Friday 10 February 2012

Getting the numbers right in logistics, like Walmart

                                                                The shrinking army...
Napoleon's invasion of Russia 200 years ago illustrates just how badly things can go wrong when the supply chain implications of moving a 400,000-man army are underestimated.
It is not enough just to get your forces from A to B - you have to keep them fed and watered as they go, or suffer the 95% casualty rate experienced by Napoleon on the Paris-Moscow back-haul trip.
Napoleon planned to take his supplies with him.
This was a logistical operation of quite staggering proportions, requiring a wagon train of no fewer than 26 battalions - eight equipped with 600 light and medium wagons each, and the rest with 252 four-horse wagons capable of carrying 1.36 tonnes (a grand total of 9,300 wagons).
To pull these wagons and to transport his cavalry and artillery he had gathered 250,000 horses, all of which required 9kg (20lbs) of forage a day.
And yet the figures did not add up. (More)
Walmart was different
We all put Walmart’s success down to discounting, but it was the company’s specialisation in logistics — borne out through obsessions with efficiency, information and distribution that made Walmart what it is today.
Fully 60% of the entire U.S. population lives within 5 miles of a Wal-Mart location and 96% are within 20 miles, all co-ordinated via a data warehouse as big as the Pentagon…
Obsession with individual stores’ weekly performance data
Successful EDLP was driven by obsession with individual stores’ weekly performance data, aimed at rooting out inefficiencies, either within their own operations or those of suppliers. Through this sort of detailed and obsessive scrutiny, Walmart concluded that they themselves could handle most external operations better, cheaper and faster, causing them to identify logistics as their primary expertise. 
See results in terms of fuel efficiency, milk transport, Sustainable Product Index and LED lighting design-upgrades here.
Logistics just a means to an end
For Walton however, this logistical capacity was largely a means to an end. About the company's extensive data network, he wrote: “What I like about it is the kind of information we can pull out of it on a moment’s notice — all those numbers.”
However, the founder remained focused only on how logistics affected performance — measured in profit....

Why not try a right-numbers weekend, from the NamNews Team?

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