Scott J. Mason, Russell D. Meller
University of Arkansas
The goal of this project is to maintain or improve service capability of replenishment while reducing inventory considering Sam’s constraints which include include shelf-space, pallet quantities, and cross-dock distribution centers
Sam’s Club, a division of Wal-Mart Stores, Inc., had annual sales of $44.3 billion in FY07, with merchandise supplied by roughly 10,000 vendors. Such a large operation leads to a complex supply chain consisting of merchandise flow from vendors to Club distribution centers (DCs) and then onto clubs. Sam’s Club has, at any given point in time, approximately $3B invested in inventory. To better manage the Sam’s Club supply chain, vendors negotiate contracts to supply Sam’s Club with merchandise based on a variety of constraints. Sam’s currently has limited ability to evaluate the impact of these constraints that ultimately have an impact on the inventory levels in the clubs. The purpose of this project is to design a tool for Sam’s that will provide them with the ability to evaluate the impact of these constraints.
Model predicted approximately 5% reduction in inventory while maintaining 0.5% reduction in in-stock and presentation.
Sam’s piloted UA’s recommended settings in 10 additional vendors for one calendar quarter.
In-stock and presentation increased, inventory decreased.
Sam’s now planning to implement recommended settings system-wide.