Media Eyes Wal-Mart's Massive Distribution Center
BENTONVILLE, Ark., April 18, 2006 — -- After the first day of the Wal-Mart media conference, I'm left wondering, is Wal-Mart trying to recruit me to work there?
The day started early with a tour of the home office. Perhaps you've heard that it is bare-bones with no fancy furniture like the stores themselves. True. Perhaps you've heard about the row of 44 plain rooms where suppliers present their wares to Wal-Mart buyers hoping the retailer will buy them. True. Perhaps you've heard that the executives have small, sparse offices instead of enormous corner suites that you might expect at the world's biggest retailer. True again.
And finally, you might wonder if the home of that smiling yellow face that promises low prices has a friendly face to greet you and say hello when you enter the store. You bet it does. His name is Paul.
Wal-Mart HQ is a no-frills, low cost operation. It's a warehouse with platform ceilings, low cubicle walls and signs throughout the complex displaying quotes from the man himself, Sam Walton: "Listen to your associates, they're our best idea generators." Wisdom, indeed. Plaques and awards hang on one wall. Employees who went beyond the call of duty on another. And here and there you'll see an electronic time clock.
What really impresses, though, is the distribution center. This is the physical manifestation that explains how Wal-Mart is the low-price leader. It has made supply-chain logistics a core competency, which allows Wal-mart to slash prices. Come again? It gets goods to the stores quickly and efficiently, keeping the shelves constantly stocked.
At the distribution center, or DC, as it is called, more than 200 trucks arrive day and night dropping off merchandise, while more than 150 trucks pick up those same items for the stores. Wal-Mart has a private trucking fleet of 8,000 drivers who drove more than 910 million miles last year. The warehouse is enormous, reaching a height of 35 feet at the center. Rows and rows of products are stacked to the rafters. Remember in the Indiana Jones movie when the Ark of the Covenant was placed in a government warehouse for safekeeping? This could be that warehouse.
If Wal-Mart ran his logistics, Kane would never have misplaced Rosebud.Above the stacks of Diet Dr. Thunder (Wal-Mart's own version of Dr. Pepper) are conveyor belts where products pulled for stores are sorted. On the main belt, boxes of Charmin toilet paper and Crest toothpaste whiz by at nearly 8 miles an hour. A machine reads the label on the boxes and calculates the weight and size, and when the item arrives at one of the many conveyor belt "off-ramps" that lead to a truck waiting to leave for a store, orange shoes about the size of a fist push that individual product off the belt. In an unscientific survey, 336 boxes were processed in three minutes. Daily, 13,000 products run through these machines.
Say what you will about the company, the distribution center is impressive.
The remainder of the day consisted of presentations by Wal-Mart senior executives. They explained who their customer is -- always referred to as "she," as in "she shops every day" or "she is looking for value." They discussed how the company offers not just low-cost items but best-priced products as well as high-value ones. The executives talked about expanding into urban markets, the push for more organic food, the emphasis on decision making at the regional level to target particular communities such as Hispanics. And, of course, they touched on health care.
And I'll sign off with just a few statistics that I find amazing: Wal-Mart has 1.3 million U.S. associates (aka employees), and 138 million customers a week visit a Wal-Mart store -- a number equal to one-third the population of the United States and greater than the population of France and the United Kingdom combined. And 84 percent of U.S. households shop at Wal-Mart. That's big.
ABC News producer Charles Herman is attending Wal-Mart's media conference and will be filing updates on the company's presentation to journalists.