Wal-Mart has one of the most highly touted and effective VMI systems the retail world has ever seen. By utilizing the latest hardware and software technologies, and implementing proven strategies and processes, Wal-Mart has managed to drastically lower its cost of inventory, and greatly increased supply chain optimization with its vendors. Wal-Mart's success story in using VMI and EDI technology has not only helped its own operations, but also improved the efficiency among all of its vendors and business partners.
There are many components that make up Wal-Mart's successful VMI and EDI system. The costs of such systems can be astronomical because of both the hardware and software requirements. Computers, complex network equipment, Point of Sale (POS) systems, EDI software, bar codes, and even wireless and embedded Radio Frequency Identification (RFID) technology are amongst the many components that make up a VMI system. The entry point of these types of systems is the computerized check outs or POS systems. When an item is purchased at a store and is scanned at the register, which can be a traditional POS, or a networked PC, it reads the barcode which tells the system what type of product it is, and then communicates this piece of information to a server or host. This data is then updated into the main inventory database, and in the case of Wal-Mart, the vendor or supplier of this system can use this data to determine whether it is necessary to refill, and also use it for marketing statistics. Another integral piece of Wal-Mart's VMI system is the core database or system which hosts all of the transaction data. It acts as a clearinghouse for both Wal-Mart and its vendors to update and retrieve information regarding inventory levels, pricing, and sales. This process is called Electronic Data Interchange. This can be very costly for vendors to implement, but is required in order for big companies such as Wal-Mart to ensure maximum cost effectiveness and profitability.
