wal-Mart must still improve the system. Yvonne Hildebrand

Question 2 What has Mattel learned from Wal-Mart? How well are they applying it to their business?

Mattel’s knowledge gained from Wal-Mart • Optimization of the supply chain for Wal-mart by utilizing data gained from Wal-mart’s inventory databases • Maintaining a efficient supply chain so that there less excess inventory Elizabeth Cates

Applications • Utilize the sales data on a daily basis to tailor to the needs of supply and demand • Pinpoint what product is selling and where so Mattel can accommodate to the manufacturing needs • In doing so, both Wal-Mart and Mattel are successful in the way that they both are working simultaneously to fulfill the needs of retail customers Elizabeth Cates

Question 3 What can other businesses learn from the experiences of Wal-Mart and Mattel that could improve their supply chain performance? Use an example to illustrate your answer.

Question 3 • Important to save time and reduce costs • Example: Hospital • Usually small margins • Surgical instruments and products listed in a database, which is connected to their supplier • Everything will be recorded in the database • Advantage • Knowledge who has used what • Knowledge what every department need • Reduce stock • Receive only products, that they really need • Supplier can optimize its production/stock Nina Wolf

Questions? Thanks for your attention!

Wal-Mart and Mattel: Supply Chain Management Best Practices